HIGH COURT FOR THE STATE OF TELANGANA ********

WRIT PETITION NO.24551 OF 2006 Between :

M/s.Asian Institute of Gastro Entrology(P) Ltd., 6-3-661, Somajiguda, Hyderabad, rep.by its Managing Director Dr. D.Nageshwar Reddy.

…. Petitioner and Commercial Tax Officer, Somajiguda Circle, Hyderabad and 2 others.

…Respondents DATE OF JUDGMENT PRONOUNCED : 06.02.2026 HON’BNLE SRI JUSTICE P.SAM KOSHY AND HON’BLE SRI JUSTICE SUDDALA CHALAPATHI RAO

1. Whether Reporters of Local Newspapers : Yes may be allowed to see the Judgments ?

2. Whether the copies of judgment may be : Yes marked to Law Reporters/Journals

3. Whether Their Lordship wish to : Yes see the fair copy of the Judgment ?

________________________________ SUDDALA CHALAPATHI RAO, J * HON’BNLE SRI JUSTICE P.SAM KOSHY AND HON’BLE SRI JUSTICE SUDDALA CHALAPATHI RAO +WRIT PETITION NO.24551 OF 2006 % 06.02.2026 Between:

# M/s.Asian Institute of Gastro Entrology (P) Ltd., 6-3-661, Somajiguda, Hyderabad, rep.by its Managing Director Dr. D.Nageshwar Reddy.

…. Petitioner and $ Commercial Tax Officer, Somajiguda Circle, Hyderabad and 2 others.

…Respondents !Counsel for the petitioner : Mr. S.Suri Babu Counsel for the Respondents : Mr. T.Chaitanya Kiran, learned Assistant Govt.Pleader representing Mr. Swaroop Oorilla, learned Spl.

Govt.Pleader Gist :

>Head Note:

? Cases referred: (2006) 145 STC 115

135 STC 224 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO WRIT PETITION NO.24551 OF 2006 DATE: 06.02.2026 Between:

M/s.Asian Institute of Gastro Entrology(P) Ltd., 6-3-661, Somajiguda, Hyderabad, rep.by its Managing Director Dr. D.Nageshwar Reddy.

…. Petitioner and Commercial Tax Officer, Somajiguda Circle, Hyderabad and 2 others.

…Respondents ORDER: (per the Hon’ble Sri Justice Suddala Chalapathi Rao)

Heard Mr. S.Suri Babu, learned counsel for the petitioner; and Mr. T.Chaitanya Kiran, learned Assistant Government Pleader appearing on behalf of Mr. Swaroop Oorilla, learned Special Government Pleader for the respondents.

2. The petitioner filed the instant writ petition under Article 227 of the Constitution of India challenging the Assessment of Value Added Tax in Form VAT 305, dated 08.09.2006, issued by the respondent No.1 for the assessment year 2005-06. The assessment sought to levy tax amounting to Rs.4,45,320/- on surgical goods used in operations and surgeries, including implants such as heart stents and valves, along with a penalty of Rs.1,11,330/- and interest of Rs.4,453/-.

3. The facts of the nutshell are that the dispute arose following conflicting rulings by the respondent No.3. Initially, on 20.8.2005, the respondent No.3 ruled that surgical disposables, implants such as stents, heart valves, etc. used in the course of treatment / surgery of patients are not liable to tax. However, this ruling was subsequently revised on 06.01.2006, wherein the respondent No.3 held that the value of medicines, implants like stents and catheters, and disposables are liable to tax at rates applicable to such items as listed in the schedules to the Andhra Pradesh Value Added Tax Act, 2005 (for short the ‘APVAT Act’).

4. The learned counsel for the petitioner primarily contended that the intrinsic nature of medical services as composite transactions where the transfer of property in goods is merely incidental and ancillary to the primary contract of service. He submits that the procedures conducted in the hospital; including diagnosis, surgeries and implantation of stents and valves require the exercise of an exceptionally high degree of medical skill, expertise and professional judgment. The prescription of correct medicines and the implantation of appropriate medical devices are essential ingredients of comprehensive medical treatment. While it is undeniable that stents and valves, when implanted in the body of patients, do get transferred to them and become integrated with their bodies, and therefore, the petitioner