AAR: OPD care for substance abuse not GST exempt

Mumbai, June 13, 2023

The GST-Authority for Advance Rulings (AAR), Rajasthan, has held that treatment of outpatients suffering from substance abuse disorders does not fall within the ambit of 'healthcare services' that are exempt from GST.

Sanjeevani Psychiatric Clinic, an allopathy facility, provides counselling, medical examination and prescription of medicines by psychiatrists. It submitted to the AAR that in the treatment of substance abuse disorders, examination of a patient by a doctor is pivotal. Other elements like counselling and dispensing of medicine are an integral part of the treatment, it said. The supply of medicines constitutes 'controlled drugs' and is given by the clinic itself in exact dosage as per the psychiatrist's prescription, said the clinic. It said a patient does not have the choice to buy it from a medical store and, therefore, the medicines cannot be treated as an independent supply.

The AAR bench observed that the clinic is engaged in the supply of services (medical examination and counselling) as well as supply of goods (medicines). It noted that healthcare services are exempt from GST, and that the supply of medicines to inpatients by hospitals may be a part of the composite supply of healthcare and may not be separately taxable. However, in this case, medicines are provided by the clinic to outpatients and are not a tax-exempt composite supply, the bench said.

It also distinguished between substance abuse disorder treatment and mental health services, and held that the former is not covered by the GST exemption notification.

[The Times of India]