A form of treatment called “Phytotherapy” to cure osteoarthritis and disorders of similar nature, seeks a ruling on whether the above service is exempted under serial no 74 of the Notification No 12/2017 Central Tax (Rate) dated 28/06/2017 (State Notification No. 1136-FT dated 28/06/2017), as amended (hereinafter collectively called “Exemption Notification”).

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In re OPTM Health Care Private Limited (GST AAR West Bengal)

Issue on which ruling is taken:

A form of treatment called “Phytotherapy” to cure osteoarthritis and disorders of similar nature, seeks a ruling on whether the above service is exempted under serial no 74 of the Notification No 12/2017 Central Tax (Rate) dated 28/06/2017 (State Notification No. 1136-FT dated 28/06/2017), as amended (hereinafter collectively called “Exemption Notification”). lt also wants to know whether it needs to stay registered under the GST Act.

Facts of the case:

  • The applicant has invented these medicines that have been approved by the Drug Control Department under the category of Ayurvedic Medicine. Supplemented by physiotherapy, the medication is used for the treatment of osteoarthritis and disorders of similar nature.
  • Applicant further submit that it is making a composite supply with health care service as the principal supply. Supply of medicine is ancillary to the principal supply. ln its clinics the patients suffering from osteoarthritis and disorders of similar nature are being treated by qualified doctors applying the unique phytotherapeutic methods. lt is registered as a clinical establishment under the West Bengal Clinical Establishments (Registration, Regulation and Transparency) Act, 2017 (hereinafter the CE Act). lts composite supply of health care service from a clinical establishment should, therefore, be exempt under Entry No. 74 of the Exemption Notification.
  • According to exemption notification, clinical establishment is defined as a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in lndia, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. Apart from Allopathy, the recognised systems of medicines in lndia consist of Ayurveda, Siddha, Unani and Homeopathy and therapies such as Yoga and Naturopathy.
  • Applicant further submits that, he is running a licensed physiotherapy centre, use of ayurvedic medicines in the protocol of treatment shows, according to the Applicant, that it actually provides ayurvedic treatment and should, therefore, be eligible for exemption under the above entry of the Exemption Notification

Findings and conclusion of the Ruling Authority :

  • Officers refer Entry No. 74 (a) of the Exemption Notification, Para No. 2 (zg) of the said notification defines health care services. Also they refer the definition of “Clinical establishment”, within the meaning under Para No. 2(s) of the Exemption Notification.
  • The term ‘recognised system of medicine’ is not defined in the GST Act or notifications issued thereunder. lt is defined under section 2 (o) of the lt means Allopathy, Yoga, Naturopathy, Ayurveda, Homoeopathy, Siddha and Unani Systems of medicines or any other system of medicine recognised by the State Government.
  • The Applicant claims that it administers certain plant-based medications for the treatment of osteoarthritis and disorders of similar nature. The medicaments are not supplied standalone, but ancillary to the supply of health care service. lt is a composite supply of health care service called ‘phytotherapy’. Applicant further submits that ‘phytotherapy’ is a treatment based on the ayurvedic system of medicine
  • Bundled supplies of two or more taxable goods or services, one of which is identifiable as principal supply within the meaning of section 2 (90) of the GST Act, is defined as ‘composite supply’ under section 2 (30) of the said Act if they are naturally bundled and supplied in conjunction with one another in the ordinary course of business. All other bundled supplies are clubbed underthe term ‘mixed supply.’
  • lt appears from the submissions of the Applicant that its ‘phytotherapy’ combines application of plant-based preparations with services having some therapeutic value. lf the preparations applied are manufactured exclusively in accordance with the formulae described in any authoritative book of Ayurveda specified in the First Schedule of the Drugs and Cosmetics Act, 1940, for use in the diagnose, treatment, mitigation or prevention of specific disease or disorder, they can be called ayurvedic medicine [refer to section 3 (9) of Drugs and Cosmetics Act, 19401 and the treatment provided may be considered a recognised system of medicine in lndia.
  • The Applicant’s submissions, however, do not clarify or claim that its plant-based preparations are manufactured exclusively in accordance with the formulae described in any authoritative book of Ayurveda specified in the First Schedule of the Drugs and Cosmetics Act, 1940.
  • The Applicant has also not clarified whether these persons possess the medical qualification included in the Second Schedule of the lndian Medicine Central Council Act, 1970 and registered underthe said Act as medical practitioners.
  • Under the circumstances, this Authority cannot accept the Applicant’s claim that it is a clinical establishment offering treatment in the recognised ayurvedic system of medicine. lts supplies are not, therefore, health care service by a clinical establishment, as defined under Para No. 2(s) of the Exemption Notification. Applicant’s supply is, therefore, not exempt under Entry No. 74 of the Exemption Notification. lt needs to remain registered, as its liability to pay GST does not cease.

Conclusion

The Applicant’s supply is not exempt under Entry No. 74 of lhe Exemption Notification. lt, therefore, needs to remain registered, as its liability to pay GST does not cease.

 

 

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