18% GST leviable on supplying, installing, testing and commissioning of oxygen pipeline system in Government Hospitals

The Chhattisgarh Authority for Advance Ruling (AAR) has determined that supplying, installing, testing, and commissioning oxygen pipeline systems in government hospitals is subject to an 18% Goods and Services Tax (GST). The AAR ruled that these services do not qualify for the GST exemption related to COVID-19 relief supplies, as the exemption was specific to COVID-related items and not general work contract services.

The AAR, Chhattisgarh in the matter of M/s Goel Medico [Advance Ruling No. STC/AAR/09/2021 dated December 17, 2021] has ruled that installation services of parts and equipment for supply of oxygen and other gases used in hospital, homes and connection of other gas operated equipment for government hospitals, attracts 18% Goods and Services Tax ("GST").

Facts

M/s Goel Medico ("the Applicant") is engaged in the activity of supply, installing, testing and commissioning of oxygen pipeline system in government hospital. The Applicant submitted that their activity being a composite supply is covered under the Services Accounting Code ("SAC") 995464 and should be exempted vide Notification No. 05/2021-Central Tax (Rate) dated June 4, 2021 ("the Impugned Notification") stipulating concessional rate of GST on Covid-19 relief supplies of goods.

Issue

Whether the activity of supplying, installing, testing and commissioning of oxygen pipeline system in government hospital, carried on by the Applicant is covered under SAC 995464 and exempted vide the Impugned Notification?

Held

The AAR, Chhattisgarh in the matter of Advance Ruling No. STC/AAR/09/2021 held as under:

• Noted that, the activity of Applicant is a supply consisting of two or more taxable supplies of goods or services or both and its combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business.
• Stated that, the activity of the Applicant includes installation services and equipment for the supply or conduct of oxygen and other gases used in hospitals, homes etc. connection of other gas operated equipments attracting 18% GST.
• Opined that, the exemption under the Impugned Notification was only on the COVID related items and not to the work contract services in which the Applicant is engaged. Therefore, the activity of Applicant is not covered under the Impugned Notification. Hence, not exempted.
• Held that, the activity of the Applicant of supplying, installing, testing and commissioning of oxygen pipeline system in government hospitals merits classification under SAC 995464 and is liable to 18% GST.