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The placement of specified medical instruments to unrelated customers like hospitals, labs etc., for their use without any consideration, against an agreement containing minimum purchase obligation of products like reagents, calibrators, disposals etc., for a specific period constitute composite supply.

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Authority for Advance Ruling — Taxability on placement of specified Medical instruments to Hospital/Labs – The applicant is engaged in the sale of pharmaceutical products, diagnostic kits etc and has adopted the business model of placing their own medical instruments at the premises of unrelated hospitals or laboratories and supplied the pharmaceutical products, reagents, diagnostic kits etc., to be used in such equipments by executing an agreement. The applicant sought an application for advance ruling as to whether the placement of specified medical instruments to unrelated customers like hospitals, labs etc., for their use without any consideration, for a specific period constitute supply and whether such movement of goods constitutes otherwise than by way of supply under GST. The AAR held that under the provisions of Section 8 of the Act, entire transaction is liable to GST under Sl No. 17 (iii) - Heading 9973 - Transfer of the right to use any goods for any purpose (whether for a specified period) for cash, deferred payment or other consideration. Aggrieved by the said ruling, the appellant preferred appeal before the Appellate Authority and submitted as to (i) whether the AAR had gone beyond the questions raised by the applicant (ii) in that case, the issue be remanded back to the said authority (iii) if the original authority had passed a proper order, is there sufficient new material before this appellate authority to set aside the original order.
Held that:- The Hon’ble Appellate Authority for Advance Ruling dismissed the appeal and held that the original order is legally correct and proper and reiterated the ruling of the AAR.—Abbott Healthcare Private Limited, In Re… [2018] 07 TAXLOK.COM 097 (AAAR-Kerala)