AAR Maharashtra Ruling: GST Applicability on Composite Healthcare Supplies and In-Patient Charges
The taxation of healthcare services has frequently been a subject of intricate debate within the framework of the Goods and Services Tax (GST). A significant point of contention often arises regarding the classification of various goods and services provided to admitted patients—ranging from medicines and implants to room rentals and dietary supplies. The core question remains: should these be treated as independent supplies or as a singular, bundled offering?
In a recent significant development, the Authority for Advance Ruling (AAR), Maharashtra, delivered a decisive order in the case of In re Laxmi Health Care Center & ICCU. This ruling provides crucial clarity on the taxability of charges recovered from in-patients, the concept of composite supply in a medical context, and the scope of exemptions available under the GST regime.
Background of the Case
The case was brought forward by Laxmi Health Care Center & ICCU (hereinafter referred to as the "assessee"), a partnership firm registered as a nursing home under the Maharashtra Nursing Home Registration Act, 1949. The assessee operates a medical facility staffed by professional doctors and maintains an in-house pharmacy to facilitate the supply of medicines and allied consumables.
The operational model of the assessee distinguishes between two primary categories of patients:
- In-Patients: Individuals admitted to the facility for medical treatment under the continuous supervision of nursing staff and doctors.
- Out-Patients: Individuals visiting for consultation who are not admitted to the facility.
For in-patients, the assessee provides a comprehensive range of services, including lodging, nursing care, medical testing, and the provision of medicines and consumables. Crucially, the assessee issues a single invoice to in-patients, which provides a detailed breakdown of charges such as room rent, doctor fees, laboratory tests, and pharmacy items.
The Questions Before the Authority
The assessee approached the AAR, Maharashtra, under Section 97 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), seeking a formal ruling on the following queries:
- Do the charges recovered for pathological tests, radiological tests, bed charges, medicines, and other consumables during the medical treatment of in-patients constitute a single supply of healthcare services?
- Is the assessee eligible for exemption under Entry 74 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, for these aggregated charges?