2019 (3) TMI 1020 - HC - VAT and Sales Tax

Input tax credit - denied for the reason of an inadvertent error of the supplier in issuing invoices in Form-8B - Held that - Form-8B indicates that there can be no input tax credit available, insofar as the purchases made under the said invoice, which is deemed to be one of last sale to the consumer. In such circumstances, there is no infirmity, insofar as the Tribunal having reversed the order of the first Appellate Authority and found the input tax credit claimed to be not sustainable - decided against assessee. Levy of tax - x-ray films - Held that - Taking of X-rays is a part of the services offered in a hospital and is an activity to diagnose the specific ailment of the patient. There is no sale discernible nor can the transfer of such X-ray films in the course of para-medical services offered be separated from the composite service offered in an hospital - tax cannot be levied - decided in favor of assessee. Decided partly in favor of assessee and partly in favor of Revenue.

Summary

Issues:
1. Denial of input tax credit due to supplier's error in issuing invoices in Form-8B.
2. Use of consumables in the hospital and related tax implications.
3. Exigibility of tax on x-ray films in the context of hospital services.

Analysis:

1. The judgment primarily addresses the denial of input tax credit based on the inadvertent error of the supplier in issuing invoices in Form-8B. The Court notes that Form-8B signifies no availability of input tax credit for purchases made under such invoices, deeming them as the last sale to the consumer. The Tribunal's decision to reverse the order of the first Appellate Authority and disallow the input tax credit claimed is upheld. The Court rules against the assessee and in favor of the Revenue on this issue.

2. The issue of the use of consumables in the hospital is raised, referencing a previous Full Bench declaration. The Senior Government Pleader argues that the Assessing Officer and statutory authorities considered the matter, allowing evidence where produced. However, the Tribunal found no evidence of the purchases being consumables used in the hospital. The Court deems this as a factual matter and declines interference with the Tribunal's decision, upholding it.

3. Regarding the tax on x-ray films in the hospital context, the Court had previously considered this issue in a batch of writ petitions against the revenue. It is established that taking X-rays is part of the services provided by hospitals for diagnosing patients. The Court holds that the transfer of X-ray films cannot be separated from the overall service offered in a hospital setting, as per the Full Bench's decision. Consequently, specific O.T. Revision numbers are partly allowed in favor of the assessee on the x-ray issue, while others are rejected. Each party is directed to bear their respective costs.

In conclusion, the judgment clarifies the denial of input tax credit due to supplier errors, the tax implications of hospital consumables, and the treatment of x-ray films in hospital services, providing detailed reasoning and upholding decisions based on legal principles and factual assessments.