9911796707
TMI Blog2014 (2) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... either the hospital nor its pharmacy sells the implants directly to the patient. In other words, the implants are used during the course of a surgical procedure and there is no 'sale' when such a procedure is performed on the patient. During the course of assessment proceedings for the AY 2008-09, notices were issued to the petitioner by the Deputy Commissioner, Commercial Tax proposing to impose tax on the value of stents and valves used for providing medical services. In the reply which was submitted by the petitioner, reliance was placed on a judgment of the Supreme Court in Bharat Sanchar Nigam Ltd. and another v. Union of India and others1 and on a judgment of a Division Bench of the Jharkhand High Court in Tata Main Hospital v. The State of Jharkhand & Ors.2 in support of the submission that the use of stents and valves in the course of angioplasty or surgical procedure is incidental to the medical service which is provided by the hospital and the stents and valves would not be taxable under the Act. An order has been passed by the Deputy Commissioner, Commercial Tax on 27 September 2013 by treating the purchase of stents and valves by the Hospital as being from unregistered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "366. (29-A) 'tax on the sale or purchase of goods' includes - (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other value consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other valuable consideration and includes,-- (i) a transfer, otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) the delivery of goods on hire purchase or any other system of payment by instalments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) the supply of goods by an association or body of persons (whether incorporated or not) to a member thereof for cash, deferred payment or other valuable consideration; (vi) the supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration, and such delivery, transfer or supply of any goods under sub-clause (i) to sub-clause (vi) above shall be deemed to be sale of those goods by the person making the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e? Doctors, lawyers and other professionals render service in the course of which can it be said that there is a sale of goods when a doctor writes out and hands over a prescription or a lawyer drafts a document and delivers it to his/her client? Strictly speaking, with the payment of fees, consideration does pass from the patient or client to the doctor or lawyer for the documents in both cases." The Supreme Court held that the reason why hospital services would not involve a sale for the purposes of Entry 54 of List II is that in the case of a composite contract to which Article 366 (29-A) has no application, unless the transaction in truth represents two distinct and separate contracts and is discernible as such, the State would not have the power to separate the agreement to sell from the agreement to render service, and impose tax on the sale. Consequently, in the case of those composite contracts other than those prescribed in Article 366 (29-A) of the Constitution, the test which was formulated by the Supreme Court is as follows:- "45....The test therefore for composite contracts other than those mentioned in Article 366 (29-A) continues to be: Did the parties have in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re contemplated in Article 366(29A). Speaking for the Bench, Hon'ble Mr. Justice R.M. Lodha held thus: "The dominant nature test has no application and the traditional decisions which have held that the substance of the contract must be seen have lost their significance where transactions are of the nature contemplated in Article 366 (29-A). Even if the dominant intention of the contract is not to transfer the property in goods and rather it is rendering of service or the ultimate transaction is transfer of immovable property, then also it is open to the States to levy sales tax on the materials used in such contract if such contract otherwise has elements of works contract. The enforceability test is also not determinative." Again, the judgment in Larsen and Toubro holds thus: "Even in a single and indivisible works contract, by virtue of the legal fiction introduced by Article 366 (29-A)(b), there is a deemed sale of goods which are involved in the execution of the works contract. Such a deemed sale has all the incidents of the sale of goods involved in the execution of a works contract where the contract is divisible into one for the sale of goods and the other for supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor patients." A petition for Special Leave to Appeal (Civil) No.3652 of 2008 was dismissed by the Supreme Court against this judgment on 10 March 2008. The Assessing Officer, in the present case, has relied upon a judgment of a learned Single Judge of the Kerala High Court in Aswini Hospital Pvt. Ltd. v. C.T.O. Thrissur and others5. The judgment of the learned Single Judge of the Kerala High Court was in a batch of petitions filed by private hospitals and by their association, disputing the liability of the hospitals to get themselves registered as a dealer under the Kerala Value Added Tax Act and to pay tax under the Act for medicines and consumables sold to the patients. The learned Single Judge of the Kerala High Court noted that the issue was covered by an earlier decision of the Kerala High Court in P.R.S. Hospital v. State of Kerala6. It would be necessary to note here that in the course of that judgment, the Kerala High Court dealt with the issue as to whether the supply of medicine is only an incidental transaction. In that context, it was observed that in the course of treatment, except probably in surgical treatment, nobody can have a doubt that medicines account for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
