Case Law Details

Case Name : Sree Balaji Medical College & Hospital Vs State of Tamil Nadu (Madras High Court)
Appeal Number : W.P. No. 22677 to 22683 of 2012
Date of Judgement/Order : 18/06/2021
Related Assessment Year :

Sree Balaji Medical College & Hospital Vs State of Tamil Nadu (Madras High Court)

W.P.No.22677 of 2012 is filed for Declaration to declare that the professional services rendered by the Doctors of petitioner’s Medical College Hospital under the nature of diagnostic services on X-Ray Films, CT Scan Films, MRI Films and supply of medical gases and implants are during the course of treatment to patients would not amounts to transfer of property in goods or an incident of contract of service under the scope of “works contract” as per Article 366 (29A) (b) of the Constitution of India and under Section 2(33) of the TN VAT Act, 2006.

2. W.P.Nos.22678 to 22683 of 2012 are filed to call for the impugned proceedings of the 3rd respondent dated 27.04.2012 and quash the same and consequently restraining the 3rd Respondent herein from levying and collecting taxes on rendering diagnostic services on X-Ray films, CT films, MRI films and medical gases for impatient treatments and other allied medical services to the patients at the petitioner Medical College Hospital.

3. Learned counsel appearing on behalf of the Writ Petitioners fairly made a submission that the issues raised in all these Writ Petitions were already adjudicated by this Court in a batch of Writ Petitions and a judgment was pronounced on 28.05.2020 in W.P.Nos.2982 to 2987 of 2012, etc., and batch. This Court considered the previous all these statutes as well as the issued raised on merits and passed the following orders:

“200.In my view, the observation of the Hon’be Supreme Court in BSNL versus Union of India (2006) 3 SCC 1 and the four decision cannot be apply for the following reasons:

i. In BSNL versus Union of India (2006) 3 SCC 1, the Hon’ble Supreme Court was not concerned with ”works contract?”;

ii. The Court was concerned with “transfer of right to use of goods which is different with” works contract”;

iii. The obiter dicta or the observation in para 44 of and the illustration in BSNL versus Union of India (2006) 3 SCC 1 cannot be construed as a binding ratio for the reason given in this order;

iv. The four decisions of the different High Court which were cited on behalf of the petitioners though have a persuasive value are not binding on this Court particularly in the light of the fact that the Courts did not examine the issue from the perspective of the definition of “works contract” in the respective tax enactments. They merely discussed the issue from the perspective definition of ”sale” simplicitor;

v. Therefore, the ratio in the four decisions do not have a binding ratio for this Court to follow them.

vi. Since the dispute pertains to the assessment years 2006 onwards considerable time has lapsed, the petitioners are directed to file their respective replies within two months from the date of receipt of this Order;

vii. Petitioner shall co-operate with the respondent assessing officer by furnishing all records that are available with them within 30 days of this order.

viii. The respondent shall exclude the value of medicine and other consultation charges while determining the taxable value. The demand shall be confirmed to the value of prosthetics and charges incurred towards X-ray, C.T.Scan, PET Scan etc.

ix. The respondent assessing officer shall hear out the petitioners separately and pass appropriate order on merits all the other issues raised in the respective notices impugned in these writ petitions;

x. The respondent assessing officer shall keep the observations contained herein while passing final orders in response to the impugned notices;

xi. If the Covid-19 pandemic continues, the respondent may hear the petitioners through video conference and pass such order within a period of 6 months from the date of this order;

xii. It is for the petitioner to approach the Government independently and request the Government for a suitable retrospective relaxation by way of exemption for hospital/medical services rendered by them in the light of the fact that the same activity/transaction appears to have been exempted under the GST Regime from July 2017.

201. These writ petitions stand disposed of with the above observation. No Cost. Consequently, connected miscellaneous petitions are closed.”

4. In view of the said directions, all these Writ Petitions are disposed of and the directions issued in the judgment cited supra is made applicable to the present Writ Petitions. Accordingly, they are at liberty to redress their grievances. However, there shall be no order as to costs. Consequently, the connected Miscellaneous Petitions are closed.

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October 2021