The West Bengal Authority for Advance Ruling (AAR) has clarified a key aspect of Goods and Services Tax (GST) compliance in its ruling on food supply to hospital in-patients. The AAR determined that food provided to in-patients, as prescribed by doctors or nutritionists, qualifies as a composite supply of health care services and is thereby exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.
This decision came in response to an application filed by Bamapada Jana, a contractor responsible for providing in-patient diets at the Central Hospital, South Eastern Railway, Kolkata. The applicant argued that the service fell within the ambit of health care services since the food was supplied as part of a clinical establishment’s operations.
The applicant contended that their services were part of the composite healthcare services provided by the hospital and therefore should qualify for exemption under Notification No. 12/2017-Central Tax (Rate). This notification exempts healthcare services provided by clinical establishments, authorized medical practitioners, or paramedics.
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The AAR observed that health care services provided by clinical establishments include the supply of food to in-patients when it is prescribed as part of their treatment. Such supplies are integral to health care services, forming a naturally bundled composite supply exempt from GST.
The AAR referred to Circular No. 32/06/2018-GST, which explicitly states that food supplied by outsourced contractors is taxable, while food supplied directly by hospital-run kitchens as part of health care services is exempt.
The applicant’s invoices for services provided to the hospital were deemed ineligible for exemption, as the applicant was categorized as an outsourced caterer and not a clinical establishment.
The ruling by the bench of Dr. Tanisha Dutta and Joyjit Banik reiterated that exemptions apply to clinical establishments that provide such services directly or through in-house arrangements. However, outsourced food supplies, when provided by independent contractors, do not qualify for exemption under the same notification.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
While hospitals can continue to provide exempt health care services, contractors supplying ancillary services like food must adhere to GST regulations and apply the appropriate tax rate.
The decision also clarifies the definition of “composite supply” under GST, ensuring consistency in taxation practices for similar scenarios across the country.
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