In re Maha Critical Speciality Division (AAR Tamilnadu)
The Tamil Nadu Authority for Advance Ruling (AAR) in the case of M/s. Maha Critical Speciality Division addressed whether the supply of medicines and consumables by a hospital’s pharmacy to its in-patients constitutes a composite supply of healthcare services and is therefore exempt from Goods and Services Tax (GST). The applicant, a clinical establishment providing various healthcare services, sought clarity on the GST treatment of medicines and consumables supplied to both in-patients and out-patients through their in-house pharmacy, which shares the same GST registration as the hospital. While the pharmacy currently charged GST on these supplies, the applicant contended that supplies to in-patients should be considered part of the composite supply of exempted healthcare services.
The AAR examined the definitions of healthcare services and clinical establishment under Notification No. 12/2017-CT (Rate) and the concept of composite supply under Section 2(30) of the CGST Act, 2017. They also considered a relevant circular clarifying that food supplied to in-patients as advised by medical professionals is part of a composite supply of healthcare. The Authority differentiated between supplies to in-patients and out-patients, noting that medicines for out-patients are advisory and can be procured from any pharmacy, whereas medicines and consumables for in-patients are integral to the treatment provided during their hospital stay and are necessarily supplied by the hospital’s pharmacy. Citing previous rulings, the AAR concluded that healthcare services provided to in-patients from admission to discharge, including the supply of medicines and consumables, are naturally bundled and constitute a composite supply.
Based on this analysis, the AAR ruled that the supply of medicines and consumables used in the course of providing healthcare services to in-patients by the applicant’s pharmacy is a composite supply of in-patient healthcare service. As healthcare services provided by a clinical establishment are exempted under Notification No. 12/2017-CT (Rate), this composite supply is also exempt from CGST and SGST. The ruling specifically pertained to in-patients, implicitly maintaining that supplies of medicines and consumables to out-patients remain taxable, as these are not considered part of a composite supply of healthcare services in that context.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
