The Tamil Nadu Authority of Advance Ruling (AAR) has held that the ‘consultation’, ‘supply of medicine’ by hospital to out-patients is not a ‘composite supply’.
The bench of I.R.S. C.Thiyagarajan and B.Suseel Kumar has observed that the Consultation service provided to out-patients are exempted from GST. However, the medicines supplied to out-patients attract payment of GST.
The applicant M/s . Theni Nattathi Kshatriya Kula Hindu Nadargal Uravinmurai Dharma Fund, is a Charitable Trust registered in Tamil Nadu, dedicated to serving society through their hospital. The applicant’s hospital provides essential healthcare services to both inpatients and outpatients, and they operate separate pharmacies within the hospital premises for their convenience.
The applicant sought the advance ruling on the issue whether Consultation service and medicines supplied to out-patients attracts GST?
Yet another issue raised was whether the consultation and supply of medicine to outpatients can be treated as composite supply?
The AAR noted that while providing health care related services to out-patients, medicines and consumables which are only of advisory nature, are prescribed to them by the Doctor who attends to the patient. It is also to be noted here that the pharmacy attached to the hospital/clinical establishment is an outlet to dispense medicines and consumables based on prescriptions, but in the case of out-patients, the said patients are not mandated to procure them only from the pharmacy attached to the hospital, and they are at liberty to procure the same from the hospital or other pharmacies of their choice.
Whereas, the AAR noted that in the case of in-patients, medicines and consumables are necessitated to be issued by the hospital’s pharmacy to ensure timely and proper treatment, and becomes an integral part of the healthcare service provided together to the in-patients.
The AAR stated that the clarification provided as in para 5(3) of the Circular No.32/06/2018-GST, dated 12.02.2018, addresses the issue by clarifying that the food supplied to the in-patients as advised by the doctor/nutritionist is part of the composite supply of healthcare and not separately taxable, whereas the other supplies of food to patients who are not admitted are taxable. The same analogy applies to the instant case of dispensing medicines to out-patients as well.
The AAR opined that the supply of Medicines in the course of providing health care services to out-patients visiting the hospital for diagnosis or medical treatment or follow up procedures cannot be considered as part of a composite supply involving supply of health care service, as they are different supplies independent of each other. Therefore except for the exempted healthcare service, all other supplies including medicines, consumables, food etc., in the case of supplies to out-patients are taxable to GST.
Ruling Details
Applicant’s Name: Theni Nattathi Kshatriya Kula Hindu Nadargal Uravinmurai Dharma Fund
Ruling Date: 02.09.2025
