Whether the Medicines, Consumables and Implants used in the course of providing health care services for diagnosis or treatment of patients being provided by the hospital is a ‘Composite Supply’?

Pre-Requisite Knowledge:

In-patient health care services provided by a hospital is exempt from the levy of GST under Sl. No 74 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

The term ‘Composite Supply’ is defined in Section 2(30) of the CGST Act, 2017 reads as under:

“Composite Supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.”

Facts of the Case:

The assessee is a multi-specialty hospital providing health care services to both out-patients and in-patients.

The assessee offers a package/healthcare services for the medical treatment required for curing the patient. The intention of the assessee is the treatment of disease or illness and not for supply of goods i.e., Implant, medicines, surgical and medical consumable.

Matter for which ruling is sought:

Whether the medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment either opted with or without packages by patients along with allied services i.e., room rent/food/doctor fees etc. provided by hospital would be considered as ‘Composite Supply’ and accordingly eligible for exemption under ‘health care services?


The hospital provides medicines, consumables, implants, etc. to the In-patients in the course of treatment on the directions of medical doctor for which the In-patient is billed together by the hospital.
The hospital cannot provide health services including diagnostic, treatment surgery etc. without the help of medicines to be taken during treatment, implants and consumables without which the treatment will be incomplete.


In this case, supply of health services is the principal supply as that is the reason the in-patients get admitted to hospital instead of buying the medicines or consumables and using on themselves. Therefore, supply of medicines, consumables and implants to the In-patients in the course of their treatment is a composite supply of health services.
Source: Advance Ruling No. GUJ/GAAR/R/11/2021 (In Application No. Advance Ruling/SGST&CGST/2020/AR/51)

Raju Kumar and Shikhar Verma

Articled Assistants

SW India