Treatment of Wellness centres vs Hotel accommodation services under GST

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Are Wellness centres Clinical establishment or Hotel accommodation services ?

Recently, the Appellate Authority for Advance Rulings (AAAR), Uttarakhand state, in the case of Corbett Nature Reserve, held that its naturopathy center cannot claim GST exemption. 

The AAAR upheld the ruling given by the Authority for Advance Ruling. 

In this case, the applicant had submitted that the health care services provided by an independent unit within the resort – viz: Aahana Naturopathy Center is a clinical establishment, which offers nature cure and yoga therapies. 

It has an authorised medical practitioner on its rolls and the facilities offered by this unit are available not just to in-house customers but are open to all. The Center is registered under the Clinical Establishment Act, 2010.

Based on these facts, it contended that it qualified as a clinical establishment and should be eligible for exemption as a ‘health care services’ supplier as per Entry 74 of Notification 12/2017. 

However, the AAAR observed that Corbett Nature Reserve had advertised and marketed its accommodation service as its main service and naturopathy as an additional service. Thus, the entire package of services was of composite nature with principle supply being that of hotel accommodation services, as accommodation services were the predominant element in it.

On analysis, it could be seen that naturopathy service is only an ancillary or additional activities at best having a proximal nexus with accommodation services. 

In concurrence with the above ruling, the, AAR-Gujarat bench of the GST Authority for Advance Rulings (AAR), in the case of Nimba Nature Cure Village had also held that its services do not fall in the category of ‘health care services by a clinical establishment’ and would not be eligible for GST exemption. 

The AAR had noted that the services provided by Nimba Nature Cure Village were a composite service – comprising accommodation, food and therapy. 

Thus, the ‘accommodation service’ was the principal supply and the GST rates relating to it would apply. 

However in a divergent ruling, in January 2019, the Goa bench of the GST-AAR, in the case of Devaaya Ayurveda & Nature Cure Centre, held it to be a clinical establishment and the services offered by it as health care services and allowed GST exemption. 

Well.......😳

Conflicting rulings without an iota of doubt, lead to confusion and go against the very objective of providing certainty. 

While the views of one advance ruling authority are not binding on another, a detailed reasoning in each ruling will atleast ensure judicial discipline.

SRIVATSAN.R.

NACIN, Chennai.

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