In re M/s. Rajarajeswari Hospitals Private Limited (GST AAR Tamilnadu)
The applicant, a multi-specialty hospital registered under GST, sought an advance ruling on whether the supply of medicines, consumables, implants, and medical items to inpatients and outpatients forms part of exempt healthcare services under Entry No. 74 of Notification No. 12/2017–Central Tax (Rate). The hospital operates an in-house pharmacy under its own drug license, which is fully integrated with hospital operations and billing. Medicines and consumables are dispensed only to patients receiving treatment and not sold to the general public. For inpatients, the hospital provides comprehensive care from admission to discharge, including room charges, medical and nursing services, diagnostics, surgeries, medicines, consumables, and implants, all billed through a consolidated invoice. For outpatients, consultation services are provided, and medicines are dispensed based on prescriptions, though patients are free to procure them elsewhere.
The applicant contended that medicines and consumables supplied during treatment are incidental and ancillary to healthcare services and constitute a composite supply, with healthcare as the principal supply, thereby qualifying for exemption. The Authority examined the statutory provisions, definitions of “clinical establishment,” “healthcare services,” and “composite supply,” the scheme of classification of services, and relevant clarifications, including Circular No. 32/06/2018-GST.
