Summary: In the case of Medpiper Technologies Pvt. Ltd. (GST AAR Karnataka), Advance Ruling No. KAR ADRG 41/2024, 13/11/2024, the Karnataka AAR ruled that an aggregator providing diagnostic and wellness services via a digital platform is taxable at 18% GST. The company, acting as an intermediary between third-party diagnostic labs and clients (e.g., insurance companies or corporate clients), does not qualify for GST exemption as a healthcare service provider. The applicant is merely facilitating access to the labs through its platform, rather than acting as an e-commerce operator. Therefore, the full invoice amount for diagnostic services, not just the margin, is subject to GST at the 18% rate. Additionally, the applicant does not fall under the definition of an “Insurance Agent” under the Insurance Act, and therefore must issue invoices like any other service provider. The AAR also confirmed that TCS collection does not apply as the applicant does not meet the criteria of an e-commerce operator.
In recent case of Medpiper Technologies Private Limited, AAR-KARNATAKA, held that aggregator for diagnostics and labs, does not qualify for exemption from GST as Healthcare service, and hence taxable @ 18%. AAR further concluded that, diagnostic labs or wellness providers are not providing the service through the online platforms / mobile app, the applicant merely provided the platform for selection of lab/ centers, therefore service is not in nature of E-commerce operator.
Fact of the case:- The applicant gets in contract with companies to provide diagnostic labs and wellness services to the employees of the company or any group of people that the company decides, through third-party labs and wellness providers. The contract can be between an insurance company and the applicant to provide the said services to a specific group of people.
These employees or groups of people can select a specific date, time and a specific diagnostic and lab tests to be done from diagnostic lab and wellness providers from the list the applicant provides. The medium of interaction between these employees and group of people with the applicant and with diagnostic labs can be through a mobile app developed by the applicant or Whatsapp or e-mail or telephonic conversation. The diagnostic labs will be providing medical reports to these employees or group of people through the medium of their choice.
Question Raised to AAR:-
1. Whether the assessee need to collect GST on the diagnostic and lab services provided through third party diagnostic labs? If yes, Whether GST has to be collected for the whole invoice amount or on the margin on the supply alone and what will be the applicable tax rate and which SAC to be used?
2. Whether TCS needs to be collected?
3. Whether the assesse fall under the definition/meaning of an “Insurance Agent” if invoiced to an insurance company, If yes how is GST applicable?
AAR Finding and conclusion
In case diagnostic and lab services provided through third party diagnostic labs, Applicant act as an aggregator for the said services for companies/insurance companies/insurance brokers; Applicant provide access to the digital platform and digital tools, for companies/insurance companies/insurance brokers, to manage the workflows for availing the services of the said diagnostic labs / clinical establishments for their employees or group of people; as per Notification 12/2017-Central Tax, services by way of health care services by clinical establishment are exempted and thus the service is being provided by the clinical establishment to the persons using the digital platform of the applicant and the applicant is only working as an aggregator; the service mentioned by the applicant comes under the definition of e-commerce and hence the applicant is not required to collect the tax under GST.
Further, recipients of service having contract with the applicant, selects the diagnostic labs or wellness providers and books specific date & time, from the list provided on the digital platform / App. Once the tests are done the diagnostic labs or wellness providers raise invoice on the applicant and the applicant in turn raises the invoice on the companies after retaining their margin. It is clearly evident from the foregoing that the service is not being provided by the labs to the recipients, through the App / Mobile platform, but through the applicant. The applicant merely provided the platform for the recipients so as to enable them to select the lab from whom the services are to be procured. Once the selection is over, the labs after the tests provide the reports directly to the recipients. The invoices are raised by the labs on the applicant. Thus the applicant doesn’t qualify to be an e- commerce operator.
Section 42 of the Insurance Act 2015 stipulates that an insurance agent is a representative who sells the policy on behalf of an insurance company. The agent helps consumers select the right insurance based on their needs, but represents an insurance company. Insurance agents will sell and negotiate different insurance policies.
In the instant case, the services being provided by the applicant are not connected, not even remotely, with the sale of insurance policies and hence the applicant does not fall under the definition / meaning of the “Insurance Agent”. Therefore the applicant has to raise invoice on par with the other companies.
Ruling by AAR
Q-1 Whether the assessee need to collect GST on the diagnostic and lab services provided through third party diagnostic labs? If yes, Whether GST has to be collected for the whole invoice amount or on the margin on the supply alone and what will be the applicable tax rate and which SAC to be used?
Ruling:- The assesse need to collect GST on the diagnostic and lab services provided through third party diagnostic labs, for the whole invoice amount and the applicable tax rate is 18% and SAC is 9993.
Q-2 Whether TCS needs to be collected?
Ruling- The applicant doesn’t qualify to be an e-commerce operator and thus the question “whether TCS needs to be collected” is redundant.
Q-3 Whether the assesse fall under the definition/meaning of an “Insurance Agent” if invoiced to an insurance company, If yes how is GST applicable?
Ruling:- The assesse does not fall under the definition/meaning of an “Insurance Agent”, if invoiced to an insurance company and thus the applicant has to raise invoice on par with the other companies.
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