Page 187 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 553
(d) Reference to the judicial pronouncements mentioned in above ques-
tions can be drawn in so much so that hospital has been set up for
the benefit of the employees and it too forms a part of residential
colony of Ordnance Factory Bhandara.
(e) Reference may also be drawn to Section 9 of the CGST Amendment
Act, 2018, that is in force from 1-2-2019, wherein an amendment in
Section 17(5)(b) of the principal CGST Act, 2017 has been brought
about where input tax credit shall not be available in respect of
supply of health services except where the same is obligatory for an
employer to provide to its employees under any law for the time be-
ing in force.
(f) That as per the amended Section 17(5)(b) of the principal CGST Act,
2017, Input Tax Credit in respect of medicines purchased in factory
hospital and other inputs and input services used in factory hospital
should be allowed since such inputs and input services are used in
respect of supply of health services to employees and their families
that are mandatory to be provided under Ordnance Factory Medical
Regulations.
With respect to the above issue, it was ruled by AAR, Maharashtra that the hos-
pital/dispensary maintained by the applicant to its employees and their depend-
ents is to be categorized as “clinical establishment” as defined at Sr. No. 2(s) of
the Notification No. 12/2017-C.T. (Rate), dated 28-6-2017, and supply of health
care service by such clinical establishment is exempted under Sr. No. 74 bearing
Heading 9993 of the Notification No. 12/2017-Central Tax (Rate), dated 28th
June, 2017, hence ITC on such exempted supply of services is not available to
applicant under sub-section (2) of Section 17 of the CGST Act, 2017 in respect of
services and goods procured for maintenance of hospitals and pharmacy outlet
as such services, being nil rated, fall under exempt supplies.
97. We have perused the aforesaid submissions made by the Appellant,
wherein they have placed their emphasis on Section 9 of the CGST Amendment
Act, 2018, which is in effect from 1-2-2019, which provides that input tax credit
shall not be available in respect of supply of health services except where the
same is obligatory for an employer to provide to its employees under any law for
the time being in force. The Appellant here has referred to the Ordnance Factory
Medical Regulations in terms of which it is mandatory for the Ordnance Factory
Bhandara to provide the medical facility to the employees and their dependents
free of cost. Thus, it was submitted by the Appellant that they are falling under
the exception clause inserted in Section 17(5)(b) of the CGST Act, 2017 vide Sec-
tion 9 of the CGST Amendment Act, 2018 w.e.f. 1-2-2019, which provides that
input tax credit shall not be available in respect of supply of health services ex-
cept where the same is obligatory for an employer to provide to its employees
under any law for the time being in force.
98. Here, we intend to agree with the Appellant’s submissions in light
of Section 9 of the CGST Amendment Act, 2018, which amends Section 17(5)(b)
of the CGST Act, 2017 as stated above. Hence, we are of the opinion that Appel-
lant are rightfully entitled to avail the ITC in respect of all the inputs like medi-
cines, equipment, furniture, etc. consumed in the hospitals and input services
like maintenance and upkeep of the hospitals, etc., to provide the health services
to its employees and their dependents as per the terms of the Ordnance Factory
Medical Regulation, which may be construed as the law for the time being in
GST LAW TIMES  23rd July 2020  187