PSU Wellness Centre Services Not Exempt as Healthcare | AAR

Case Details: Indovation Healthcare LLP, In re - [2026] 186 taxmann.com 39 (AAR-UTTARAKHAND)

Judiciary and Counsel Details

• Anurag Mishra & Vivekanand Maurya, Member
• Dharmendra Chaudhary, Designated Partner for the Applicant.

Facts of the Case

The applicant was engaged in operating and managing Government Urban Health & Wellness Centres (UHWCs) and Polyclinics in Uttarakhand under agreements with a PSU, which had been appointed by the State Government as the executing agency for the healthcare project. The applicant contended that the services provided through the centres constituted exempt healthcare services by a clinical establishment. Alternatively, it was argued that the activities qualified as exempt pure services provided in relation to public health functions entrusted to municipalities under Article 243W of the Constitution. The applicant also claimed that the amounts received were Government grant-in-aid and not consideration liable to GST. Accordingly, an advance ruling was sought on the applicability of GST exemption.

AAR Held

The Authority for Advance Ruling held that the consideration received by the applicant was for operational, managerial and administrative services supplied to the PSU under a contractual arrangement and not for healthcare services rendered directly to patients. It was observed that the payments were linked to operation and management of the centres and not to diagnosis or treatment of patients. The Authority further held that the applicant acted as a sub-contractor to the PSU and did not provide services directly to the Government or local authority. Since the activities involved infrastructure, manpower and operational support, the supply was not a pure service eligible for exemption. It was also held that the payments received from the PSU arose from contractual obligations and could not be treated as Government grants or subsidies. Accordingly, the exemptions claimed under Entries 74 and 3 of Notification No. 12/2017-CT (Rate) were denied and the services were held liable to GST.

List of Cases Referred to

• Commissioner of Customs (Import) v. Dilip Kumar & Company [2018] 95 taxmann.com 327/69 GST 239 (SC) (para 8.2.3)
• Novopan India Ltd. v. CCE & Customs 1994 taxmann.com 231 (SC) (para 8.2.3).