Boilla Venkataramana Reddy Vs Shivenari Canteen Services (GSTAT Hyderabad)
Summary : GSTAT Hyderabad allowed the department’s appeal, subject to modifications, against the First Appellate Authority’s order treating food supplied by Shivenari Canteen Services for MGM Hospital’s in-patients as an exempt composite supply of healthcare services. The dispute concerned supplies from January 2018 to November 2021 under an agreement with the hospital. The department sought restoration of the adjudicating authority’s order and referred to a demand of ₹23,04,026, contending that the respondent was an outsourced caterer rather than a healthcare provider. The respondent relied on Circular No.32/06/2018-GST dated 12.02.2018, the healthcare exemption under Notification No.12/2017-CT(R) dated 28.06.2017, and letters issued by the Principal Accountant General and MGM Hospital. It also argued that food supplied within the hospital premises on medical advice could not be separately taxed as restaurant services, that the adjudication travelled beyond the show cause notice, and that Section 74 was unjustified because the taxable and exempt turnover had been disclosed in returns.
The Tribunal examined the definition of composite supply under Section 2(30) and held that the respondent supplied only food under its agreement with MGM Hospital. There was no second supply in the respondent’s hands to constitute a composite supply. The circular’s clarification concerned the hospital’s supply of healthcare together with food to admitted patients on medical advice; in that transaction, healthcare was the principal supply and food was ancillary. It did not exempt an independent caterer’s supply to the hospital merely because patients ultimately consumed the food. The Tribunal also rejected reliance on the hospital and audit letters as independent sources of exemption: they explained the Board’s clarification, and their issuers were not competent to provide a binding tax clarification. Consequently, the First Appellate Authority had erred in treating the respondent’s activity as composite healthcare supply, and its order was set aside.
