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The supply of medicines, surgical items, implants, stents, and other consumables to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at SI No. 74 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017.

Authority for Advance Ruling — Taxability on various health care services – The applicant is a healthcare project and is a Charitable Trust registered under Section 12A of Income Tax Act, 1961. The applicant is engaged in provision of Health Care Services to both inpatients and out patients. The applicant sought an advance ruling as to whether the medicines, surgical items, implants, stents and other consumables used in the course of providing health care services to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures would be considered as “Composite Supply” of health care services under GST and consequently can exemption under Notification No.12/2017 read with Section 8(a) of GST be claimed; whether the supply of food to all the inpatients would be considered as “Composite Supply” of health care services under GST and consequently can exemption under Notification No. 12/2017 read with Section 8(a) of GST be claimed; whether ITC on common purchase of medicines and surgical items which are ultimately supplied on actual basis to inpatients and outpatients is available. Held that:- The Hon’ble Authority for Advance Ruling held that the supply of medicines, surgical items, implants, stents, and other consumables to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at SI No. 74 of Notification No. 12/2017 CTR dated 28.06.2017. The supply of food to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a component of the composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at SI No. 74 of Notification No. 12/2017 CTR dated 28.06.2017. The eligibility of credit of tax paid on the inputs and input services used for taxable as well as exempted supplies are governed by the provisions of Section 17 (2) of the Act, 2017 and Rule 42 of the Rules, 2017. The eligible input tax credit shall be calculated as per the formula prescribed in Rule 42 of the CGST Rules, 2017.
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