2017 (4) TMI 1598 - HC - VAT and Sales Tax

Nature of activity - sale or not - use of stent whether medicated or otherwise or valves along with medicines during the surgical procedure by the doctor upon indoor patient of the Hospital - sale of stents, valves or medicines within the meaning of Section 2(ac) of the U.P. VAT Act or not - HELD THAT - The Division Bench of this Court considering the decisions in State of Madras v. Gannon Dankerley Co. (Madras) Ltd. 1958 (4) TMI 42 - SUPREME COURT , BSNL vs. Union of India 2006 (3) TMI 1 - SUPREME COURT and Tata Main Hospital vs. State of Jharkhand 2007 (9) TMI 599 - JHARKHAND HIGH COURT as well as PRS Hospital vs. State of Kerala 2002 (12) TMI 596 - KERALA HIGH COURT opined the fact that in the bill which is raised on the patient, the hospital recovers, apart from the cost of the surgery, charges towards drugs and other consumables would not render the transaction of the implantation of a stent or valve a 'sale' within the meaning of Section 2(ac) of the Act. The Deputy Commissioner by the impugned order has taken a contrary view on the basis of PRS Hospital 2002 (12) TMI 596 - KERALA HIGH COURT and Aswini Hospital Pvt. Ltd. v. C.T.O. Thrissur 2019 (3) TMI 438 - KERALA HIGH COURT but without considering the Division Bench decision of this Court in International Hospital Private Limited 2014 (2) TMI 765 - ALLAHABAD HIGH COURT - the Deputy Commissioner despite a clear verdict of the Division Bench decision of this Court has tried to follow a decision which has been distinguished and not accepted by the Division Bench of this Court, in passing the impugned order. The impugned orders dated 3.5.2016 and 4.5.2016, passed by the Deputy Commissioner (Commercial Tax), Ghaziabad is quashed - petition allowed.

Summary

Issues:
Challenge to temporary assessment orders for November and December 2015 under U.P. VAT Act - Whether use of stent, valves, and medicines during surgical procedure amounts to sale within Section 2(ac) of the Act.

Analysis:
The writ petition challenged temporary assessment orders for November and December 2015 under the U.P. VAT Act, focusing on whether the use of stent, valves, and medicines during a surgical procedure constitutes a sale within Section 2(ac) of the Act. The Division Bench previously addressed a similar matter in International Hospital Private Limited vs. State of U.P., citing relevant precedents such as State of Madras v. Gannon Dankerley & Co. and Tata Main Hospital vs. State of Jharkhand. The Division Bench concluded that charges for drugs and consumables in the hospital bill do not transform the implantation of stents or valves into a sale under the Act.

The Deputy Commissioner, however, took a different view based on PRS Hospital and Aswini Hospital Pvt. Ltd. v. C.T.O. Thrissur without considering the Division Bench's decision in International Hospital. The Court noted that the Division Bench's ruling in International Hospital remains final, as no subsequent decision has overruled or discredited it. The Deputy Commissioner's decision to follow a distinguished case rather than the binding precedent of the Division Bench was deemed erroneous.

In light of the Division Bench's judgment in International Hospital Private Limited, the Court quashed the impugned orders from May 2016, emphasizing that their decision aligns with the established precedent. The Court clarified that their ruling does not present an independent opinion but upholds the Division Bench's findings, urging the assessing authority to consider all relevant factors for the final assessment of the year 2015-2016. Consequently, the writ petition was allowed, granting relief to the petitioner.