In re Siemens Healthcare (P) Ltd. (GST AAAR Haryana)
Whether the provisioning of diagnostic imaging services under the agreement/contract executed by Siemens Healthcare Pvt. Ltd. (SHPL) with its customers would qualify for exemption from levy of GST under S. No. 74 of the Notification 12/2017-CT(R) dated 28/06/2017?
It is observed that SHPL is providing the input services of provision of installing/operating the MRI, CT scanners etc in the premises of its Customers (clinical establishments) and providing diagnostic images to them (clinical establishments).
We find that providing diagnostic images is not equivalent to providing diagnosis, and the services by SHPL is not an independent establishments for providing diagnostic service.
To avail the benefit of the exemption all the limbs of the notification must be satisfied i.e., the services have to be health care services as defined in clause (Zg) of para 2 of the notification & the services have to be provided by clinical establishment as defined in clause (s) of para 2 of the said notification. Since the appellant is to provide its diagnostic imaging services to the clinical establishment which in turn makes use of these images provided by the appellant & with the advice/opinion of medical practitioner/pathologist/radiologist makes diagnosis & provides it to the patient, the appellant can’t be said to provide diagnosis services to the patient, & hence not eligible to the exemption.
The Authority for Advance Ruling (AAR) has observed that the term ‘by way of diagnosis’ does not include any intrinsically linked processes and in the instant case it is not the Applicant firm but only the Hospital which further provides the diagnostic service, and thus, a health care service.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, HARYANA
The present appeal has been filed under Section 100 (1) of Central Goods and Service Tax Act, 2017 / Haryana Goods and Service Tax Act, 2017 (hereinafter referred to as CGST Act / HGST Act, respectively) by M/s Siemens Healthcare (P) Ltd. against the Advance Ruling No. HAR/HAAR/R/2018-19/27 dated 03.12.2018.
A copy of order dated 03.12.2018 of the Advance Ruling Authority was received by the appellant on 04.03.2020 and the appeal was due for filing by 3.04.2020 in terms of Section 100(2) of the CGST Act 2017. However the appeal was been filed on 24.06.2020 and is within time when read with COVID-2019 related extension provided to GST matters vide notification 35/2020-Central Tax dated 3.04.2020, This notification extends the time limits to 30.06.2020, “where arty time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended upto the 30th day of June, 2020.”
I. BRIEF FACTS OF THE CASE
M/s Siemens Healthcare Pvt. Ltd, Plot No. 78, JIL Building, Sector 18, Gurugram (hereinafter, “the Appellant”) has been, historically, in the business of trading medical equipment required to spread its business dimension by involving itself in the provision of diagnostic imaging services to hospitals (customers) and other clinical establishments for various Haryanais registered as a State taxpayer under GST in Gurugram. They are engaged in selling, establishing and maintaining the medical diagnostic/imaging equipment at the premises of their clients viz. hospitals and other clinical establishments.
1. As submitted by the applicant, such diagnostic imaging services would involve providing to its customers visual representations of the interior of a human (i.e., patient’s) body to assess the current medical condition of patients by their customers. Detailed description of the services and relevant terms of the proposed arrangement have been explained by the applicant, as under:-
I. The above services shall; inter alia, be provided at customer’s premises by placing, installing and operating their diagnostic system of relevant modality. Having said that, there shall be no transfer of ownership or right to use the diagnostic system, components and accessories (‘collectively equipment’) to the customer.
II. The applicant shall be responsible for arranging the technical personnel (to operate equipment) and all other consumables (excluding contrast) and medical supplies like films, compact disks (media). Diagnostic output so provided by the applicant shall be used by the customer for further analysis, perusal and examination.
III. The customer shall not hypothecate, pledge or create any encumbrance whatsoever on the equipment nor shall it part with the possession of the equipment to any third-party during subsistence of the agreement. Further, as per the agreement, the customer agrees and acknowledges that the applicant shall provide diagnostic imaging services for further analysis, perusal and examination by the customer without assuming any clinical risks.
IV. As regards to the consideration for provision of aforesaid services, the applicant shall raise monthly invoice on the customer. The manner of arriving at the consideration amount shall be either on revenue share arrangement in a pre-agreed proportion or pre-agreed service fees based on the number of patients/cases. The services fees payable to the applicant may further be subjected pre-agreed lower and/or upper capping on the basis of diagnostic imaging service volume.
V. The scope of services proposed to be provided by the applicant is further explained by the applicant; as under:-
(i) Placing the medical imaging equipment (of mutually agreed technology) at customer’s premises;
(ii) Preparing patients for imaging procedures (scheduling patients and providing pre-scan instructions thereby preventing rescheduling);
(iii) Correctly positioning patients to get the right image. For, instance to position patients for an 1VIRI, the Applicant would need to decide on the correct imaging coil, the best Position and the protocol for the imaging;
(iv) Operating equipment optimally to get accurate diagnostic images;
(v) Communicating with physicians/ radiologist about images;
(vi) Delivering/ handing over the acquired images to the Picture Archiving and Communication System (‘PACS’),
The application for advance ruling has been filed as the taxpayer intends to also deploy their professionals to run such machines in the hospitals, while maintaining these machines also.
II. QUESTIONS IN ADVANCE RULING:
The RULING has been requested on the QUESTION:-
“Whether the provisioning of diagnostic imaging services under the agreement/contract executed by Siemens Healthcare Pvt. Ltd. (SHPL) with its customers would qualify for exemption from levy of GST under S. No. 74 of the Notification 12/2017-CT(R) dated 28/06/2017?”
The Advance Ruling Authority (AAR) had provided the following Ruling: –
RULING:
“The services offered/ provided by the applicant do not qualify to be covered under the scope of exemption provided under entry at Sr. No. 74 of the Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 and hence, these are not exempted”.
III. GROUNDS OF APPEAL:
The Appellant has submitted the following as their ‘Grounds of Appeal’:
1. That, the Advance ruling Authority (AAR)’s findings are contrary to the provisions of the CGST Act.
2. That, the AAR has not disputed that Appellant is a clinical establishment and is providing services under SAC 9993. Whereas, the exemption has been denied on the ground that the services are not health care services. Accordingly, in the present appeal the Appellant is confining its submission to this aspect of the matter.
3. The term “Healthcare services” is defined in clause (zg) of the Exemption Notification as under:-
“(zg) “health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized 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;”
The term “healthcare services” reproduced above can be divided into following limbs:-
