In re Odisha State Medical Corporation Limited (GST AAAR Odisha)
The appeal concerned the GST treatment of services rendered by Odisha State Medical Corporation Limited (OSMCL), a government-owned company established to implement Odisha’s Free Medical Distribution Scheme. OSMCL was created by a State Government resolution, fully funded and controlled by the Government of Odisha, to centrally procure medicines, medical consumables, and equipment through competitive tendering; manage warehouses and distribution logistics; monitor drug distribution counters; and support public health facilities up to the CHC level. The corporation receives budgetary allocations from the State, disburses payments to suppliers from those funds, and retains only a prescribed service charge (earlier 5%, later up to 2.5%) to meet recurring expenses. Amounts paid to suppliers are not treated as OSMCL’s revenue or expenditure.
The original AAR had held that OSMCL was not a Government Authority, though it was a Government Entity, and denied exemption under Notification No. 12/2017 on the ground that the supplies were not “pure services,” relying on Rule 33 (pure agent valuation). On appeal, the Appellate Authority examined the statutory definitions, the Government Resolution establishing OSMCL, its functions, accounting treatment, and the scope of Rule 33. It concluded that OSMCL qualifies as a “Government Entity” but not a “Government Authority.” It further held that the activities undertaken—procurement, warehousing, logistics, monitoring, and equipment maintenance—constitute a natural bundle of services without any supply of goods by OSMCL, and therefore amount to “pure services.” The Authority clarified that Rule 33 relates only to valuation and cannot be used to deny the character of pure services.
