The Gujarat Appellate Authority for Advance Ruling (AAAR) in reference to ‘Healthcare Services’ has confirmed that a health-related service supplied by a clinical establishment irrespective of whether provided inside or outside a clinical institution is exempt from GST; also, when provided to its organization staff.
BMPL a speciality hospital running under the brand name “Sunshine Global Hospitals” approached the Gujarat Authority for Advance Ruling (AAR) to obtain clarity on whether the supply of medicines, surgical items, implants, consumables, and other allied services & items provided by its hospital through their in-house pharmacy, as well as food, room rent, other services to the in-patients, is part of composite supply of healthcare treatment exempted from levy of GST.
The query further sought clarification as to whether the supply of operational health checkup (OHC) services by the hospital i.e., nursing staff, Doctors, Paramedical staff on the hospital’s payroll, providing health check-up services, ambulance facilities, and allied medical services to hospital employees and also the camps conducted for health check-ups outside the hospitals, will qualify for exemption under the scope of Health Care service.
The AAR on examining the relevant sections and rules pronounced that the supply of services to in-patients was part of the healthcare services defined in the exemption notification. Hence exempted from the levy of GST. Regarding the applicability of taxes for OHC services, the AAR classified it as ‘Human Health and Social Care Services and confirmed a tax rate @ 18% (CGST+SGST).
Consequently, BMPL preferred an appeal before the Gujarat Appellate Authority for Advance Ruling (AAAR).
Submission made by the Applicant
BMPL submitted that OHC services are offered by their Nursing staff, Doctors and Paramedical staff by way of health check-ups in cases of medical emergencies and medical treatment required by its employees. It was further submitted that the major goal of service was to provide timely health check-ups, medical treatments, and other allied medical services to the organization’s employees as and when needed.
BMPL referred to the scheme of tax under the erstwhile Service Tax regime and places reliance on Notification No.30/2011 – Service Tax dated 25/04/2011, which fully exempted the services provided or to be provided by any hospital, nursing home or multi-speciality clinic to an employee of a business entity or to a person covered by a health insurance scheme subject to certain conditions.
Observations by AAAR
The AAAR observed that the definition of “health care services” as given under the exemption notification included diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicines in India and admitted that the lower authority had erred in holding that Health Care Services do not include the services of Occupational Health Check-ups or preventive care.
AAAR confirmed that the activity of providing operational health checkup services by BMPL to its employees and also the camps conducted for health check-ups outside the hospitals qualifies as Health Care services and are exempted from the levy of GST.
The above ruling clarifies the services which come under the purview of healthcare services. The Ruling will have persuasive value on Clinical establishments supporting rural healthcare by way of medical camps and will encourage employers in the Health Care sector to take steps to improve worker health and safety.