Naturopathy is subject to GST when combined with an accommodation service
Facts and Issue of the Case
The applicant is registered with the GSTIN having Registration No.05AAGFC3157J1ZJ and seek advance ruling on the following question: “Whether “The -Centre” of the applicant is eligible to get the benefit of entry No.74 of exemption Notification No.: 2/2037-Central Tax (Rate) dated 28/06/2017, classified under SAC Heading 9993″.
The applicant is ruining a Resort namely “Aahana- The Corbett wilderness” and also runs an independent unit namely “Aahana Naturopathy Centre” (also referred to as “the Centre”), wherein they are providing various services in the form of Nature cure (drugless cure) & Yoga therapies (Health care services), which are not restricted only to the in-house customers, but also open to all.
The applicant’s unit is registered under the Clinical establishment Act, 2010 as “Naturopathy Centre”, and that the said health care services (Naturopathy) provided by “The Centre” are exempt from the levy of GST under Notification No. 12/2017- Central Tax (Rate) under Entry 74 (SAC Heading 9993), which pertains to Services by way of health care services by a clinical establishment, an authorized medical practitioner or para-medics.
The Authority for Advance Ruling, Uttarakhand, after examining the issue, observed that the supply of services provided by the applicant, which is composite supply, is rightly classifiable under sub-heading No. 99631 as Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like’, whereas, the exemption at Entry No. 74 of exemption Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 is applicable to services falling under the SAC 9993. Therefore, the AAR held that the applicant is not eligible to get the benefit of Entry No. 74 of Exemption Notification No. 12/2017-Central Tax (Rate), dated 28- 6-2017. Being aggrieved with the said Ruling, the applicant has filed the present appeal before AAAR and the appeal is registered as Appeal No. UKGSTARA 02/02/13.12.21/2021-22 dated 13.12.2021 seeking classification of services provided by “the Centre” under SAC 9993 in as much as, the said centre viz “Aahana Naturopathy Centre’ provides healthcare services which attract nil rate of tax in terms of entry no. 74 of exemption notification no. 12/2017-Central Tax (Rate), dated 28- 6-2017.
Observation of the case
Court has gone through the facts placed on record, the Ruling of AAR, Memorandum of Appeal along with grounds of Appeal and submissions made at the time of personal hearing. Now court proceeds as under:
- The moot issue to be decided is whether “The Centre” of the applicant is eligible to get the benefit of entry No.74 of exemption Notification No.12/2017- Central Tax (Rate) dated 28.36.2017, classified under SAC Heading 9993″.
- The applicant in his appeal submitted that the health care services under question fall under entry Nc .74 of exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.
As per Section 8 of the Act ibid, the tax liability on a composite or a mixed supply shall be determined in the following manner, namely:
- a composite supply comprising two or more supplies, one of which is a
- principal supply, shall be treated as a supply of such principal supply; and
- a mixed supply comprising two or more supplies shall be treated as a supply of that supply which attracts the highest rate of-tax.
As per Section 7 (1) of the CGST Act, ‘Supply’ includes all forms of supply of goods or services such as sale, barter, transfer, exchange, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, including activities specified under Schedule I which are made or agreed to be made without consideration.
On perusal of records, court finds that in the instant case the applicant has advertised and marketed their accommodation service as their main service and Naturopathy as additional service. Thus, the accommodation service and other services including Naturopathy rendered during the course of said service is covered under composite service and the accommodation service constitutes the predominant element and therefore, becomes the “principal supply” and other services including Naturopathy shall form the part of that composite supply. On true and fair analysis of the aforesaid Notification, the conclusion is compelling that all services provided in relation to or in addition to accommodation service are liable to GST applicable to ‘Accommodation Service’ in as much as, all such ancillary/ additional activities having a proximal nexus with accommodation service.
The Ruling No. 05/2021-22dated 08.10.2021 passed by the Authority of Advance Ruling of Uttarakhand was hereby, upheld.In-re-Corbett-Nature-Reserve-GST-AAAR-Uttarakhand-1