Supply of medicines, implants etc. to patients admitted to hospital is a composite supply where principal supply is healthcare services

Case Details: Authority for Advance Rulings, Kerala Malankara Orthodox Syrian Church Medical Mission Hospital, In re - [2021] 131 taxmann.com 193 (AAR - KERALA)

Judiciary and Counsel  Details

• • Sivaprasad S. and Senil A K Rajan, Member
  • P.J. Johney, CA for the Applicant.

Facts of the Case

The applicant was a hospital providing health care services with medical professionals. It was offering a package to inpatients covering treatment including all required medicines and other supplies for a consolidated amount. It filed an application of advance ruling to determine whether GST would be leviable on the value of supply of medicine, implants and other supplies issued to patients during the course of treatment.

AAR Held

The Authority for Advance Ruling observed that the applicant was offering a package to the inpatients covering the treatment including all required medicines and other supplies for a consolidated amount. In such cases the combination of goods and/or services included in the supply were naturally bundled in the ordinary course of business. Hence it would be a composite supply of which the principal supply would be health care services and the other supplies would be only incidental or ancillary to the supply of health care services.

Therefore, the supply of medicines, implants and other items to the inpatients admitted to the hospital for treatment as per the package offered by the applicant would be a composite supply where the principal supply shall be health care services falling under SAC 999311 and exempted as per entry at Sl. No. 74 of Notification No. 12/2017 – Central Tax (Rate), dated 28-6-2017.

List of Cases Referred to

• • Ernakulam Medical Centre (P.) Ltd., In re [2018] 98 taxmann.com 161/70 GST 617 (AAR – Ker.) (para 5.2)
  • Ernakulam Medical Centre (P.) Ltd., In re [2019] 103 taxmann.com 182/74 GST 49 (Mag.) (AAAR – Ker.) (para 5.2)
  • Vista Marine & Hydraulics, In re [2019] 110 taxmann.com 498/[2020] 77 GST 349 (AAR – Ker.) (para 5.5)
  • Kerala Forest Development Corpn. Ltd., In re [2019] 104 taxmann.com 42/74 GST 123 (AAR – Ker.) (para 5.5)