In a significant ruling, the West Bengal Authority for Advance Ruling (AAR) has clarified that the standalone supply of food to in-patients by a catering contractor does not qualify for exemption under the Goods and Services Tax (GST).
The case involved Bamapada Jana, a service provider contracted by the Central Hospital, South Eastern Railway, to supply meals to in-patients.
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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.
The AAR, however, disagreed, observing that the supply of food by the applicant was a standalone service, outsourced by the hospital, and not directly linked to the provision of healthcare services.
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The hospital’s composite healthcare services include food supplied to in-patients as recommended by doctors or nutritionists, but this exemption applies only when the food is provided directly by the hospital, either through its own kitchen or by in-house staff.
In its detailed analysis, the AAR Bench of Dr. Tanisha Dutta and Joyjit Banik noted that the applicant’s role was limited to preparing and delivering food based on dietary instructions provided by the hospital. This activity does not qualify as “healthcare services” as defined in the GST Act.
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The ruling also laid reference to Circular No. 32/06/2018-GST, which explicitly states that when hospitals outsource food supply to external contractors, GST is applicable on such supplies, and the hospital cannot claim input tax credit.
The AAR further differentiated this case from other rulings, such as those involving multi-specialty hospitals, where the food supply was deemed ancillary to healthcare services. In contrast, the applicant in this case operates purely as a caterer and does not engage in providing any healthcare services.
This ruling clarified that the applicant must levy GST on the invoices raised for the hospital and clarifies that such supplies fall outside the scope of composite healthcare services.
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