Supply of Medicines and Other Procedures during Treatment of Inpatients Admitted to the Hospital is considered a Composite Supply: AAR [Read Order]
Supply of Medicines and Other Procedures – Supply of Medicines – Treatment of Inpatients Admitted to the Hospital – Hospital – Composite Supply – AAR – Taxscan
Supply of Medicines and Other Procedures – Supply of Medicines – Treatment of Inpatients Admitted to the Hospital – Hospital – Composite Supply – AAR – Taxscan
The Rajasthan Bench of Authority for Advance Ruling (AAR) ruled that the supply of medicines and other procedures during the treatment of inpatients admitted to hospitals is considered a composite supply where principle supply is health care service.
The Applicant M/s Innovations Medi Research Private Limited a registered company located in the state of Rajasthan, raised a question regarding the GST liability in respect of the supply of medicines, implants and other items to patients undergoing treatment as inpatients in different situations.
The applicant was offering a package to the inpatients covering the treatment including all required medicines and other supplies for a consolidated amount that is prefixed. In such cases, the combination of goods and/or services included in the supply are naturally bundled in the ordinary course of business and hence it is a composite supply of which the principal supply is health care services and the other supplies are only incidental or ancillary to the supply of health care services.
Therefore, the supply of medicines, implants, and other items to the inpatients admitted to the hospital for treatment as per the package offered by the applicant was a composite supply where the principal supply is health care services.
The Bench of Umesh Kumar Garb (Member of Central Tax ) and Mahesh Kumar Gowla (Member of State Tax) observed that according to the circular No.32/06/2018-GST, (F.No.354/ 17/2018 TRU Dt.12.02.2018) issued based on the approval of 25th GST Council Meeting, it was clarified that food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.
In light of the above circular, the supply of medicines and other procedures during treatment of inpatients admitted to hospitals amounted to composite supply and eligible for exemption under category “health care services".
The nature of various services in a bundle of services will help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and other services combined with such service are incidental or ancillary services which help in better utility of main service then the various elements of the service are said to be naturally bundled in the ordinary course of business.
The bench further observed that the various AAR passed ruling that the supply of medicines and allied items provided by the hospital through the pharmacy to the in-patients is part of the composite supply of health care treatment and hence not separately taxable.
To Read the full text of the Order CLICK HERE
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