In-Patient Medicine Supply Exempt as Part of Health Care Services | AAR

Case Details: Believers Church India, In re - [2025] 176 taxmann.com 379 (AAR-KERALA)

Judiciary and Counsel Details

• Jomy Jacob IRS & Mansur M.I., Member
• Tony C. Kallukalam, CA for the Applicant.

Facts of the Case

The Applicant, a public religious and charitable trust engaged in rendering medical and educational services through its multi-specialty hospital and affiliated institutions, issued medicines, implants, and other supplies to in-patients during the course of their treatment. The Applicant contended that such supplies formed part of a composite supply of health care services and were exempt from GST. The Applicant relied upon Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017, which exempts health care services classified under Heading No. 9993. The Applicant further submitted that the exemption applied irrespective of whether the treatment was charged on a full package basis, partial package basis, or without any package, and even if the cost of medicines constituted a major share of the treatment expenses, provided the principal supply remained health care services. The matter was accordingly placed before the Authority for Advance Ruling (AAR), Kerala.

AAR Held

The AAR Kerala held that in the case of in-patients, the supply of medicines, implants, and other supplies issued during the course of treatment constitutes a composite supply of health care services. The AAR reasoned that the principal supply in such cases is the health care service itself, and all ancillary supplies naturally bundled with it are also covered under the exemption provided by Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017. The AAR clarified that the exemption remains applicable regardless of the method of billing, whether on a full package, partial package, or itemized basis, and is unaffected by the proportion of medicine costs in the overall treatment charges.

List of Cases Reviewed

• Ernakulam Medical Centre (P.) Ltd., In re [2019] 103 taxmann.com 182/74 GST 49/23 GSTL 418 (AAAR-KERALA) (para 7.4)
• Baby Memorial Hospital Ltd., In re [2019] 110 taxmann.com 514/[2020] 80 GST 342/32 GSTL 59 (AAR – KERALA) (para 7.4)
• ST. Thomas Hospital, In re [2021] 129 taxmann.com 246/87 GST 367/52 GSTL 474 (AAR – KERALA) (para 7.4)
• CMC Vellore Association, In re [2020] 117 taxmann.com 863/39 GSTL 330 (AAR – ANDHRA PRADESH) (para 7.4). followed

List of Cases Referred to

• Ernakulam Medical Centre (P.) Ltd., In re [2018] 98 taxmann.com 161/70 GST 617/18 GSTL 142 (AAR – KERALA) (para 4.1)
• Ernakulam Medical Centre (P.) Ltd., In re [2019] 103 taxmann.com 182/74 GST 49/23 GSTL 418 (AAAR-KERALA) (para 4.1)
• Vista Marine & Hydraulics, In re [2019] 110 taxmann.com 498/[2020] 77 GST 349/[2019] 30 GSTL 671 (AAR – KERALA) (para 4.2)
• Kerala Forest Development Corpn. Ltd. In re [2019] 104 taxmann.com 42/74 GST 123/24 GSTL 101 (AAR – KERALA) (para 4.2)
• Baby Memorial Hospital Ltd., In re [2019] 110 taxmann.com 514/[2020] 80 GST 342/32 GSTL 59 (AAR – KERALA) (para 7.4)
• ST. Thomas Hospital, In re [2021] 129 taxmann.com 246/87 GST 367/52 GSTL 474 (AAR – KERALA) (para 7.4)
• CMC Vellore Association, In re [2020] 117 taxmann.com 863/39 GSTL 330 (AAR – ANDHRA PRADESH) (para 7.4).