Whether the type of establishment under which the applicant carries his business is a clinical establishment; if yes, then it is classified as exempted service.

PJ/Case Law/2018-2019/3531

Case: M/s J C Genetic India Private Limited.

Citation: Order No. 01/2019 dated 21.01.2019

Issue: Whether the type of establishment under which the applicant carries his business is a clinical establishment; if yes, then it is classified as exempted service.

Brief Facts: The applicant states to be a healthcare company, engaged in the diagnosis pre and post- counseling therapy and prevention of disease by providing necessary sophisticated tests. Further, the applicant also provides genomic information, which helps physicians and wellness professionals in curing diseases and improving human health.

Appellant’s Contention: The applicant, in his written representation states that he is involved in providing healthcare services. The services provided by the applicant are as follows- Genetic testing services for prevention, Management and precision diagnosis services used in detecting origin of cancer; services in nature of genetic testing, cardiology, nephrology etc.
The applicant also states that they have collaboration with diagnostic companies, accredited by NABL and DSIR certified to provide advance genetic tests that help in prevention and management of cancer and various health and metabolic disorders.

Respondent’s Contention and reasoning: The authority pointed out that the appellant has categorically mentioned about their collaboration with companies, which in turn are accredited by NABL and DSIR. However the appellant has failed to provide any documents that may prove to be of evidence to support the same said accreditation. Moreover mere involvement of the appellant in sophisticated testing would not be a sufficient criterion to qualify his establishment as a clinical establishment. Further more, since the applicant requires other company’s clear reports/ opinions on the tests it performs, it proves that the applicant are working as sub contractors to the said accredited company by NABL and not as an independent clinical establishment. Thereby it has been concluded that the applicant is not providing healthcare services and is not running its activities in the nature of a clinical establishment.

Decision: The Authority for Advance Rulings, Madhya Pradesh held that the Applicant is functioning as a sub-contractor to the diagnostic companies and not as a ‘Clinical Establishment’ and, hence, healthcare services provided by it, are not exempt as per the exemption notification under GST.

Comment: It should be noted that it is nowhere mentioned that a clinical establishment cannot outsource some of its service. And even if it does so, it would not amount to change in its form as a clinical establishment. As per the definition of Clinical establishment, according to Clause 2 (s) of Notification no. 12 Central Tax ( Rate) dated 28^th June 2017, the said healthcare services can be provided by the establishment as an independent entity or even as a part of an other establishment. The services that are provided by the applicant are covered under the definition of Healthcare Services as per Clause 2 (zg) of the notification no. 12/2017 Central Tax (Rate) dated 28^th June 2017.
While delivering the decision, the authority should consider that the core work of clinical establishment is to provide facilities requiring diagnosis or treatment or care for illness, injury etc., and not that whether it is performed on his own or outsourced from third party.

Prepared by: Adit Gupta

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PJ/Case Law/2018-2019/3531

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