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TMI Blog2025 (3) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... in carrying on any business or trading activity and transactions are effected by them whether in the course of business or not. The definition of dealer is in consonance with legislative intent to place the persons engaged in activities of sale and trade which would not otherwise fall in the restricted definition of business. The said contention, in our opinion, is not acceptable for the reason that the definition of a dealer as given under the Kerala General Sales Tax Act 1963 is not pari materia with the definition of a dealer as given under the Act, 1994. The definition under the Kerala General Sales Tax Act, 1963 has specific clauses whereby those persons have also been included within the definition of a dealer who sell or transfer goods as specified therein "whether in the course of business or not" The words "whether in the course of business or not" as under the Kerela Act are wholly absent in the definition of a dealer as given under the M.P. Act. The definition under the M.P. Act defines a dealer to mean any person who carries on the business of buying, selling, supplying or distributing goods, etc. The only condition for attracting the definition of a dealer to a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial Tax, Indore confirming the levy of tax under the provisions of Madhya Pradesh Commercial Tax Act, 1994 (hereinafter referred to as 'the Act'), for declaration that petitioner is immune from levy of tax under the Act on supply of medicine in the course of activity of running its charitable hospital and for restraining the respondents from giving effect to the impugned order and also prohibiting them from enforcing/recovering demands against the petitioner. By way of amendment, proceedings taken subsequent to filing of the petition have also been challenged. 3. As per the petitioner, it is a charitable trust established with charitable objects. The trust amongst its various objects has also the object of providing medical relief to the public at large. The petitioner has established a hospital under the name and style of "Choithram Charitable and Research Center". The hospital is run by the petitioner in a charitable manner without any profit motive. Since the petitioner trust is a charitable trust running the hospital, it is not a dealer within the meaning of Section 2(h) of the Act hence is not liable to pay any tax under the Act. The petitioner is required to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine to patients in the course of activity of running its charitable hospital. Since the issue involved and the questions raised in this petition are similar to those as raised in W.P. No.2826 of 2005, they are not being narrated in detail. 6. W.P. No.473 of 2006 has been preferred by the petitioner Bombay Hospital, Indore challenging the order dated 24.12.2004 [Annexure P/8] and order dated 28.08.2025 [Annexure P/10] passed by the respondents whereby tax has been imposed upon it on the sale /supplies from canteen run in its charitable hospital for the attendants of the patients. The issues involved and questions raised in this petition are similar to the one involved in the previous petitions i.e whether running of a canteen by the petitioner can be said to be bringing it within the purview of a dealer for attracting the liability of tax under the Act hence they are not being narrated in detail. 7. Learned Senior counsel for the petitioners has submitted that as per the definition of a dealer under the Act only those persons who carry on business of buying and selling goods are regarded as dealers. A person would not be a dealer unless he carries on business of buying or selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cine as such is a part of the business of the hospital. Mere registration as a charitable trust cannot exempt the petitioners from the liability of payment of tax. The documents filed by the petitioners themselves establish that there is a regular activity of purchasing and selling of medicine in the shop of the petitioners, hence it is clear that they are dealers and are carrying the business independently and same cannot be said to be an ancillary or incidental activity. Supply of medicine to the patients and running a canteen while issuing separate bills certainly can be said to be bringing the petitioners within the purview of a dealer within the definition of the Act. The volume purchase of the medicine, frequency, continuity and regularity can be certainly said to be business. It is not intended that profit must be earned not does the definition cover a mere desire to make some monetary gain out of transaction or even series of transactions. It predicates a motive which pervades the whole series of transactions affected by the person in the course of his activity. The findings recorded by the respondents are perfectly justified. It is hence submitted that the petitions deserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion agent, broker, a del-credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of the principal; iv. any person who transfers the right to use any goods for any purpose, (whether or not for a specified period) in the course of business to any other person; Explanation - (I) Every person who acts as an agent of a non-resident dealer, that is as an agent on behalf of a dealer residing outside the State and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as - (i) a mercantile agent as defined in the Indian Sale of Goods Act, 1930; or (ii) an agent for handling goods or documents of title relating to goods; or (iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment, and every local branch of a firm or company situated outside the State, shall be deemed to be a dealer for the purpose of this Act. (II) The Central or a State Government or any of their departments or offices which, whether or not in the course of business, buy, sell, supply or dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes: - a) Omitted b) a casual trader c) a commission agent, a broker or a del credere agent or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods executing works contract, transferring right to use any goods or supplying by way of or as part of any service, any goods on behalf of any principal; d) a non-resident dealer or an agent of a non-resident dealer, or a local branch of a firm or company or association or body of persons whether incorporated or not situated outside the State; e) a person who, whether in the course of business or not, sells; i. goods produced by him by manufacture, agriculture, horticulture or otherwise; or ii. trees which grow spontaneously and which are agreed to be severed before sale or under the contract of sale; (f) a person who whether in the course of business or not:- (1) transfers any goods, including controlled goods whether in pursuance of a contract or not, for cash or deferred payment or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of a dealer. He would be so included even if he is buying, selling, supplying or distributing goods whether in the course of business or not. The said judgment relied upon by the learned counsel for the respondents is distinguishable and is not applicable to the facts of the present case. 15. Though the learned senior counsel for the petitioners has placed heavy reliance upon the decision of the Apex Court in State of Tamil Nadu and another vs. Board of Trustees (supra) but the same has been distinguished and statutorily superseded by the Apex Court in the case of Cochin Port Trust (supra) and does not help him in any manner. However, the issue involved in this petition i.e. whether medicine supplied for treatment of inpatients in a hospital of which price is recovered from the patients would be deemed to be sale of drugs has been specifically considered by the Full Bench of the Kerala High Court in Aswini Hospital Private Limited and others (supra) wherein it has been held that when medicine is supplied as part of treatment of patients in a hospital the price of which is recovered by way of bills from the patients, there is no deemed sale of the drugs. This sale in cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not be complied with by either a medical practitioner or a hospital, the latter of whom dispenses medicines only in accordance with the directions of the attending physician or surgeon. A person visits a hospital primarily for the purpose of curing an ailment or arresting or preventing it. At the hospital he places himself at the disposal of the physician or the surgeon who decides on the course of treatment to be taken which may or may not involve the administration of drugs, implants being carried out and other consumables being used in the course of the treatment. The cost of the implants, consumables or the drugs is irrelevant insofar as deciding what is the dominant nature of the transaction or service rendered to the patient in a hospital, which, without any doubt, is the therapeutic treatment rendered. The patient has no control or say, has limited control, on the procedures taken in the course of the treatment, the drugs administered and the consumables used. * ---- * --- * --- * 21. The declaration so made was with respect to the development contract which was held to be a works contract. As to the other transactions the dominant nature test applies and in hospital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , out of the definition of "sale of goods", is that it is an integral, indivisible part of the composite transaction rendering medical treatment and care, which is a service rendered. There can be no differentiation made of the various aspects or elements involved in such service rendered. The element of sale is an integral part of the medical service and cannot be separated or distinctly plucked away from the composite transaction so as to levy tax on the sale element. The consensual nature of a sale and the absence of a contract are not the fetter on the State to tax the sale of drugs, consumables and implants. The State is fettered in so far as the levy being not competent and permissible, when the sale is effected in the course of a composite service or contract ; not possible of bifurcation and isolation from the composite transaction, for effectuating a separate levy on the value of the sale effected." 16. In Bhailal Amin General Hospital (supra) the Gujarat High Court has also held that the petitioner therein being a charitable trust running and maintaining a public hospital while purchasing, selling and supplying medicines to patients in order to achieve objects was not en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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