Pure Services received from Vendors by AIIMS not exempt from GST: AAR [Read Order]

In a recent ruling, the Telangana State Authority for Advance Ruling ( AAR ) has ruled that the All India Institute of Medical Sciences ( AIIMS ) is not eligible to claim Goods and Services Tax ( GST ) exemption on pure services received from vendors.

AIIMS, located in Bibinagar, Telangana, is a prestigious addition to the All India Institute of Medical Sciences network in India. The institution was established to address the increasing demand for high-quality healthcare, medical education, and research in the region. Despite AIIMS' commitment to providing top-tier medical education, the AAR ruling has significant implications for its financial operations.

AIIMS sought an advance ruling on whether it could claim GST exemption on pure services received from vendors, including manpower, housekeeping, and consultancy services, which were subject to a GST rate of 18%.

The institution had been reversing the entire Input Tax Credit ( ITC ) availed, as it provides exempt services in compliance with GST regulations. AIIMS argued that being a Central Government institution, supplies made to it should be exempt under specific entries in Notification 12/2017.

The AAR ruled that AIIMS does not qualify as the Central Government but rather as a "Governmental Authority" established by an Act of Parliament. The relevant entry in Notification 12/2017 was amended, omitting the phrase "Governmental Authority" from the description of services, rendering AIIMS ineligible for GST exemption.

In view of the findings, the Authority clarified that AIIMS cannot claim GST exemption on pure services received from vendors. The ruling has financial implications for the institution, as it will continue to be liable for GST payments on these services.

The ruling was made by the bench consisting of S.V. Kasi Visweswara Rao, Additional Commissioner ( State Taxes ), and Sahil Inamdar, I.R.S., Additional Commissioner ( Central Taxes ).

The AAR decision highlights the importance of precise understanding and interpretation of GST provisions. AIIMS, despite its standing as a premier healthcare and education institution, has been held liable for GST on specific services, highlighting the nuanced nature of tax regulations in India.

To Read the full text of the Order CLICK HERE

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