The Maharashtra Appellate Authority of Advance Ruling (AAAR) in the case of M/s. Kasturba Health Society vide Order No. MAH/AAAR/DS-RM/13/2022-23 dated 05.12.2022, has ruled that the GST is not applicable on charges collected under an unparalleled health insurance scheme.

In this case, the appellant operates a “medical college” called “Mahatma Gandhi Institute of Medical Science” in Village Sewagram, Dist. Wardha, which is linked to a clinical laboratory called “Kasturba Hospital.” The Appellant Society named its educational unit “Mahatma Gandhi Institute of Medical Science” (MGIMS), followed by naming its clinical laboratory “Kasturba Hospital”.

The appellant/assessee society got registered voluntarily under the GST Act. It had not filed any returns till March 2019, since none of the activities was in the nature of “business” so as to fall within the meaning of “supply” as provided in Section 2(87) of the GST Act, and hence it believed that it was not obliged to comply with the provisions of the GST Act.

The appellant's Unparalleled Health Insurance Scheme, in which the nominal charges received to provide the benefit of reduced rates for disease investigations and treatment may be treated as an advance towards the future provision of health care services to scheme subscribers.

The applicant sought an advance ruling on the issue of whether the nominal charges received from patients towards an “unparalleled health insurance scheme” to retain their flow at one end for the purpose of imparting medical education and, as a result, provide them the benefit of concessional rates for investigations and treatment at the other end would fall within the meaning of “supply” and be eligible for exemption under the category of “educational and/or health care services.”

The AAAR has observed that the fees and other charges received from students and recoupment charges received from patients would constitute consideration for “outward supply.”

Further, the AAAR held that the charges collected under the “Unparalleled Health Insurance Scheme” are to be considered an advance towards the provision of health care services to the subscribers of this scheme, and accordingly, any amount collected towards this scheme will not be subject to the levy of GST.