The Kerala bench of the Authority of Advance Ruling ( AAR ) in an application filed by M/s Baby Memorial Hospital Ltd held that artificial body parts / devices implanted in the body by means of a surgical procedure shall be classified as a composite supply which shall be exempt since the principal supply is healthcare service.
The Bench constituting of Hon’ble Members B.G. Krishnan and B.S. Thyagarajababu has ruled as follows:
On the issue of whether the applicant, a Multi-Speciality Hospital is liable to pay GST on supply of medicines, drugs and other surgical goods from its pharmacy to inpatients, the Authority held that such supply is in course of providing health care services which are naturally bundled and shall constitute a ‘Composite Supply’ which shall be eligible for exemption under the category ‘health care services’.
On the issue of whether the applicant is liable to pay GST on the supply of medicines, drugs and other surgical goods from its pharmacy to outpatients, it has been held that GST shall be applicable on such supply.
On the third issue of whether the applicant is liable to pay GST on supply of incidental services as X-ray, Clinical laboratory etc rendered as a part of health care service, while referring to Notification No. 12/2017, the Authority held that the services by way of diagnosis come under the category of health care services covered under SAC 9993 and thereby stand exempted.
On the fourth issue of whether the applicant is liable to pay GST on supply of implants and artificial limbs made during course of treatment to patients, the Authority ruled that the supply of artificial body parts/devices such as heart valve, artificial kidney, artificial joints, and coronary stents etc which are implanted in the body essentially by means of a surgical procedure can be classified as a composite supply where principal supply is of healthcare services.
In other cases of artificial body parts/devices which are worn/attached/fitted/fastened to the body for which a surgical procedure may or may not be required; the nature/taxability of supply has to be determined on a case to case basis considering the facts and circumstances of each case. Also, wheelchairs, tricycles supplied to the patients cannot be considered as a composite supply where the principal supply is health care services and hence shall be liable to GST as individual supply of goods.
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