January 2016
M/S.Christy Raj Hospital vs. State of Kerala [2014] 53MTJ284SC, Civil Appeal No 1119 of 2006, and 975 of 2014, dated 22nd January, 2014.
By G. G. Goyal
Janak Vaghani Chartered Accountants
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Sales Tax – Dealer – Hospital – Activity of Buying and Selling Medicines Through its Pharmacy – May be Business – Direction by VAT Department for Registration Under Sales Tax Law – Writ Petition Dismissed by High Court- Affirmed by SC – With a Permission to Raise All Grounds At The Stage of Assessment, Sections 16 and 17 of The Kerala General Sales Tax Act, 1963.
FACTS
The Appellant, Trust running a Hospital, had filed Writ Petition before the Kerala High Court challenging the direction given by the Sales Tax Department to obtain registration as dealer under the Kerala General Sales Tax Act. The appellant contended before the High Court that hospitals are not liable to be registered under KGST Act as they werewnot doing any business. The High Court dismissed the writ Petition.
The High Court held that though it is true that doctors of various specialties doing service in hospital by their intellectual skill in the matter of treating the patients by itself may not be a business activity and that is only a profession but various other facilities provided in the hospital cannot be said to be non business activity for example, a clinical laboratory, can independently function outside a hospital and do business. The fact that it is housed in a hospital will not make the service rendered a non-business activity. The activity in the hospital may involve business activities and non- business activities as well.
The appellant filed appeal before the Supreme Court against the judgment of Kerala High Court dismissing Writ Petition.
HELD
The Supreme Court disposed the appeal and affirmed the judgment and order passed by the High Court and granted permission to the appellant to raise all such grounds which are available to it, including certain grounds raised in appeal before SC at the stage of assessment. The assessing authorities were directed to look into those grounds, advert to them and pass a reasoned and speaking order. It was also clarified by SC that it has not examined the constitutional validity or otherwise of ‘Dealer’ as well as ‘Business’.
