Andhra Pradesh’s Authority for Advance Ruling has said that the administration of Covid-19 vaccine by Hospitals is taxable at 5 per cent, denying exemption as ‘healthcare’ services.
Ongole (Andhra Pradesh) based Krishna Institute of Medical Sciences was given permission to administer Covid-19 vaccine. It approached AAR with three queries: whether the administering of vaccination by hospitals is the supply of Good or Supply of Service, whether the administering of vaccine by clinical establishments (Hospitals) qualify as ‘Health care services” and whether administering of Covid-19 vaccination by clinical establishment is exempt under GST Act.
AAR observed that there are two activities in the vaccination process. One is the sale of vaccines, and the second is their administration. While the first activity is the supply of goods, the second one is the supply of services. “When it comes to administering of the vaccine by hospitals, it involves a combination of two supplies, which are naturally bundled, i.e, ‘supply of vaccine’ and the ‘service component’ followed by way of administering the same. It is moreover, in the nature of Composite Supply,” it said in a recent ruling.
Under the composite supply, two or more supplies are naturally bundled and supplied in conjunction with each other in the ordinary course of business and out of them one is called principal supply. The rate of GST of the principal supply will be applied to the entire supply. Since vaccines attract GST at the rate of 5 per cent, it will be the same for vaccine administrationby hospitals.
On the second issue, AAR said that there is no doubt that the applicant qualifies to be a clinical establishment but, the supply transaction is predominantly of sale of goods and not the service component of healthcare. It has been settled by various Advance Ruling Authorities that inpatient services are covered under the healthcare services extended by the clinical establishments, which are exempt under GST. “By no stretch of imagination, the receipt of vaccine can be considered as inpatient services rendered by the hospitals in this regard,” it said.