2018 (11) TMI 1359 - HC - VAT and Sales Tax

Deputation of officers at distillery unit - reimbursement of medical expenses would be included as cost of establishment - specific contention raised by the State Attorney is that the cost of establishment would also include the medical reimbursement under the Medical Attendant Rules - Held that - In the present case, merely for the unfortunate circumstance of the father of a person who was deputed to the distillery fell sick during the period of deputation; the distillery cannot be mulcted with the treatment expenses. The reimbursement of medical expenses as available in the Medical Attendant Rules is another incidence of service, which would not come within the meaning of cost of establishment as such nor as understood in Rule 14 - we have to find that the medical benefits as spoken of in Exhibit P1 would be confined to that incurred by the deputed employee himself, that too any expenses incurred by way of an employment injury in the distillery and not otherwise. What would be the position in the event of the deputationist himself falling sick, not as a direct result of employment; and being unable to attend duty for a period of one or two months? - Held that - Definitely there would have to be another deputation made and there could be no claim of medical reimbursement made from the distillery. The benefit of medical reimbursement is an incidence of the total service of the employee with the Government and is not a benefit which accrues during the period of deputation - we find the reasoning of the learned Single Judge to be perfectly in order and the Rules do not persuade us to arrive at a different finding. It is deemed fit that the appellant be returned the amounts with 8% interest from the date of deposit till payment. The refund as directed shall be made within a period of three months - appeal dismissed.

Summary

Issues:
Interference with government order for reimbursement of medical expenses to an Excise Guard deputed to a distillery; Interpretation of Warehouse Rules and Medical Attendant Rules regarding liability for medical expenses; Whether the distillery is liable to reimburse medical expenses of a government employee deputed to their premises.

Analysis:
The judgment involves an appeal from a learned Single Judge's decision regarding the reimbursement of medical expenses claimed by an Excise Guard deputed to a distillery. The State was cautioned by the Court during the admission process about the appeal's merit. The Excise Department deputes Guards to distilleries for controlling bonded warehouses where raw materials are stored. The 6th respondent, an Excise Guard, submitted medical bills amounting to ?1,07,230 for his father's treatment, which the Government sanctioned but directed the distillery to pay. The distillery paid under protest and challenged the order through a writ petition.

The Single Judge found that the liability under the Medical Attendant Rules cannot be extended to industries following the Warehouse Rules. The judgment relied on the absence of provisions in the Rules holding the distillery liable for medical expenses reimbursement. The State argued that Rule 14 of the Warehouse Rules includes all allowances, asserting that medical expenses fall under the cost of establishment to be reimbursed by the distillery. However, the Court rejected this argument, emphasizing the specific definition of "cost of establishment" in Rule 14, which does not encompass medical expenses unless related to an employment injury.

The Court clarified that a deputed government servant remains a government employee, and the distillery must pay establishment costs in advance for the deputation period. However, reimbursement of medical expenses is not automatically included unless it relates to an employment injury. The judgment affirms that medical benefits under the Rules are limited to expenses incurred by the deputed employee due to employment-related injuries. The Court also highlighted that medical reimbursement is a benefit of total government service, not just the deputation period, and upheld the Single Judge's decision. The Court ordered the refund of the amounts paid by the distillery with interest and dismissed the appeal without additional costs.