2021 (11) TMI 106 - HC - Income Tax

Renewal of approval under proviso (ii) (b) to section 17 (2) (viii) - approval for providing treatment for Covid-19 patients - rejecting the application of the petitioner for grant of renewal of approval under Section 17(1)(b) of the Income Tax Act, 1961 to treat Covid-19 patients on 03.08.2020 - order of the State Government of the mandate for Covid treatment - revocation of permission for providing medical treatment for Covid-19 by the State Government - HELD THAT - State Government revoking the mandate given for Covid treatment be considered for deciding application of the petitioner for renewal of approval under Section 17(2)(ii)(b) of the Act, and nothing else. The impugned order, apart from dealing with the revocation of mandate for Covid treatment by the State Government, also dealt with other aspects as to the nature of coronavirus disease being a respiratory disease and the petitioner having resorted to excessive, exorbitant and unconscionable pricing being a misconduct or an offence, without putting the petitioner on notice of the said allegations, to offer its explanation. This action of the first respondent in passing the impugned order by traversing beyond the show cause notice in our view is a violation of principles of natural justice causing serious prejudice to the petitioner. On this sole ground itself the impugned order is liable to be set aside. We are also at a loss to understand the basis on which the 1st respondent has concluded that the treatment for coronavirus would be covered by respiratory disease, in as much as even after more than a year, no fool proof medical treatment/ vaccination is discovered and the research is continuing. Even the World Health Organization (WHO) or the Indian Council of Medical Research, which is the apex body in India for the formulation, coordination and promotion of biomedical research and one of oldest research bodies in the world established in the year 1911, have not notified the SARSCov-2 (corona virus) to be only a respiratory disease. On the other hand some of the other serious symptoms associated with Corona virus are chest pain or pressure, sore throat, loss of taste or smell, fever, dry cough and loss of speech or movement etc.- As the mutants of corona virus continue to strike, ICMR is continuing work on variant strains of SARS-Cov-2 and assisting in development of vaccines. In view of the above , the claim of the 1st respondent, that Covid-19 treatment is a respiratory disease, in our view, is not backed by any material or scientific data and appears to be a self evolved theory of the 1st respondent, and is liable to be rejected. Since the show cause notice issued relies only on the revocation of permission for providing medical treatment for Covid-19 by the State Government, and the said revocation, having been lifted by the State authorities by proceedings dated 13.09.2020 and the petitioner was permitted to provide treatment for Covid-19 patients, the very basis of the show cause notice issued, stands removed. In view of the above, considered from any angle, the impugned order passed by the 1st respondent, cannot be sustained.

Summary

Issues Involved:
1. Denial of renewal of approval under proviso (ii)(b) to section 17(2)(viii) of the Income Tax Act, 1961.
2. Consideration of the State Government's revocation of permission for Covid-19 treatment.
3. Alleged violation of principles of natural justice by the 1st respondent.
4. Classification of Covid-19 as a respiratory disease under Rule 3A of the Income Tax Rules, 1962.

Detailed Analysis:

1. Denial of Renewal of Approval:
The petitioner challenged the order dated 19.10.2020, which denied the renewal of approval under proviso (ii)(b) to section 17(2)(viii) of the Income Tax Act, 1961. The petitioner had been providing medical treatment and had previously received approval for three consecutive terms starting from 2011-12, with the last approval valid until 21.03.2020. The petitioner applied for renewal on 13.01.2020, two months before the expiry date.

2. Consideration of State Government's Revocation of Permission for Covid-19 Treatment:
The 1st respondent issued a show-cause notice on 12.10.2020, citing the revocation of the State Government's permission for Covid-19 treatment as a reason for denying the renewal. The petitioner contended that the revocation was based on media propaganda and misinformation and was limited to Covid-19 treatment, not affecting other medical treatments. The petitioner also mentioned that they were in the process of getting the permission reinstated, which was indeed granted on 13.10.2020, a day before the show-cause notice was issued.

3. Alleged Violation of Principles of Natural Justice:
The petitioner argued that the impugned order was passed without considering their explanation dated 16.10.2020 and that the order traveled beyond the scope of the show-cause notice. The court found that the 1st respondent’s order included issues not mentioned in the show-cause notice, such as the nature of Covid-19 as a respiratory disease and allegations of exorbitant pricing. This was deemed a violation of the principles of natural justice, as the petitioner was not given an opportunity to respond to these additional grounds.

4. Classification of Covid-19 as a Respiratory Disease:
The 1st respondent classified Covid-19 as a respiratory disease under Rule 3A of the Income Tax Rules, 1962, which the court found to be unsupported by scientific data. The court noted that neither the World Health Organization (WHO) nor the Indian Council of Medical Research (ICMR) had classified Covid-19 solely as a respiratory disease, pointing out that the virus has multiple symptoms and effects. Therefore, the 1st respondent's classification was considered a self-evolved theory and was rejected by the court.

Conclusion:
The court set aside the impugned order dated 19.10.2020, directing the 1st respondent to process the petitioner's application for renewal of approval under proviso (ii)(b) to section 17(2)(viii) of the Income Tax Act, 1961, in accordance with the provisions of the Act. The court emphasized the violation of natural justice and the lack of scientific backing for the classification of Covid-19 as a respiratory disease. Pending miscellaneous petitions were closed, and no order as to costs was made.