Andhra Pradesh AAR: Administration of COVID-19 vaccine by Hospitals taxable at 5%; Denies exemption as ‘health-care’ services

In the matter of Krishna Institute of Medical Sciences Ltd

Andhra Pradesh AAR holds that administration of COVID-19 vaccination by Hospitals is a ‘Composite Supply’, wherein the principal supply is the ‘sale of vaccine’ and the auxiliary supply is the service of ‘administering the vaccine’ and the total transaction is taxable at 5%; AAR observes that both the supplies i.e. sale of vaccine and administering of vaccine are intrinsically connected with each other, and it is viewed as a single package by the recipient, where he purchases the vaccine and gets it administered subsequently; AAR determines that, generally, the primary requirement of recipient would be the receipt of vaccine, basing on his choice i.e., Covishield or Covaxin, thus, the supply of goods constitutes the major supply; Moreover, AAR apprises that, proper administration of vaccine by technically qualified personnel as prescribed by the guidelines of the Government becomes the ancillary supply, which involves service charge; As regards the query as to whether such administration of vaccine would qualify as health care service as per Notification no. 12/2017, opines that the dominant intention of the recipient is the receipt of the vaccine followed by its administration and in the instant case, there even though the Applicant is a clinical establishment, the supply is predominantly of goods.