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Medical Services are exempt from service tax vide exemption contained in Entry Nos. 2 and 3 of the Notification No. 25 / 2!2"S#$ dated 2"%"2!2 &often 'no(n as )Me a exemption Notification)+. Article see's to analyse the,ud ment in Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland -2!2. 2 / taxmann.com 33.
Medical Services are exempt from service tax vide exemption contained in Entry Nos. 2 and 3 of the Notification No. 25 / 2!2"S#$ dated 2"%"2!2 &often 'no(n as )Me a exemption Notification)+. Article see's to analyse the,ud ment in Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland -2!2. 2 / taxmann.com 33.
Medical Services are exempt from service tax vide exemption contained in Entry Nos. 2 and 3 of the Notification No. 25 / 2!2"S#$ dated 2"%"2!2 &often 'no(n as )Me a exemption Notification)+. Article see's to analyse the,ud ment in Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland -2!2. 2 / taxmann.com 33.
Exemption to Medical Services - !et!er s"ppl# o$ %oods connected &it! provision o$ medical services is also exempt ' An analysis of judgment in Commission of the European Communities v. United Kingdom of Great Britain & Northern Ireland [2012] 24 taxmann.com 330 (C!" VINEET SODHANI Chartered Accountant DEEPSHIKHA SODHANI Chartered Accountant Introduction 1. Medical Services are exempt from service tax vide exemption contained in Entry Nos. 2 and 3 of the Notification No. 25/2!2"S#$ dated 2"%"2!2 &often 'no(n as )Me*a Exemption Notification)+. #he article see's to analyse the ,ud*ment in Commission of the European Communities v. United Kingdom of Great Britain & Northern Ireland -2!2. 2/ taxmann.com 33 &EC0+ for short$ United Kingdom of Great Britain & Northern Ireland's case &supra+ and other 1ndian ,ud*ment&s+ on the issue to the find out the scope of exemption of medical services vis--vis *oods supplied in course of provision of such services. Judgment in United Kingdom of Great ritain ! Nort"ern Ire#and$% ca%e &%u'ra( ). #he 0ud*ment in United Kingdom of Great Britain & Northern Ireland's case & supra+ (as as follo(s 2 ).1 Facts " 34 and Northern 1reland had exempted supply of *oods connected (ith supply of hospital and medical care products. An issue arose (hether the supply of corrective spectacles 5y re*istered opticians shall also 5e exempt6 ).) Held - Supply of spectacles dissociable from provision of medical care and not eligible for exemption available to medical care services 7 Apart from minor provisions of *oods (hich are strictly necessary at the time (hen the hospital/medical care is provided$ the supply of medicines and other *oods$ such as corrective spectacles prescri5ed 5y a doctor or 5y other authori8ed persons$ is physically and economically dissocia5le from the provision of medical services. 7 9nly the provision of medical care in the exercise of the medical and paramedical professions is exempt and the supply of *oods &except the minor provisions of *oods (hich are in"dissocia5le from the service provided+ is not covered 5y such an exemption. Pro*i%ion% in India +. As per section %5:&//+ of the ;inance Act$ !<</$ )service) means any activity carried out 5y a person for another for a consideration$ = 5ut shall not include an activity (hich constitutes merely a transfer of title in *oods 5y (ay of sale$ *ift or in any other manner> or such transfer$ delivery or supply of any *oods (hich is deemed to 5e sale (ithin the meanin* of clause &2<A+ of article 3%% of the Constitution. Judgment in "arat Sanc"ar Nigam ,td. *. UOI -)../0 + STT )12 &S3( 4 Sa#e *. Ser*ice 1. #he aspect of sale and service (as dealt (ith in detail in Bharat Sanhar Nigam !td"'s case &supra+. 1t (as held as follo(s " # $ospital%&edial servies are not overed '( deemed sale - 9f all the different 'inds of composite transactions$ only three specific situations$ a (or's contract$ a hire purchase contract and a caterin* contract have 5een 5rou*ht (ithin the fiction of a deemed sale. Apart from these$ there is no other service (hich has 5een permitted to 5e so split up. ?ence$ Article 3%%&2<A+ does not cover hospital services. # )ill given during treatment is not 'sale' - 1f durin* the treatment of a patient in a hospital$ he or she is *iven a pill$ the sales tax authorities cannot tax the transaction as a sale. # )resription slip given '( dotor is not 'sale' of doument - @octors$ etc.$ render service in the course of (hich it cannot 5e said that there is a sale of *oods (hen a doctor (rites out and hands over a prescription to his/her patient$ even thou*h (ith the payment of fees and consideration does pass from the patient to the doctor for the documents. # *eason +h( aforesaid do not amount to sale - #he reason (hy these services do not involve a sale is that 2 if there is an instrument of contract (hich may 5e composite in form in any case other than the exceptions in Article 3%%&2<"A+$ unless the transaction in truth represents t(o distinct and separate contracts and is discerni5le as such$ then the State (ould not have the po(er to separate the a*reement to sell from the a*reement to render service and impose tax on the sale. # Sale depends on ,ominant Nature -est - 1f parties had in mind or intended to separate ri*hts arisin* out of the sale of *oods$ then there (ould have 5een AsaleA of such *oods> other(ise$ if there (as no such intention there (ould 5e no sale even if the contract could 5e disinte*rated. Ana#5%i% of t"e Judgment in United Kingdom of Great ritain ! Nort"ern Ire#and$% ca%e &%u'ra( 2. Section %5:&//+ itself excludes AsaleA or Adeemed saleA of A*oodsA from provision of services and$ therefore$ there is no Buestion of exemption contained in Me*a Exemption Notification applyin* to such a sale. ?o(ever$ as (as held in Bharat Sanhar Nigam !td"'s case &supra+$ every supply of *oods in course of medical services doesnAt amount to AsaleA thereof. #he same vie( has 5een opined in United Kingdom of Great Britain & Northern Ireland's case &supra+. #hus$ if supply of *oods is indissocia5le from provision of medical/health care services so much so that the supply of *oods is incidental and ancillary to the provision of service$ then such AsupplyA of *oods shall not 5e re*arded as AsaleA and shall amount to provision of medical services and shall$ accordin*ly$ 5e exempt from service tax. 3onc#u%ion /. 1f medicine is provided 5y doctor/hospital as a part of treatment$ then such supply of medicine$ etc.$ is not a AsaleA of *oods and is part of medical services and is$ accordin*ly$ exempt. ?o(ever$ if *oods li'e spectacles$ dia5etes measurin* eBuipment$ :C measurin* eBuipment$ etc.$ and even medicines are supplied 5y doctor/hospital other than as a part of medical treatment$ etc.$ then$ since such supply arises due to intention of patient to A5uyA them leadin* to separate ri*hts arisin* out of their AsaleA$ such supply shall 5e AsaleA and shall not 5e covered 5y exemption availa5le to Amedical servicesA. 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In Re John H. Gledhill and Gloria K. Gledhill, Debtors, State Bank of Southern Utah v. John H. Gledhill and Gloria K. Gledhill, 76 F.3d 1070, 10th Cir. (1996)