2019 (8) TMI 1494 - HC - VAT / Sales Tax

Works Contract - deemed sale or not - supply of medicines, vaccines, surgical items, x-ray films and plates etc. to the indoor patients in course of treatment in TMH - HELD THAT - The issue is covered by the definition in the case of TATA MAIN HOSPITAL VERSUS THE STATE OF JHARKHAND ORS. 2007 (9) TMI 599 - JHARKHAND HIGH COURT where it was held that On the facts noticed in the forgoing paragraphs, we find that the TMH is not doing business of sale of the aforesaid articles, i.e. Medicines, vaccines, surgical items, x-ray films plates etc. and therefore, cannot be said that the Hospital is a dealer within the meaning of Dealer Under the Bihar Finance Act. The transaction aforesaid, cannot be said to be sale under the law as there is no element of sale at all in the said transaction. In the light of the aforesaid order of assessments for the periods 2010-11 and 2011-12 bringing to tax the value of consumables used in the Dental hospital by the petitioner (Implants such as concrete paste for plugging teeth holes and teeth caps) as deemed sale value in the execution of works contract are quashed - petition allowed.

Summary

Issues involved:
1. Whether the supply of medicines, vaccines, surgical items, x-ray films, and plates to indoor patients in the course of treatment constitutes a 'sale' under the Bihar Finance Act.
2. Whether the hospital can be considered a 'dealer' within the meaning of the Bihar Finance Act.
3. Whether the value of consumables used in the Dental hospital, such as concrete paste for plugging teeth holes and teeth caps, can be taxed as deemed sale value in the execution of works contract.

Analysis:
1. The High Court considered the issue of whether the supply of medical articles to indoor patients constitutes a 'sale' under the Bihar Finance Act. Referring to a decision of the Jarkhand High Court, it was noted that the supply of these articles is part of the treatment, incidental to medical services, not sold to patients separately, and consumed for patient treatment. The court held that the hospital is not engaged in the business of selling these items, and thus, the transaction does not fall under the purview of 'sale' as defined in the Act. Consequently, the supply of medical articles by the hospital was deemed not liable to be taxed.

2. Regarding the classification of the hospital as a 'dealer' under the Bihar Finance Act, the court determined that since the hospital was not engaged in the sale of medical articles to patients but rather providing them as part of treatment, it could not be considered a 'dealer' within the meaning of the Act. As a result, the hospital was not liable to be taxed as a dealer for the supply of medical articles to indoor patients.

3. The judgment also addressed the issue of whether the value of consumables used in the Dental hospital, specifically concrete paste for plugging teeth holes and teeth caps, could be taxed as deemed sale value in the execution of works contract. The court quashed the order of assessments for the periods 2010-11 and 2011-12, which sought to tax the value of these consumables, and allowed the writ petitions filed by the petitioner. Consequently, it was ruled that the consumables used in the Dental hospital were not subject to tax as deemed sale value in the execution of works contract, leading to the closure of connected Miscellaneous Petitions.