GST Exemption for Ayurvedic Inpatient Care: Analysis of Kerala AAR in re Ayushya Ayurvedic and Panchakarma Centre

The Kerala Authority for Advance Ruling has clarified the GST treatment of healthcare services provided by an Ayurvedic hospital, particularly distinguishing between inpatient and outpatient supplies. The ruling in In re Ayushya Ayurvedic and Panchakarma Centre (Padmanabha Pillai Sambhu) addresses whether room rent, medicines, consumables, food, and other services supplied to inpatients qualify as exempt health care services under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

This analysis recasts the ruling in a structured, practitioner-friendly form, highlighting the implications for clinical establishments, especially those providing Ayurvedic treatments.

Background of the Applicant and Operations

Nature of Establishment

  • The applicant, M/s. Ayushya Ayurvedic and Panchakarma Centre, is an Ayurvedic hospital located in Thiruvananthapuram.
  • It is registered under GST with GSTIN 32AFTPP4186J1ZU.
  • The centre is owned and run by Dr. P. Sambhu, a qualified Ayurveda practitioner.
  • The establishment provides Ayurvedic healthcare services through a recognised clinical facility.

Services Offered: Inpatient vs Outpatient

The hospital caters to both:

  1. Inpatients

    • Individuals are treated as inpatients only after:
      • Completing a formal admission process, and
      • Being allotted a room/bed in the hospital.
    • Inpatient treatment typically involves:
      • Continuous medical monitoring,
      • Administration of Ayurvedic medicines,
      • Performance of specific Ayurvedic procedures and therapies,
      • Nursing care and ancillary support services.
    • A consolidated bill is raised at discharge, covering:
      • Consultation fees,
      • Cost of medicines and consumables used during stay,
      • Room rent,
      • Charges for procedures and therapies.

  2. Outpatients

    • Patients who visit for consultation without admission.
    • They receive:
      • Consultation and diagnosis,
      • Prescription for medicines and therapies.
    • Medicines may be purchased:
      • From the hospital pharmacy, or
      • From outside pharmacies.
    • When supplied, medicines to outpatients are billed separately, not as part of a composite package.

Record Maintenance and Medical Supervision

  • The hospital maintains systematic records of:
    • Clinical findings,
    • Diagnosis,
    • Treatment plan,
    • Medicines administered.
  • Inpatients are periodically examined by doctors, and treatment is modified based on clinical response.
  • Medicines and consumables are closely integrated with the course of treatment and supervised by practitioners.

Questions Before the Authority

The application was filed under Section 97(2) of the CGST Act, specifically invoking:

  • Clause (b): Applicability of notifications, and
  • Clause (e): Determination of liability to pay tax.

Core Issue

Whether the following qualify as exempt healthcare services under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate):

  • Inpatient treatment by the Ayurvedic hospital, including:
    • Medicines and consumables,
    • Room rent,
    • Dietary food supplied as part of treatment,
    • Nursing and ancillary services; and
  • Whether medicines sold to outpatients are also covered by the same exemption.

Entry No. 74 – Notification No. 12/2017-Central Tax (Rate)

Entry No. 74 exempts:

(a) health care services by a clinical establishment, an authorised medical practitioner or para-medics;
(b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above.

The rate is Nil, with no specific conditions for the exemption itself.

Definition of “Health Care Services”

As per clause 2(zg) of Notification No. 12/2017-Central Tax (Rate):