There has been chaos whether GST can be levied on vaccination for covid-19 by hospitals. To address this, let us try to analyze the below mentioned provisions in detail.
Before we proceed, please note this article is not going to converse on applicability of GST on manufacturing of vaccine but we try to unfold whether GST has to be levied by the hospitals who are administering the vaccine to beneficiaries.
Administration of vaccination:
Proper vaccine administration is critical to ensure that vaccination is safe and effective. CDC (Centers for Disease Control and Prevention) recommends that all health care personnel who administer vaccines receive comprehensive, competency-based training on vaccine administration policies and procedures before administering vaccines. Comprehensive, skills-based training should be integrated into existing staff education programs such as new staff orientation and annual education requirements.
Government has constituted National Expert Group on Vaccine Administration for COVID-19 (NEGVAC). The NEGVAC will guide all aspects of the COVID-19 vaccine introduction in India.
For any new vaccine introduction, healthcare providers will be responsible for handling and administering the vaccine as well as be a major source of information for the community.
As per NEGVAC, the vaccination team consists of vaccination officers and vaccinator officer. Vaccinator officer is the one who is responsible for vaccination of beneficiary. The following health care professional can only be the vaccinator office:
Therefore, the vaccine has to be administered by a medical professional only, any other person is not authorized to administer the vaccine.
Vaccine administered by government to the beneficiaries:
The vaccine given to the beneficiaries by government are free of cost. Therefore, as per Section 7 of CGST Act, Scope of Supply, Supply without consideration between two unrelated parties are not taxable under GST. Therefore, GST will not be levied for the vaccination provided by government directly to the beneficiaries.
Vaccine administered by private hospitals to the beneficiaries:
The vaccination provided at private hospitals are for consideration and it has to be understood whether those are taxable or not. Inorder to identify, let us try to understand whether Vaccination is supply of good or Service?
The definition of good has been given under GST Act vide Section 2(52),
“goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
In order to categorize vaccination as sale of goods, we need to understand that vaccines are not sold by the pharmacy/ hospitals to the beneficiaries moreover the vaccine (injection) is also not handed over to the beneficiaries over the counter. Further, the beneficiaries are visiting hospital in order to get treated through vaccination which is directly injected into the body of the beneficiaries by the authorized medical practitioners as part of medication process. Accordingly, in our view, administering of vaccine should not be considered as supply of goods.
The definition of service has been given under GST Act vide Section 2(102):
“services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
As vaccination is not supply of goods, as per the above definition it can be classified as service. To classify it as a services, it can be seen that as part of vaccination process, there are various checks and consultation carried out by medical practitioner before and after vaccination which goes to prove that vaccination is as part of diagnosis for COVID. Accordingly, we are of the opinion that there is supply of service to beneficiaries.
Now as we have established that administering of vaccination is a service, let us now try to understand whether the same is taxable or exempt under GST.
As per S. No. 74 of Notification No. 12/2017 Central Tax Rate dated 28th June 2017,
“Services by way of –
(a) health care services by a clinical establishment, an authorised medical practitioner or para-medics;
(b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above”
are exempted from GST.
Let us evaluate whether above said service qualify as healthcare service rendered by authorized medical practitioner:
The definition of “healthcare service” stated in Notification No. 12/2017 Central Tax Rate dated 28th June 2017, is defined as
“health care service” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma;”
Any service by way of care for illness will qualify as healthcare service. The nature of activity of vaccination is prevention of disease or illness through the process of medication. Therefore it has to be considered as health care service.
Further the definition of “authorized medical practitioner” stated in Notification No. 12/2017 Central Tax Rate dated 28th June 2017, is defined as
“a medical practitioner registered with any of the councils of the recognised system of medicines established or recognised by law in India and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force”
The vaccines are administered by authorized medical professionals such as doctors, para-medics, well trained nurses who will be authorized under the medical councils as healthcare professionals.
As Vaccination is given to develop the immunity against the chronic illness, as per the above definitions, this has to be considered as care for illness, administered by authorized medical professional or paramedics.
Therefore, from the above analysis, administration of vaccine, in our view has to be considered as supply of healthcare service which is exempt from levy of tax under GST.
The views, thoughts and opinion expressed in this article are solely of the author and based on his experience and understanding of the provisions applicable as on the date of writing of the article. Adequate attention has been given to avoid any clerical/ arithmetical error, however if it still persists kindly intimate us to avoid such error for the benefit of other readers.
For any further clarification the author may be reached at [email protected]