Levy of GST on supply on supply of Free medical instrument with other goods to hospitals for a specific period

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Levy of GST on supply on supply of Free medical instrument with other goods to hospitals for a specific period

The applicant has adopted the business model of placing their own medical instruments at the premises of hospitals or laboratories and supplied the pharmaceutical products, reagents, diagnostic kits etc to be used in such equipments by executing an agreement. The applicant sought for advance ruling on the following:

(i) Whether the placement of specified medical instruments to unrelated customers like hospitals, labs, etc., for their use without any consideration, for a specific period constitute supply?

(ii) Whether such movement of goods constitutes otherwise than by way of supply under GST?

The authorized representative of the applicant was heard. It is stated that the applicant placed its own specified medical equipments to identified hospitals or laboratories by executing an agreement. The applicant placed the equipment in the premises of hospitals or laboratories without receiving any consideration. The employee of the hospitals or laboratories where the equipment is installed has the full right to use the machine during the period of contract. But the title and ownership of the instrument continues to be with the applicant. The users of the instruments only possess a non-transferable light to use the said instruments during the tenure of agreement. These medical or diagnostic equipments transferred from the warehouse located in Ahmedabad to Kerala against delivery challan.

The hospitals or laboratories at which the instrument is installed are bound to procure specified quantity of reagents, calibrators, disposals etc. from the applicant till the tenure of agreement. The price of these products is also specified in the agreement. These products are supplied against tax invoice. If the hospital fails to purchase specified minimum quantity of the products such as reagents, calibrators, disposals etc., the applicant is entitled to recover the same from the hospital, equal to the volume of deficit purchase. As the applicant has faced certain difficulties while transporting the instrument against delivery challan, this clarification was sought for.


 

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