2026-VIL-32-AAAR
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SGST AAAR

GST – Uttarakhand AAAR - Healthcare services by a clinical establishment - Exemption under Entry 74 of Notification No. 12/2017-Central Tax (Rate) - The Appellant operated Government Urban Health and Wellness Centres and Polyclinics and was nominated as the operating agency for providing healthcare services, medicines and treatment entirely free of cost to patients through its own deployed medical professionals, with consideration paid by a Government PSU executing agency rather than directly by patients – The Authority for Advance Ruling held the services taxable on the basis that consideration flowed from the executing agency treating it as the recipient of supply rather than examining the true nature of healthcare services rendered - Whether exemption under Entry 74 can be denied merely on the basis that consideration is paid by an implementing agency rather than directly by patient or whether the essential character must be determined based on the nature and substance of activity undertaken - HELD - The exemption available under Entry 74 for healthcare services by a clinical establishment cannot be denied merely because consideration is paid by an implementing or executing agency rather than directly by the patient as determination of taxability and classification of supply cannot rest solely upon the identity of the payer but must be based on the true nature, substance and objective of the contract and the activities actually performed - Where services performed as an integral part of delivery of healthcare under a Government health programme involve diagnosis, treatment and care for illness by medical professionals through a clinical establishment, the services retain their character as healthcare services regardless of whether consideration is paid by the Government, insurers, employers or nodal agencies. The lower Authority erred in placing undue emphasis on the contractual payment structure and relationship with the executing agency while overlooking the actual activities undertaken at the centres - Applying the doctrine that a composite transaction derives its GST character from its predominant or principal element and the principle that exemption provisions must be interpreted to give full effect to their beneficial purpose with any ambiguity resolved in favour of exemption, the services supplied constitute healthcare services classifiable as exempt under Entry 74 - The impugned Advance Ruling order is set aside and the services supplied in relation to operation and management of Government Urban Health and Wellness Centres and Polyclinics are held to be exempt from GST under Entry 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 – The appeal is allowed
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