The court clarified that the provision of medical supplies in a hospital context does not constitute a taxable sale under the KVAT Act.

J U D G M E N T

Both these writ petitions are filed by the same petitioner challenging the orders of penalty and notices for assessment under the provisions of the Kerala Value Added Tax Act (hereinafter referred to as ‘KVAT Act’).

2. The main dispute involved in these writ petitions pertain to the taxability of medicine supplied, implants and consumable tools and surgical tools exclusively used in the procedure as part of treatment of patients in a hospital. In these writ petitions, the penalty order was passed imposing liability of tax in respect of the goods referred to above separately, by treating the transaction as sale, and based on the same, assessment was proposed under Sec.25(1) of the KVAT Act. W.P.(C).No.12094/2015 was submitted by the petitioner challenging Ext.P5 and P6 orders of penalty, whereas, W.P.(C). No.1185/2016 is filed, challenging Exts.P3 and P4 notices under Sec.25(1) of the KVAT Act.

3. Today when the matter came up for consideration, the learned counsel for the petitioner brought to the attention of this Court, the decision rendered by a Full Bench of this Court in Sanjose Parish Hospital v. Commercial Tax O Chavakkad And Ors. ( 2019 (1) KHC 377 ), wherein this issue was specially dealt with and it was found that, the transactions in connection with the medicines supplied, implants carried out, the consumables used and surgical tools exclusively used in a particular procedure, as part of treatment of patients in a hospital, the price of which is recovered by way of bills from the patients are not ‘sale of goods’ as contemplated by the legislation levying such tax; herein the Kerala Value Added Tax Act . Thus, in the light of the authoritative pronouncement of the legal proposition in this regard, an interference is required.

4. Of course of the petitioner submitted that the Full Bench decision is now pending consideration before the Hon’ble Supreme Court. However, since this Court has already laid down the law and the same has not been interfered with so far, by the Hon’ble Supreme Court, I am of the view that, these writ petitions can be disposed of, in the light of the principles laid down in the above referred judgment.

Accordingly W.P.(C).No.12094/2015 is disposed of, quashing Exts. P5 and P6 and W.P.(C). No.1185/2016 is disposed of, quashing Exts.P3 and P4 notices, holding that, the transactions based on which the tax were imposed upon the petitioner as per the said orders, are non taxable in the light of the principles laid down by this Court in Sanjose Parish Hospital’s case. Since it is reported that, an amount of Rs.5 lakhs is already remitted by the petitioner in compliance of the condition granting interim order in W.P. (C).No.12094/2015, the petitioner is entitled to get the amount refunded in view of the fact that, this Court has already set aside the impugned demands. Therefore, it is further ordered that, upon submitting a formal application in this regard, the competent authority shall effect the refund, along with statutory interest, within a period of three months from the date of such application.

Sd/-