GST on supply of medicines and consumables to in-patients by
hospital pharmacy
Summary of
Advance Ruling:
The applicant sought an
advance ruling to determine whether the supply of medicines and consumables by
its in-house pharmacy to in-patients should be considered part of the
exempt healthcare services, or treated as separate taxable supplies
under GST.
The Authority held that supply
of medicines and consumables used in the course of providing healthcare
services to in-patients is a composite supply and forms an integral
part of the in-patient healthcare service, which is exempt under GST
as per Notification No. 12/2017-Central Tax (Rate) and corresponding State
Notification.
Ruling Number: Order No.
52/AAR/2024
Date of Ruling: 31 May
2024
Ruling Authority: Tamil
Nadu Authority for Advance Ruling (TN-AAR)
Applicant: Maha Critical
Speciality Division
Question
Raised in the Ruling:
Whether the supply of
medicines and consumables to in-patients during treatment till discharge by
the pharmacy unit of the applicant is to be considered as part of composite
supply of healthcare services and thus exempt under GST, or
treated as separate taxable supply.
Relevant
Sections/Notifications:
- Section 2(30)
of CGST Act, 2017 – Composite Supply
- Section 2(102)
– Definition of services
- Para 2(zg)
of Notification No. 12/2017-CT (Rate), dated 28.06.2017
- Sl. No. 74 of Notification No.
12/2017-CT (Rate)
- Circular No. 32/06/2018-GST dated
12.02.2018
Submissions
by the Applicant:
- The applicant is a healthcare
provider under the banner of “Maha Critical Speciality Division”.
- The pharmacy attached to the hospital
dispenses medicines and consumables only to in-patients based on the
doctor’s prescription.
- These are essential for treatment and
cannot be separated from the treatment process.
- The charges for medicines, room rent,
diagnostics, and doctor consultations are part of a single consolidated
bill raised by the hospital.
- It was submitted that this bundled
supply is a composite supply with principal supply being healthcare,
hence exempt.
Discussion
and Findings by Authority:
- The Authority distinguished between in-patient
and out-patient services:
- Out-patients
are not mandatorily required to purchase medicines from the hospital
pharmacy and can opt to buy externally.
- In-patients,
however, receive all care including medicines internally, which is
critical for timely treatment.
- The pharmacy services for in-patients
are inherently linked with the healthcare services provided and not
independent supplies.
- Circular No. 32/06/2018-GST, para
5(3), also clarifies that items like food to in-patients are part of
composite healthcare supply and exempt.
- Similarly, medicines and
consumables to in-patients are also part of the composite
healthcare supply.
Answer to
the Question:
Yes. Supply of
medicines and consumables to in-patients by the pharmacy unit of the
applicant is a composite supply of healthcare services, and thus exempt
from GST under Sl. No. 74 of Notification No. 12/2017-CT (Rate) and
corresponding State notification.
Conclusion:
The Authority held that
the supply of medicines and consumables to in-patients during hospitalization
is an exempt composite supply forming part of the in-patient healthcare
service. Therefore, no GST is applicable on such supplies when made by
the hospital pharmacy as part of the treatment provided till discharge.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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