‘Healthcare services’ classifiable under service code 9993

In re Shubham Sarvam Medical Projects LLP (GST AAR Uttarakhand)

On perusal of aforesaid legal provisions , we find that all the healthcare services by a clinical establishment or authorized medical practitioner or para medics by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy and services by way of transportation of the patient to and from a clinical establishment are exempt from GST. However, hair transplant or cosmetic or plastic surgery does not get exemption and is taxed. Thus, all treatments excluding cosmetic treatments have been covered by this definition.

 In view of the above, we find that the applicant is engaged in providing ‘healthcare services’ to the people of Uttarakhand and the same is classified under service code 9993. We also find that the said services are exempted from payment of GST as provided vide entry no, 74 of Notification No. 12/2017 dated 28.06.2017 (as amended from time to time).

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

Note Under Section. 100(1) of the Uttarakhand Goods and Services Tax Act, 2017. an appeal against this ruling lies before the appellate authority for advance ruling constituted under section- 99 of the Uttarakhand Goods and Services Tax Act, 2017, within a period of 30 days from the date of service of this order.

AUTHORITY FOR ADVANCE RULING

GOODS & SERVICE TAX UTTRAKHAND

RULING

1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s Shubham Sarvam Medical Projects LLP, C/o Ram Dutt Joshi Combined Government Hospital, Ramnagar, Nainital -Uttarakhand seeking an advance ruling on following issues:-

(a) Under which SAC the services provided by LLP under PPP contract to UK Government Nodal Agency is covered;

(b) Whether serial no. 3, 73 & 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) are applicable on LLP.

2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

3. As per the said subsection (2) of Section 97 of the CGST/SGST Act, 2017 advance ruling can be sought by an applicant in respect of :-

(a) Classification of any goods or services or both

(b) Applicability of a notification issued under the provisions of this Act,

(c) Determination of time and value of supply of goods or services or both,

(d) Admissibility of input tax credit of tax paid or deemed to have been paid

(e) Determination of the liability to pay tax on any goods or services or both

(f) Whether the applicant is required to be registered

(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term

4. In the present case applicant has sought advance ruling on classification and applicability of notification on supply of services. Therefore, in terms of said Section 97(2) (a) & (b) of CGST/SGST Act, 2017, the present application is hereby admitted.

5. Accordingly opportunity of personal hearing was granted to the applicant on 08.10.20’20. Shri Shubham Agarwal (CA), on behalf of the applicant appeared for personal hearing on the said date and re-iterated the submissions already filed with the application. Ms Preeti Manral, Deputy Commissioner, SGST-Dehradun, concerned officer appointed by the State Authority, also present during the hearing proceedings.

6. From the record submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing no. 05AEBFS7457J1ZP, Before proceeding in the present case, we would first go through the submissions filed by the applicant and the same is summarized as under:-

(i) The appellant is engaged in providing service to Uttarakhand Health and Family Welfare Society, a nodal agency of Uttarakhand Government, for implementation of UK health system development project.

(ii) Responsibilities of the applicant is as follows,-

> To develop healthcare facilities at sites to meet the minimum infrastructure equipment;

> To operate and maintain the healthcare facilities as per agreement;

> To supply medical equipment to health centers as per agreement;

> To supply manpower to health centers and be responsible for their work conduct;

> To commission, operate & maintain a comprehensive website for healthcare facilities

(iii) It is a mixed supply of service wherein primary service is to manage & provide healthcare facilities.

7. Before deciding the issues in hand, we first go through the agreements/contracts submitted by the applicant in this regard. On perusal of contract no. IN-UKHFWS-117391-NC-RFB dated 27.12.2019, the relevant portions are summarized as under:-

(a) The said contract is a PPP contract, was signed between the applicant & Uttarakhand Health & Family Welfare Society (in short society);

(b) The Govt, of Uttarakhand (in short Govt) has to resolve & enhance health infrastructure facilities to the remote population in the state of Uttarakhand through Uttarakhand Health Systems Development Project (in short project) and for that Govt aims to engage private health care service providers in meeting the unmet access needs of the state’s population;

(c) The Govt has nominated the Uttarakhand Health & Family Welfare Society, a society that is under the administrative control of the Govt, as the nodal agency, for implementation of the project;

(d) The Society has awarded contract to the applicant to operate and maintain the healthcare facilities in the districts and to provide the healthcare services in accordance with this agreement;

(e) Article-2 of the contract (Scope of the project):-

* The augmentation and development of the healthcare facilities at the site that has been described at Schedule-A to meet the minimum infrastructure, equipment and personnel requirements set forth in Schedule-B;

* Operation & maintenance of the healthcare facilities in accordance with the provisions of this agreement;

* making available the healthcare facilities for the patients and providing at a minimum healthcare services to the patients that are set out in Schedule-B, so as to achieve at a minimum the baseline requirements for the key performance indicators set forth in Schedule-C and

* ——————————————————————————-

(f) The Schedule-A of the contract is related to the site of the project;

(g) The Schedule-B of the contract is related to the minimum healthcare services (clinical & curative services, Diagnostic & other para clinical services, Ancillary services including ambulance services, laundry services, security services etc), infrastructure, personnel & equipments requirement.

8. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed for our consideration in the application. Now we proceed by taking the issue one by one:

(A) Classification of service provided by the applicant to the society.

A-1 In this context, on perusal of the contract we find that society had permitted the applicant to operate and maintain the healthcare facilities in the districts and to provide the healthcare services to the people of Uttarakhand. On perusal of Schedule-B of the contract, the applicant has to provide minimum healthcare services ( clinical & curative services, Diagnostic & other para clinical services, Ancillary services including ambulance services, laundry services, security services etc), commission, operate & maintain website for healthcare facilities, infrastructure, personnel & equipments requirement to meet the goal of the Govt i.e. to resolve & enhance health infrastructure facilities to the remote population in the state of Uttarakhand.

A.2 Now the question arises whether other ancillary services viz laundry services, security services, commission, operate & maintain of website for healthcare facilities etc & infrastructure provided along with minimum healthcare services are taxable or otherwise.

A.3 In this context, we observe that the other ancillary service & infrastructure are support services to ‘healthcare services’ and should be treated as an incidental to said service and the said ancillary services & infrastructure shall be covered under composite supply. To appreciate the law position in this regard we reproduce the relevant portion of the Act as under:

(i) Section 2(30) of the Act ibid “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

(ii) Section 2(90) of the Act ibid “principal supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;

(iii) Section 8 of the Act ibid: The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:-

(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and

(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.

In the instant case other said ancillary services rendered along with infrastructure during the course of ‘healthcare service’ is covered under composite service in as much as the ‘healthcare services’ constitutes the predominant element and therefore becomes the “principal supply” and other ancillary services & infrastructure shall form the part Of that composite supply as ancillary in as much as ‘healthcare services’ cannot be effectively accomplished without rendering other ancillary services & infrastructures.

On true and fair analysis of the legal provisions and on perusal of the agreement, we hold that services provided in relation to ‘healthcare services’ are exempted from the liability to GST in as much as all such ancillary activities having a proximal nexus with ‘healthcare services’ and thus, shall covered under ‘healthcare services’.

A.4 Now we have to decide whether the ‘healthcare services’ are exempted or otherwise. In this context relevant legal provisions are extracted below:

Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017

G.S.R….(E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:

S.No	Chapter, Section, Heading or Group	Service Description	Rate (Percent)	Condition
(1)	(2)	(3)	(4)	(5)
74	Heading 9993	Services by way of (a) health care services by a clinical establishment, an authorized medical practitioner or para-medics; (b) services provided by way of transportation or a patient in an ambulance, other than those specified in (a) above.	Nil	Nil

The definition of ‘Healthcare Services’ has been provided in serial no. 2(zg) of the said notification:

“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.

iii. The definition of “clinical establishment” has been provided in serial no. 2(s) of the said notification:

“clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases;

A.5 On perusal of aforesaid legal provisions , we find that all the healthcare services by a clinical establishment or authorized medical practitioner or para medics by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy and services by way of transportation of the patient to and from a clinical establishment are exempt from GST. However, hair transplant or cosmetic or plastic surgery does not get exemption and is taxed. Thus, all treatments excluding cosmetic treatments have been covered by this definition.

A.6 In view of the above, we find that the applicant is engaged in providing ‘healthcare services’ to the people of Uttarakhand and the same is classified under service code 9993. We also find that the said services are exempted from payment of GST as provided vide entry no, 74 of Notification No. 12/2017-Central Tax (Rate) dated (as amended from time to time).

(B) Whether serial no. 3, 73 & 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) are applicable on LLP.

1 On perusal of said notification, we find that intra-state supply of services mentioned therein, are exempted from payment of GST subject to the relevant conditions as mentioned against the corresponding services. Thus, the said notification deals with exemption to the category of service rendered and not to the category of person engaged in supply of services. Accordingly we observe that the supply of services, irrespective of person involved therein, mentioned in the said notification, are in exempted category.

ORDER

In view of the above discussion & findings we hold as under:

(i) The services rendered by the applicant covered under ‘healthcare services’ which falls serial no. 74 of table appended to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017(as amended from time to time) and the same is classified under Service Code (Tariff) 9993.

(ii) The Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) exempt the supply of services mentioned therein, irrespective of person involved in providing the same.