Fortis Arm Challenges Rs 7 Cr GST Demand: Delhi HC to Decide Tax on Inpatient Medicines
Delhi High Court
The tax authorities alleged that the hospital collected GST on medicines and consumables billed at MRP to patients but failed to deposit the same with the Government.
New Delhi: The Delhi High Court will examine whether Goods and Services Tax (GST) can be demanded on medicines, medical devices and consumables supplied to patients as part of inpatient treatment.
The Court issued notice in a writ petition filed by Escorts Heart Institute and Research Centre Limited, a wholly owned subsidiary of Fortis Healthcare, challenging a GST demand of Rs 6.66 crore along with interest and penalty, arising from a show cause notice dated 29 September 2025 issued under Section 76 of the Central Goods and Services Tax Act, 2017.
The tax authorities alleged that the hospital collected GST on medicines and consumables billed at MRP to patients but failed to deposit the same with the Government.
Contesting the allegation, Escorts Heart Institute and Research Centre Limited, a wholly owned subsidiary of Fortis Healthcare, submitted that healthcare services are fully exempt from GST and that medicines, devices and consumables administered to inpatients form an integral part of such exempt healthcare services, with no GST being separately charged or collected on inpatient bills; it was clarified that GST is collected and duly paid only on medicines sold through the hospital pharmacy as an independent supply.
The tax authorities, however, maintained that even supplies made to inpatients attract GST and that the hospital had collected tax without remitting it, justifying initiation of proceedings.
Observing that the case raises an important and nuanced issue concerning the taxability of medicines and consumables dispensed during inpatient care, the Division Bench of Justice Prathiba M. Singh and Justice Shail Jain noted that hospitals routinely administer such items either as part of treatment packages or item-wise billing and that, where no GST is separately reflected on invoices, the question of tax liability requires careful examination of facts.
The Court directed the petitioner to file a detailed reply to the show cause notice along with invoices, procurement details and tax payment records, while permitting the adjudication proceedings to continue.
At the same time, the Court granted interim protection by ordering that;
“The proceedings in the SCN, before the adjudicating authority, shall continue; a hearing shall be afforded and the final order may be passed, but the same shall not be given effect to during the pendency of this writ petition.”
The matter has been listed for further hearing on 17 March 2026.
To view the official order, click the link below:
https://medicaldialogues.in/pdf_upload/highcourtorder-316342.pdf
