2019 (3) TMI 710 - HC - VAT and Sales Tax

Levy of tax - X Ray films purchased and used in diagnostic service and use of consumables purchased in the Hospital for upkeep of the hospital can be treated as sale at all - Held that - The question is answered in favour of the assessee and against the revenue, looking at the declaration of the Full Bench in Sanjose Parish Hospital v. Commercial Tax Officer 2019 (3) TMI 438 - KERALA HIGH COURT . Whether on the facts and in the circumstances of the case and in law input tax credit can be denied merely for the reason of an inadvertent error of the supplier in issuing invoice in Form 8B, when the returns and books reveal the same goods having suffered output tax and remittance of the same is not disputed and are not the order of the Tribunal reversing the orders of the 1st Appellate authority passed without application of mind and mechanically? - Held that - The question is answered against the asseessee and in favour of the revenue, since, Form-8B is the invoice issued on last sale and it is specified in the form itself that there can be no input tax credit claimed on such purchases. Whether on the facts and in the circumstances of the case and in law, on the impost of tax on capital goods the Tribunal ought to have afforded opportunity to explain and establish from the books the nature of the goods itself if doubted and ought not the matter have been remanded to the 1st Appellate authority to consider the same when the 1st Appellate authority has not considered the issue at all? - Held that - It is only proper that the Assessing Officer re-consider the issue on production of the bills. The assessee shall within a period of one month from the date of receipt of a copy of this judgment produce the bills along with written submissions, if any. The Assessing Officer shall then afford a hearing and consider the issue of those invoices. The invoices in which purchase of capital goods were made, shall be avoided from estimation of sales - matter on remand. Revision allowed in part.

Summary

Issues:
1. Tax imposition on X-Ray films and consumables used in the hospital.
2. Denial of input tax credit due to an error in the supplier's invoice.
3. Tax imposition on capital goods without proper documentation.

Analysis:

Issue 1:
The first question raised concerns the tax imposition on X-Ray films and consumables used in the hospital for diagnostic services and upkeep. The judgment refers to the Full Bench declaration in Sanjose Parish Hospital v. Commercial Tax Officer, favoring the assessee against the revenue in this regard.

Issue 2:
Regarding the denial of input tax credit due to an error in the supplier's invoice (Form-8B), the judgment rules against the assessee, emphasizing that Form-8B specifies no input tax credit can be claimed on such purchases made in the last sale.

Issue 3:
The third question pertains to the tax imposition on capital goods without proper documentation. The judgment notes that the Tribunal did not receive evidence of invoices for the purchase of capital goods. However, new invoices have now been produced, indicating purchases of capital goods such as spares and equipment used in the hospital.

The judgment directs the Assessing Officer to re-consider the issue upon production of the bills by the assessee within a month. The Assessing Officer is instructed to provide a hearing and exclude the invoices for the purchase of capital goods from the estimation of sales. The O.T. Revisions are partly allowed, with each party bearing their respective costs.