AIIMS Ineligible for GST Exemption on Pure Services from Vendors

In re All India Institute of Medical Sciences (GST AAR Telangana)

In a significant ruling by the Goods and Services Tax Authority for Advance Rulings (GST AAR) in Telangana, the All India Institute of Medical Sciences (AIIMS), Bibinagar, has been deemed ineligible for GST exemption on pure services procured from vendors. This decision, stemming from an application by AIIMS for clarity on GST exemptions, underscores the intricacies of GST laws and their implications for educational and healthcare institutions in India.

The case presented by AIIMS Bibinagar revolved around the institution’s procurement of various services essential for its operation, including manpower, housekeeping, and security services. AIIMS, a central educational and healthcare institution, posited that these services, being ‘pure services,’ should be exempt from GST, citing their crucial role in delivering healthcare and medical education.

The institution’s argument was built on the premise that, as an entity established under an Act of Parliament and functioning under the Ministry of Health & Family Welfare, it should be considered a governmental authority and, thus, eligible for GST exemptions as per Notification 12/2017. This notification outlines exemptions for services to the Central Government, State Governments, Union territories, and local authorities.

However, the GST AAR Telangana’s examination revealed a crucial distinction. Although AIIMS Bibinagar is indeed a creation of an Act of Parliament and operates under the aegis of the Ministry of Health & Family Welfare, it does not qualify as ‘Central Government’ but rather as a ‘Governmental Authority.’ The notification in question had, with effect from January 1, 2022, omitted ‘Governmental Authority’ from the entities entitled to GST exemption on services. Consequently, AIIMS’s claim for GST exemption on the pure services received from its vendors was denied.

This ruling highlights the complexities and specificities of GST law application, particularly concerning exemptions for institutions operating in the public sector. For AIIMS Bibinagar, and similar institutions, this means a reevaluation of their tax liabilities and financial planning to accommodate GST on services that are essential to their operation. Furthermore, it sets a precedent for how GST laws are interpreted and applied to entities that, while governmental in nature, do not fit the narrow definition of ‘Central Government’ for purposes of GST exemptions. This case serves as a reminder of the evolving nature of GST jurisprudence and the need for entities to navigate these waters with careful legal and financial planning.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TELANGANA

1. M/s. All India Institute Of Medical Sciences, NH 163, Rangpur, AIIMS Bibinagar, NH, 163, Bibinagar, Yadadri Bhuvanagiri, Telangana, 508 126. (36AAAGA2453A1Z6) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules.

2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.

3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs. 5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act’2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act’2017.

4. BRIEF FACTS OF THE CASE:

4.1 M/s All India Institute of Medical Sciences (hereinafter referred to either as “Applicant” or “AIIMS”) is the one of the newest additions to the prestigious All India Institute of Medical Sciences (AIIMS) network in India. Located in Bibinagar, a town in the Yadadri Bhuvanagiri district of the Indian State of Telangana, AIIMS Bibinagar was established to address the growing demand for high-quality healthcare, medical education and research in region.

4.2 AIIMS Bibinagar, Like its counterparts, is committed to offering top-tier medical education and training programs. It aims to produce skilled healthcare professionals who can meet the evolving healthcare needs of the nation. The institution is equipped with modern infrastructure and state – of – the – art facilities to medical education.

4.3 AIIMS, being an institution dedicated to healthcare and education, has entered into contracts with several entities for services, including:

1. M/s. MJ Solanki, GSTIN: 24AAQFM2633M1ZY. For the provision of house keeping services and manpower supply services at AIIMS Bibinagar.

2. M/s Kore Security Services, GSTIN: 07ADKPJ3897P1ZM, for the provision of security services at our college, hospital and hostel facilities.

3. M/s. P. Suresh& Associates Chartered Accountant Services GSTIN: 36AAVFP9999G1ZZ.

Regarding this contracts, AIIMS is currently paying GST at a rate of 18%. However, in compliance with the provisions of the GST Act, They are reversing the entire Input Tax Credit (ITC) availed by us since They are providing exempt services. The GST paid to our vendors is consequently remitted to the Government, and it, in turn, supports our organization Financially.

5. QUESTIONS RAISED:

All India Institute of Medical Sciences is committed to supply quality health and medical Education services, In this regard they have been receiving pure services such as Manpower services, House keeping services and consultancy services from vendors on which GST is charged @18%.

1. Whether All India Institute of Medical Sciences can claim GST Exemption on pure services received from Vendors?

6. PERSONAL HEARING:

The Authorized representatives of the unit namely Sri. G.V. Satish, Account officer & Sri. Suresh Kumar, CA & AR attended the personal hearing held on 29.11.2023. The authorized representatives reiterated their averments in the application. Further, the Authorised Representative/Applicant M/s. All India Institute Of Medical Sciences, reiterated that their case /Similar Case is not pending in any proceedings in the applicant’s case under any of the provision of the Act and have not already decided in any proceedings in the applicant’s case under any of the provisions of the Act.

7. DISCUSSION & FINDINGS:

The applicant All India Institute of Medical Sciences (AIIMS), Bibinagar, is purchasing pure services such as Man power supply, Security Services & Accountancy Services. In the statement of facts they have claimed that the vendors of these Services are charging GST at the rate of 18% on the services supplied. They also submitted that being an education institution their Output service is exempt and therefore they are reversing the Input tax credit amount into Rs.2 to 3 Crs annually. They submitted that their Institution is Central Government. And hence supplies made to their Institution are exempt under entry 3 & 3A of Notification 12/2017. To support their claim they are Central Government they submitted document evidence:

1. AIIMS, Bibinagar falls directly under the purview of the Ministry of Health & Family Welfare (MOHFW) and is created by an Act of Parliament Act.

2. That Section 5 of the AIIMS Act 1956 designates them as an “Institute of National Importance”.

3. That they are financed by Central Government by way of appropriation made by Parliament by Law in this behalf under Section 15 of the said Act.

4. That their accounts are audited by the comptroller and auditor General of India.

As seen from the above evidence the applicant is not Central Government but a “Governmental Authority” as it is established by the Government by the Act of Parliament. The Sl. No. 3 & 3A of Notification 12/2017 as amended with effect from 01.01.2022 have omitted the phrase Governmental Authority from the description of the services. Hence the applicant is not eligible for exemption under these two serial numbers.

8. In view of the foregoing, we rule as follows:

In view of the above discussion, the questions raised by the applicant are clarified as below: