GST is not applicable on amount towards unparalled insurance scheme

M/S. KASTURBA HEALTH SOCIETY
AAA-MAHARASHTRA
DATED: 10TH DECEMBER,2022

The Maharashtra Appellate Authority of Advance Ruling (AAAR)- has ruled that the GST is not applicable on charges collected under an unparalleled health scheme.

BRIEF FACTS

• The appellant operates a "medical college" called "Mahatma Gandhi Institute of Medical Science" in Village Sewagram, Dist. Wardha, which is linked toa clinical laboratory called "Kasturba Hospital."
• The Appellant Society named its educational unit "Mahatma Gandhi Institute of Medical Science" (MGIMS), followed by naming its clinical laboratory “ Kasturaba Hospital”.
• The appellant/assessee society got registered voluntarily under the GST Act. It had not filed any returns till March 2019, since none of the activities was in the nature of "business" so as to fall within the meaning of "supply" as provided in Section 2(87) of the GST Act, and hence it believed that it was not obliged to comply with the provisions of the GST Act.
• The appellant's Unparalleled Health Insurance Scheme, in which the nominal charges received to provide the benefit of reduced rates for disease investigations and treatment may be treated as an advance towards the future provision of health care services to scheme subscribers.
• The applicant sought an advance ruling on the issue of whether the nominal charges received from patients towards an "unparalleled health insurance scheme”, to retain their flow at one end for the purpose of imparting medical education and, as a result, provide them the benefit of concessional rates for investigations and treatment at the other end would fall within the meaning of "supply" and be eligible for exemption under the category of "education and /or health care services.”

APPLICABLE PROVISIONS OF GST ACT, 2017

• Thus, the term "Supply", under the CGST Act, has got very wide connotation due to the presence of the clause "all forms of supply of goods or services or both'".

For any transaction to be qualified as "supply" under CGST Act, 2017, the said transaction is required to satisfy the following pre-requisites:

• that such supply should be made by a person for a consideration;
• that such supply should be made in the course or furtherance of business:

As it is an admitted and undisputed fact that the Appellant-Society are providing the education and health care services through its two arms, namely, MGIMS and Kasturba Hospital, respectively. Further, there is also no doubt about the Appellant-Society being a person in term of its definition provided under section 2(84) of the CGST Act, 2017, which inter alia includes the society.

Moreover, it is also evident that the said activities are being performed by the Appellant-Society in the course of their business as the said activities comprising imparting of medical education to the students to address the shortage of doctors in rural India, and providing the health care services to the poor rural and urban people are the sole objectives of the Appellant-Society. Thus, it is opined that the activities of the Appellant can be rightly construed as supply in term of section 7(1)(a) of the CGST Act, 2017

• it is clear that activities of imparting medical education to the students will squarely fit under entry at SI No. 66 of the Exemption Notification No. 12/2017 CT(Rate) dated 28.06.2017 as follows;

Further, the definition of the term "educational institution" is provided under clause section of the (y) of the definition aforesaid exemption notification, which reads as under:

"educational institution" means an institution providing services by way of,-

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force:

• As the services of medical education provided by the Appellant-Society is Maharashtra University of Health Sciences, recognized by the Nashik and Nagpur University, MGIMS, an establishment of the Appellant-Society, falls under the category of "educational institution" as defined under the GST law, and accordingly, it is held that the medical education services provided by the Appellant to the students will attract nil rate of GST as per the aforesaid entry 66, ibid.
• Further the second activities of the health care services provided by the establishment, Kasturba Hospital, will Appellant-Society through its squarely fit under the entry at SI. No. 74 of the exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, the relevant entry of which reads as under:

• Further the definition of the term "health care services" is provided under clause section of the aforesaid (zg) of the definition exemption notification, which reads as under;

(zg)health care services means any service by way of diagnosis or treatment or care ilness, for injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

• Since the Appellant-Society, through its establishment Kasturba Hospitalare engaged in providing Services by way of diagnosis or treatment or care of the patients, hence, their services can be rightly Termed as "health care services", and accordingly, it is held that the said services will be exempt from the payment of GST in term of the entry at SI. No. 74, ibid.

THE AAAR HELD

• The fees and other charges received from students and recoupment charges received from patients would constitute as a consideration for "outward supply" as defined in section 2 (83) of the CGST Act, 2017 and the supply of educational services or health care services, against which both these charges are collected by the Applicant, are exempted supplies in terms of the entries at SI. No. 66 and Sl. No. 74 of the Notification No. 12/2017-C.T. (R) dated 28.06.2017.
• The charges collected under the "Unparallel Health Insurance Scheme are to be considered as advance towards the provision of the health care services to the subscribers of this scheme, and accordingly, any amount collected towards this scheme will not be subjected to levy of GST in terms of the entry at SI. No. 74 of the exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.