Procurement and distribution activity of medicines or surgical equipment on behalf of the government amounts to supply

Last updated: 29 December 2022

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Quick Summary

The Andhra Pradesh Authority for Advance Ruling (AAR) has determined that the procurement and distribution of medicines and surgical equipment by a government-appointed corporation on behalf of the government constitutes a 'Supply' under the CGST Act. This ruling clarifies that even without a profit motive or value addition, such activities are subject to GST. Consequently, the corporation is not eligible for exemptions typically granted for pure services to the government.

Court :
AAR, Andhra Pradesh

Brief :
The AAR, Andhra Pradesh in M/s Andhra Pradesh Medical Services and Infrastructure Development Corporation [TS-668-AAR(AP)-2022-GST dated December 22, 2022] held that the procurement and distribution of drugs, medicines and other surgical equipment by the assessee on behalf of the Government without any value addition, and without any profit or loss, without even the intent to do business, will amount to Supply as per Section 7 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") and exemption as per Entry 3 or 3A of Notification 12/2017 Central Tax (Rate) dated June 28, 2017 ("the Services Exemption Notification") will not be applicable on it.

Citation :
S-668-AAR(AP)-2022-GST dated December 22, 2022

Daily Limit Reached