C. N. RAMACHANDRAN NAIR, J. –

The short question arising in these cases is whether a hospital is a "dealer" within the definition of that term contained in the Kerala General Sales Tax Act, hereinafter called "the Act". The proceedings initiated against the petitioners by the sales tax authorities under the Act under challenge are issued on the basis that the petitioners are "dealers" under the Act. While in some cases notices are issued to the hospitals directing them to take registration under the Kerala General Sales Tax Act, in some cases hospitals are directed to produce books of accounts and in yet another category penalty is levied or proposed either for not registering or for non-compliance with other statutory provisions. The validity or otherwise of all these proceedings will depend on whether the concerned hospital can be treated as a "dealer" to subject it to all the disciplines provided under the Act and Rules. There is a standard pattern of service rendered in a hospital and distinguishing factors among the hospitals may be in regard to quality and volume of it, but essentially the activities in all the hospitals are one and the same. There is no case by any of the petitioner-hospitals that they are not supplying or selling medicines to the patients in the course of medical treatment which is the very basis on which sales tax authorities have issued notices calling them to take registration, to produce books of accounts, file returns and pay tax, if any due. Therefore, the essence of issue is whether the supply of medicine to patients in the course of treatment constitute "sale" bringing the petitioners within the scope of "dealer" under the Act making them liable to take out registration, file returns and to pay sales tax if payable.

I heard counsel for the petitioners and also the Special Government Pleader for Taxes.

Before proceeding to the main issue, an aspect to be clarified is the distinction between medical practitioners on the one side and the hospitals and dispensaries on the other side. Notification SRO No. 1090 of 1999 as amended by SRO No. 802 of 2001 provides exemption to medical practitioners which is as follows :

"---------------------------------------------------------------------- Sl. Name of dealer Turnover which is Conditions and No. exempted restrictions ----------------------------------------------------------------------- 13. Medical practitioners Turnover relating to Nil dispensing medicines the medicines dispensed from their own to their patients dispensaries in the course of treatment

[Explanation. - For the purpose of this serial number the term 'medical practitioners' shall not include any hospital or clinic.] -----------------------------------------------------------------------"

By virtue of the exemption provided under the above notification, there is no need to go into the question as to whether medical practitioners dispensing medicines are also "dealers" within the meaning of the Act because by virtue of the exemption available to medical practitioners that question is only academic in nature and I do not think there is any need for this Court to address such a question unnecessarily. The explanation to entry 13 to the above notification was introduced with effect from August 16, 2001. However, notices are seen issued by some officers way back in 1997 itself directing hospitals to comply with statutory provisions. In fact exclusion of hospitals and clinics from entry 13 above is only in the form of an explanation.

Even prior to the introduction of the said explanation, entry 13 provided for exemption only to medical practitioners dispensing medicines from their own dispensaries who are different from hospitals and clinics. Therefore, even prior to the introduction of the explanation, such of the persons who generally come as medical practitioners di