In re Oswal Industries Ltd (GST AAAR Gujarat)
The Advance Ruling No. GUJ/GAAR/R/25/2020 dated 09.07.2020 by holding that M/s. Oswal Industries Ltd. (M/s. Nimba Nature Cure Village) is not eligible to get the benefit of Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding Notification No. 12/2017-State Tax (Rate) dated 30.06.2017
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT
The appellant M/s. Oswal Industries Limited (M/s. Nimba Nature Cure Village), has submitted that they are engaged in providing Naturopathy treatment since last 6 years. It is one of the largest Naturopathy Centers in India, and offers AYUSH approved treatments of Naturopathy, Ayurveda, Yoga including Meditation, Physiotherapy and special Therapy. It also provides Advanced Hydrotherapy and Heat Treatment like Stone Therapy. As it functions as an integrated Health Care Center, the regimen demands that all the patients should be in-patients (IP), as the treatments offered are of prolonged duration and to be closely monitored in natural environment. Hence, it also provides accommodation and food to each patient seeking treatment.
2. It has further been submitted that the treatment of Naturopathy in Nimba is provided with the help of qualified Naturopaths, all holding degree of BNYS from recognized Universities of India. It also provides alternative therapies from traditional Chinese Acupuncture Treatment, Reflexology and Acupressure Therapy etc. The treatment is provided at appellant’s Center for treatment of ailments like Chronic Backaches and Headaches, besides Respiratory Disease, Gastro Intestinal Diseases and Muscular Skeleton Diseases.
3. The appellant filed an application for Advance Ruling before the Gujarat Authority for Advance Ruling (hereinafter referred to as the ‘GAAR’) and submitted that in Pre-GST regime, they had been availing exemption from payment of Service Tax as per Sl.No.2(i) of the Notification No.25/2012-ST dated 20.06.2012. It has been submitted that the jurisdictional Central Excise Commission rate, vide letter dated 19.01.2015 and 10.03.2015 had informed the appellant that any healthcare services when provided by way of diagnosis or treatment or care for illness, injury, abnormality of pregnancy in any recognized system of medicines provided in any institutions only were exempted from payment of service tax under the Mega exemption Notification No.25/2012-ST dated 20.06.2012.(Sl.No.02) and health care services other than those above did not fall under the purview of the said exemption. They were requested to take suitable action accordingly. The appellant has further stated that after implementation of the GST, as per Entry No.74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 the appellant is eligible for exemption.
4. The appellant sought ruling from the GAAR on the following question –
(i) “Whether the applicant is eligible to get the benefit of entry No. 74 of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 ?”
5. The GAAR examined the issue and observed that the package offered by the appellant, as evident from their website indicates that the therapy offered by them is strictly on a residence basis; that the total consideration mainly revolves around two factors viz. (i) the type of room and (ii) whether single or double occupancy; that the package of the appellant consists of the 3 components viz. (a) Accommodation, (b) Food; and (c) Therapy; that the packages would not be possible without any one of the 3 components. It has been observed that the packages offered by the appellant are naturally bundled and would be aptly covered under the definition of Composite Supply. Further, the principal supply would be the accommodation services since the therapy can in no way be administered without accommodation. In fact, there is no option available for the customer to avail the wellness package without opting for the accommodation. Thus, GAAR found that the accommodation service attains the nature of the principal supply and other two components attain the nature of ancillary services.
6. The GAAR has further observed that the supply of services provided by the appellant, which is a composite supply, is classifiable under Sub-Heading No.99631 lunder ‘Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like’. As the exemption at Entry No.74 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is applicable to services falling under the Heading 9993, whereas the nature of services provided by the appellant is covered under Sub-Heading 996311, as discussed above.
Therefore, the exemption available at Entry No.74 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the appellant.
7. In view of the foregoing, the GAAR, vide Advance Ruling No. GUJ/GAAR/R/25/2020 dated 09.07.2020 held as follows:-
“The applicant M/s. Oswal Industries Ltd. (M/s. Nimba Nature Cure Village) is not eligible to get the benefit of entry No.74 of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 “
8.1 Aggrieved by the aforesaid advance ruling issued by the GAAR, the appellant has filed the present appeal.
8.2 The appellant has submitted that the process of treatment provided at their centre is as follows:-
(i) All patients have to fill an application form giving full details of their disease particulars, past and present.
(ii) The filled-up form will go for the scrutiny of Nimba’s doctor, and if found suitable and treatable under Naturopathy regimen, the case / cases will be approved for treatment.
(iii) Duration of the treatment will be prescribed by the doctor.
(iv) Since healing under naturopathy takes a longer duration of treatment, Nimba does not take patients less than for 7 days.
(v) On receiving consent from the patient, a Reservation Confirmation letter is issued clarifying duration of stay and tentative expenditure.
(vi) All patients must carry the Reservation Confirmation letter and show the same to the Gate for entry to the Centre
(vii) On arrival, the patient is subject to medical scrutiny before formal registration as a patient, and a ward (room) will be allocated.
(viii) Doctor prepares a Case Diary comprising all daily treatment plan, therapy and diet.
(ix) Treatment proceeds as per case diary and doctor examine daily and advice patient accordingly.
8.3 The appellant has submitted that in pre-GST regime, the Deputy Commissioner, Central Excise, Kalol Division vide letter F.No. V/ST-Div/Nimba/2014-15 dated 10.03.2015 had informed that the services provided by their company were exempt from service tax if they were providing in naturopathy system of medicines. It has been submitted that on implementation of Goods and Services Tax (GST), the levy of GST by way health care services by a clinical establishment, an authorized medical practitioner or para-medics has been exempted by the Government vide Sr. No. 74 ofNotification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The appellant has referred to the definition of “health care services” provided under clause (zg) of the said Notification.
8.4 The appellant has further submitted that by virtue of entry no. 74A of Notification No. 12/2017-Central Tax (Rate) and CBIC Circular No. 32/06/2018-GST dated 16.02.2018, entire charges, including retention money, food charges and fees payments being charged from in-patients, by medical institutes / clinical establishments / hospitals, providing health care services as defined under clause 2(zg) of the said Notification have been categorically exempted from the levy of GST.
8.5 As submitted by the appellant, the main purpose and objective of provision of accommodation facilities to the patients availing the Naturopathy, Ayurveda and Yoga based treatments, rendered by their centre, is the medical treatment and accommodation is just an incidental requirement of such treatment, therefore, the entire package of such medical treatments, along with the provision of food and accommodation to the in-patients, shall be considered as composite supply within the meaning of section 2(30) of the CGST Act, 2017 with services portion of Naturopathy / Ayurveda/ Yoga services as the principal supply and the provision of food and accommodation to the in-patients as incidental / secondary supply. As the Naturopathy services provided by the appellant are exempt, the entire package of services shall be considered as exempt and accordingly remain outside the purview of the levy of GST.
9.1 The appellant has submitted that it is engaged in providing all recognized alternative health care services such as Naturopathy, Ayurveda, Yoga and Meditation, Physiotherapy and Special Therapies, at their premises with the help of highly qualified professional Doctors in the field of Naturopathy, researchers and support staff.
9.2 The appellant has further submitted that the classification of services provided by it is Heading 9993 (human health and social care services) most appropriately appears at Sr. No. 31 of Notification No. 11/2017-Central Tax (Rate) and as per Annexure to the said Notification, the specific service provided by them appears at Sr. No. 612. It has been submitted that the services provided by them gets covered under Service Accounting Code 999319 which covers health services of Naturopathy, which are provided by qualified practitioners, other than medical doctors.
9.3 The appellant has submitted sample case history (chart) prepared by the Doctor / qualified professionals at the time of admission of patient and the treatment method adopted for the ailment of the patients admitted.
9.4 The appellant has relied upon the advance ruling in the case of M/s. Alcon Resort Holdings Pvt. Ltd. [2019-TIOL-209-AAR-GST] and has submitted that they are providing the same set of services to all the patients who obtain admission for their ailment and their ailment is cured by the qualified professionals / Doctors through the process of Naturopathy, Ayurveda and Yoga.
9.5 The appellant has submitted that the GAAR has relied on the contents available on the website and that too on the single page of the website. It has further been submitted their website clearly specifies on the home page that they are providing services related to Naturopathy and it is one of the largest Naturopathy centers in India.
9.6 It has been submitted that the main services of Nimba Nature Cure Village is to provide services related to health through Naturopathy and treatment of each ailment takes specified time for cure, but not less than seven days under the system of Naturopathy; that when a patient intends for treatment of Naturopathy, then in such case the patient has to stay at the Naturopathy centre for a time period as advised by the Doctor / qualified professional, which is in any case, not less than 7 days and has to follow the diet chart regimental activity as per the prescription of the Doctors for curing the ailment for which the patient intends treatment under Naturopathy; that during the treatment, the patient cannot decide the days of stay or the type of foods as per his wish and has to follow the entire treatment programme strictly as advised by the Doctor / qualified professional.
10. There has been change in one of the two Members of this authority consequent upon the transfer and posting of the Chief Commissioner, Gujarat Goods and Services Tax, after Personal Hearing has been held in this case. The appellant was therefore asked whether they require fresh hearing or not. The appellant vide their mail dated 10.01.22 informed that they would like to be heard again. Accordingly, personal hearing in the matter was held on 13.01.22 wherein the advocate for the appellant reiterated the contents of their appeal. He submitted that, Nimba Nature Cure Village, Unit of Oswal Industries Ltd., is a therapeutic centre and Naturopathy is prime activity. The treatment and days of stay is decided by their doctor. Only qualified doctors are working at the centre. No admission to the centre is given until the doctors diagnose or carry out checks on the patient. He submitted that medical health insurance does not cover their treatment cost. However Central Govt. Health Scheme has extended the benefit of treatment at their centre to the Central Govt, employees. He submitted that there is no outdoor patient department at their centre. He further submitted that their service was exempted under the Service Tax regime. That GAAR erred in considering their service as rental of rooms. That treatment cannot be provided without accommodation service. Accommodation and food is secondary service. That to set aside the order of GAAR and allow their application for classifying services provided by them, towards Naturopathy at Nimba Nature Cure Village, as services by way of health care services by a clinical establishment and grant benefit of exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
FINDINGS
11. We have considered the submissions made by the appellant in the appeal filed by them, written submission vide letter dated 26.10.2020 as well as submissions at the time of personal hearing and Ruling given by the GAAR.
12. The issue raised in the present case is whether the appellant is eligible to get the benefit of Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding Notification No. 12/2017-State Tax (Rate) dated 30.06.2017 (the Central Tax (Rate) Notification referred to includes the reference to corresponding State Tax (Rate) Notification also).
13.1 It would, therefore be appropriate to refer to the relevant entry at SI. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which reads as follows
