In-Patient Medicines Exempt; Out-Patient Supplies Taxable | AAR
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Case Details: Rajarajeswari Hospitals (P.) Ltd., In re [2026] 183 taxmann.com 710 (AAR-TAMILNADU)
Judiciary and Counsel Details
- C. Thiyagarajan & B. Suseel Kumar, Member
Facts of the Case
The applicant, a multi-speciality hospital engaged in providing comprehensive healthcare services, sought an advance ruling on whether the supply of medicines, consumables, implants, and other medical items to in-patients and out-patients would qualify as an exempt supply under healthcare services. It was submitted that supply of such items to in-patients during the course of treatment forms part of a composite supply wherein healthcare service is the principal supply, and hence should be exempt. It was further submitted that such supplies are naturally bundled and provided in conjunction with treatment until discharge. The matter was accordingly placed before the Authority for Advance Ruling (AAR).
AAR Held
The AAR held that the supply of medicines, consumables, implants, and other medical items to in-patients constitutes a composite supply of healthcare services, wherein healthcare service is the principal supply, and therefore qualifies for exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017 read with Section 11 of the CGST Act. It was observed that such supplies are naturally bundled and integral to treatment provided during hospitalisation. For outpatients, the supply of medicines and related items is not a composite supply since patients can procure them independently; hence, such supplies are taxable, except consultation services, which remain exempt as healthcare services.
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