Order Date – 29 January 2024

Facts –

• The Applicant, M/s Spandana Pharma, is engaged in the activity of providing health care services to patients suffering from psychic disorder, substance use disorder, Neurology etc.. The applicant also runs a hospital in the name of Spandana Pharma.

Issue –

• Whether the supply of medicines, drugs and consumables used in the course of providing health care services to in-patients would be considered as “Composite Supply”?

Order –

• The AAR observed that the Applicant is a hospital hence, the same is covered under 'clinical establishment' and since the hospital is providing treatment to inpatients suffering from psychic disorder, substance use disorder, Neurology etc the same is covered under “health care services”. 
• Hence the room charges, medicines, consumables and food supplied in the course of providing treatment to the patients admitted in the hospital (in-patient) are undoubtedly naturally bundled in the ordinary course of business and the principal supply is health care service which is the predominant element of the composite supply.
• Further, it is clear that the entire amount charged by the hospital from the patients including the retention money and the fee/payments made to the doctors etc. is towards the healthcare services provided by the hospitals to the patients and is exempt. However, it was held that the Applicant is providing practical training to nursing students and psychologists and hence the same is not covered under healthcare services.