Judgement : Appellate Authority for Advance Ruling Gujarat (GAAAR) held that supply of Occupation Health Check-up Service by the hospital to be treated as Health Care Service and exempted under GST in terms of notification for exempt services.
Fact of the case :
The appellant, M/s. Baroda Medicare Private Limited is running 3 multispecialty hospitals under the Brand name ‘Sunshine Global Hospitals’ at Manjalpur, Vadodara and Surat.
The appellant filed an application for advance ruling (GAAR) on whether the supply of medicines, surgical items, implants, consumables, and other allied services and items provided by the hospital through their hospital in-house pharmacy is part of the composite supply of health care treatment and thus not taxable under CGST/SGST. It was held by GAAR that this is a composite supply of in-patient healthcare service and exempted from GST.
And whether the supply of Occupational Health Check-up (OHC) service
by the hospital i.e. nursing staff, Doctors, Paramedical staff on hospital’s payroll, working in different corporate for providing health check-up service, ambulance facility, and allied medical services to their employees and also the camps conducted for health check-up outside the hospitals, to be treated as Health Care service and hence not taxable under CGST / SGST. It was held that by GAAR that the appellant will be liable to pay GST under “Human health and social care services”.
Thus, aggrieved by the said ruling of GAAR in respect of the second question, the appellant filed the appeal.
Argument by Petitioner :
The appellant has submitted that the impugned advance ruling provides for classification of occupational health check-up under “Human Health and Social Care Services” and that services provided by the appellant merit classification under Service Code 999312 as far as occupational health check-up is concerned which is very well covered within the purview of Sr. No. 74 of exempt notification No. 12/2017-Central Tax (Rate) 28.06.2017, as amended.
It further submitted that Occupational Health Check-up is not in the nature of Social Services but in the nature of Health Care Services. At one end AAR doesn’t want the services to get classified in the category of “Health Care Services” and immediately thereafter mentions that the activity merits classification under “Human Health and Social Care Services”.
The appellant has referred to the definition of “Health Care Services” given at clause (zg) of Para 2 of the said exemption notification and submitted that the entire scheme and objective of Occupational Health Check-up is medical examination of a patient.
The appellant has also submitted that in order to be eligible to claim benefit of exemption, what is important is that the said Health Care Services must be supplied by a clinical establishment, an authorized medical practitioner or paramedics and to whom it should be provided, is not a condition for claiming exemption.
The appellant has submitted that in the Service Tax regime, the Central Government vide notification has fully exempted the taxable service provided or to be provided by any hospital, nursing home or multi-speciality clinic referred in sub-clause (zzzzo) of clause (105) of section 65 of the Finance Act, 1994.
Argument by Department:
GAAR observed and held that the activities are by no stretch of imagination covered under the scope of “Health Care Services” as defined above. Thus, the “Health Care Services” do not include the services of the Occupational Health Check-up facilities, which is commonly known as corporate health check-up schemes, provided to business entities.
Payment is being made by the business entities who have engaged the applicant for said services and not by the person concern whose health check-up is being carried out by the applicant. Thus, said services are being provided to the business entities and not to any patient. Hence, same are not covered under exempted “Health care services”
Legal Issue:
Whether Occupation Health Check-up Service provided by the hospital to be treated as Health Care Service and be exempt from GST under Entry 74 of notification No. 12/2017-Central Tax (Rate) 28.06.2017,
Observation of Court :
The GAAR has failed to examine as to whether the description of service (well covered under SAC 999312) provided by the appellant is covered within the description of service given at Sr. No. 74 of the said exemption notification.
It is evident that the services by way of Occupation Health Check-ups or preventive care are not covered by social services mentioned in the explanatory notes of SAC 9993 i.e. “Human Health and Social Care Services”
Further, GAAR failed to appreciate that Service Tax was made applicable on Occupational Health Check-up Services which was subsequently exempted by the Government. The definition of Health Care Service is similar in GST regime as compared to Finance Act, 1994.
Thus, held that supply of Occupation Health Check-up Service by the hospital to be treated as Health Care Service and exempted under GST in terms of Entry at Sr.No.74 of notification No. 12/2017-Central Tax (Rate) 28.06.2017, as amended.
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