If the output services provided by the assessee are exempt under the GST Act, then whether the input services acquired in order to complete the execution of output services should be liable to GST or not.

PJ/Case Law/2016-2017/3453

Case:TATHAGAT HEALTH CARE CENTRE LLP
Citation:2018 (13) G.S.T.L. 255 (A.A.R. - GST)
Issue:If the output services provided by the assessee are exempt under the GST Act, then whether the input services acquired in order to complete the execution of output services should be liable to GST or not.
Brief Facts:The issues involved in the appeals are filed by M/s. TATHAGAT HEALTH CARE CENTRE LLP(hereinafter referred to as the assessee). The assessee Dr. Mahantesh Charanthimath (Chairman and Managing Director) is running a hospital - M/s. Tathagat Heart Care Centre LLP, having registered address at # 12/2, 4th Floor, K.M.P. House, Yamunabai Road, Madhavanagar, Bangalore - 560 001 and correspondence address at # 31/32, ‘A’ Block, 1st Floor, Crescent Road, Bangalore - 560 001, are registered taxable person, holding GSTIN Number 29AAKFT1751D1Z5, have filed an application, on 27-1-2018, for advance ruling under Section 97 of CGST Act, 2017, KGST Act, 2017 & IGST Act, 2017 read with Rule 104 of CGST Rules, 2017 & KGST Rules, 2017, in form GST ARA-01. They enclosed copy of challan for Rs. 10,000/- bearing CIN Number PUNB18012900027179, dated 5-1-2018 towards the fee for advance ruling and hence the same is admitted.The applicant is a cardiology specialized hospital running on a premises taken on lease. They are providing cardiology related, life saving, health care services to the patients and the said output services are exempt from GST. They have taken premises of one floor on rental basis from existing building of Mallige Hospital for Heartcare Services only.The applicant sought advance ruling on the question/issue that “Whether GST is leviable on the rent payable by a Hospital, catering life saving services?”

Appellant’s contention: Dr. Mahantesh Charanthimath, Chairman and Managing Director of the applicant concern appeared and filed written submissions. The assessee mentioned that the business enterprise is a Cardiology specialized hospital which is catering to life saving services and the hospital has taken the premises on lease and running exclusive heart care centre. The assessee further explained that during the service tax regime, the rent, on the room service provided to the heart care patients undergoing treatment, was exempt from service tax under Notification No. 25/2012-S.T.,dated 20-6-2012. Although in the GST regime, hospital services are all exempt from GST. Hence the hospital does not have any output service tax to set off against the input tax arising from payment of GST on rent. Therefore, the applicant wants to know whether the rent paid or payable by the hospital is exempt from GST.

Reasoning of Judgement: The Authority for Advance Ruling stated that it has considered the submissions made by the applicant in their application for advance ruling as well as the written submissions made by Dr. Mahantesh during the personal hearing. It has also considered the question/issue on which advance ruling is sought by the applicant, relevant facts having bearing on the question/issue raised, the applicant’s understanding/interpretation of law in respect of the issue.The applicant sought advance ruling on the question that whether GST is leviable on the amount of rent paid/payable by them towards leasing of the premises by the hospital or not, which clearly falls under the purview/jurisdiction of this authority under Section 97(2)(e) of the CGST Act, 2017.Renting in relation to immovable property is defined in 2(zz) of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as -
(zz) ”Renting in relation to immovable property” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;
In the current case the applicant has taken the premises on lease and running exclusive heart care centre and providing health care services on commercial basis. The impugned service of Rental or leasing services involving own or leased non-residential property is classified under the Heading (SAC) 997212 and is taxable under GST. Further no specific exemption is available under any notification for the time being in force for the said service. Also there is no provision available in the Act which allows exemption on an input service if the output service provided by the taxable person is exempt.

Decision:GST must be leviable on the rent paid/payable for premises, taken on lease by the applicant.
Comment: The gist of this case is that the assessee has been denied for the benefit of exemption as for the tax paid on the input servicesbecause theproperty taken by the assessee on lease is for commercial purposes. However if the same property was taken on lease for residential purposes then it doesn’t attract any law as for charging GST.
Prepared by: Adit Gupta

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PJ/Case Law/2016-2017/3453

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