1973 (7) TMI 79 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether a physician supplying medicines to patients from his clinic is considered a dealer under the Bihar Sales Tax Act, 1947?
2. Whether the supplies of medicines by the physician to patients visiting his clinic constitute a sale under the Bihar Sales Tax Act, 1947?

Analysis:

Issue 1:
The case involved a physician who ran a pharmacy and clinic for patient examination and treatment. The sales tax department initiated proceedings for assessment based on a surprise inspection. The assessments for various periods were challenged through appeals and revisions. The Tribunal ultimately dismissed the revision applications and referred two questions of law to the High Court.

Issue 2:
The Tribunal found that the physician's actions constituted a sale of medicines to patients visiting his clinic. The Tribunal determined that an implied contract for the sale of medicines existed between the physician and patients. Despite the physician not charging fees separately for medicines, the Tribunal held that a turnover tax was rightly imposed. The High Court rejected the argument that the physician's charges were part of a consolidated contract for treatment, emphasizing that patients paid for medicines supplied. The court concluded that the physician was a dealer under the Act and the supply of medicines to patients amounted to a sale. The Supreme Court decision cited by the physician was deemed irrelevant to the case at hand.

In conclusion, the High Court answered both questions in the affirmative, determining that the physician was indeed a dealer under the Bihar Sales Tax Act, 1947, and that the supply of medicines to patients visiting his clinic constituted a sale. The department was favored, and costs were awarded accordingly.