The Telangana State Authority for Advance Ruling (AAR) recently determined that the All India Institute of Medical Sciences (AIIMS) in Bibinagar, Telangana, does not qualify for a Goods and Services Tax (GST) exemption on so-called “pure services” procured from suppliers.
AIIMS-Telangana, an esteemed member of the All India Institute of Medical Sciences network, was founded to address the increasing need for superior healthcare services, educational opportunities in medicine, and research activities within the area.
The institution requested an advanced ruling to ascertain its eligibility for a GST exemption on pure services it receives, including those related to manpower, housekeeping, and consultancy, which attract an 18% GST. AIIMS had been foregoing all Input Tax Credit (ITC) it had claimed because the services it provides are exempt from GST.
The argument from AIIMS was that, being an entity of the Central Government, it should be exempt from such taxes as per specific clauses in Notification 12/2017. Nevertheless, the AAR concluded that AIIMS is not recognized as the Central Government itself, but rather as a ‘Governmental Authority’ as per its establishment under an Act of Parliament. Following an amendment on January 1, 2022, to Notification 12/2017, which excluded the term ‘Governmental Authority’, AIIMS was found ineligible for the GST exemption.
This ruling from the AAR makes it clear that AIIMS is not entitled to the GST exemption for pure services from vendors. As a result, the institution must continue to bear the GST costs for these services, affecting its financial operations.