M/s Edappal Hospital (P) Limited v. State of Kerala

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
T. R. Ravi
Judgment Date: 2020-06-22
Court Decision / Holding: The revisions are allowed with the reservation that if the Supreme Court reverses the Full Bench judgment, the assessee would be subject to that decision. The VAT Tribunal’s orders are set aside and the questions are answered in favour of the assessee and against the revenue. The matter is kept open to potential consequences if the FB ruling is reversed by the Supreme Court; costs are allocated to the parties.
Final Disposition: Revisions allowed; VAT Tribunal orders set aside; matters to be decided in light of the Full Bench ruling, with reservation for Supreme Court reversal; costs awarded.

Parties to the Case

Appellants / Petitioners

M/s Edappal Hospital (P) Ltd., Edappal, represented by its Managing Director, Mrs. Chitra Gopinath

Respondents

State of Kerala

Legal Representation & Advocates

Counsels for Petitioners

• Sri N. Muraleedharan Nair

Counsels for Respondents

• Senior Govt. Pleader Sri Mohammed Rafiq

Case Synopsis & Summary

This consolidated High Court of Kerala order deals with three tax revision petitions (OT.Rev.No.101/2015, OT.Rev.No.96/2015, OT.Rev.No.112/2015) filed by M/s Edappal Hospital (P) Ltd. challenging VAT Tribunal orders on the taxability of purchases (laboratory chemicals, surgical items) and X-ray charges by a hospital, and the corresponding sales to patients. The revisions arise from three separate assessment years, each involving T.A.(VAT) Nos.1166/1163/1165/2013. The core issue is whether such hospital transactions fall within the taxable ambit under the Kerala Value Added Tax Act for medical emergencies and therapeutic prescriptions. The petitioners rely on a Full Bench decision in Sanjose Parish Hospital (M/s.) v. Commercial Tax Officer and Others (2019 (1) KHC 377 (FB)) to argue non-taxability. The State counters that there is a pending Special Leave Petition in the Supreme Court, but no stay has been granted, and therefore the revisions should not be kept pending. The Division Bench ultimately sets aside the Tribunal orders, answers the questions in favour of the assessee, and reserves the outcome to any reversal by the Supreme Court of the FB ruling, with costs awarded to the parties. The decision highlights coordination between VAT jurisprudence and medical service exemptions as clarified by the FB judgment.

Provisions of Law Cited

Kerala Value Added Tax Act (KVAT)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contend that the hospital’s purchases of laboratory chemicals and surgical items, and X-ray charges, are for medical emergencies and the subsequent sales are on physician-prescribed therapeutic use. They rely on the Full Bench ruling in Sanjose Parish Hospital (M/s.) v. Commercial Tax Officer and Others to assert non-taxability under KVAT and argue there is no stay in the related Supreme Court matter, so relief should be granted without delay and the Tribunal orders set aside in line with the FB decision across the three years under consideration.

Contentions of Respondents

The State maintains that KVAT taxation is applicable to such hospital transactions and notes a pending Supreme Court Special Leave Petition, with no stay granted. Given the absence of a stay, the revisions should not be kept pending, and the Tribunal’s orders should be reversed in light of the FB decision, subject to any reversal by the Supreme Court. The State underscores the revenue interest and the need for definitive clarifications on taxability.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Sanjose Parish Hospital (M/s.) and Others v. Commercial Tax Officer and Others	2019 (1) KHC 377 (FB)	Positive	Cited as the controlling Full Bench authority relied upon by the present order to hold non-taxability of hospital purchases/sales for emergencies.

Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHAND RAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 22ND DAY OF JUNE 2020 / 1ST ASHADHA, 1942** **OT.Rev.No.101 OF 2015** **AGAINST THE ORDER/JUDGMENT IN OTHERS 1166/2013 DATED 29-10-2014 OF VALUE ADDED TAX APPELLATE TRIBUNAL,ADDITIONAL BENCH,PKD** ## **REVISION PETITIONER/S:** **M/S.EDAPPAL HOSPITAL (P) LIMITED EDAPPAL, REPRESENTED BY ITS MANAGING DIRECTOR, MRS.CHITRA GOPINATH.** **BY ADV. SRI.N.MURALEEDHARAN NAIR** **RESPONDENT/S:** **STATE OF KERALA** ## **OTHER PRESENT:** ## **SENIOR GOVT.PLEADER SRI.MOHAMMED RAFIQ** **THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 22.06.2020, ALONG WITH OT.Rev.96/2015, OT.Rev.112/2015, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** O.T. Rev.No.101/2015 and con.cases ::2:: **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 22ND DAY OF JUNE 2020 / 1ST ASHADHA, 1942** ## **OT.Rev.No.96 OF 2015** **AGAINST THE ORDER/JUDGMENT IN TAVAT 1163/2013 DATED 29-10-2014 OF VALUE ADDED TAX APPELLATE TRIBUNAL,ADDITIONAL BENCH,PKD** ## **REVISION PETITIONER/S:** **M/S. EDAPPAL HOSPITAL (P) LTD. EDAPPAL, REPRESENTED BY ITS MANAGING DIRECTOR MRS.CHITRA GOPINATH** **BY ADV. SRI.N.MURALEEDHARAN NAIR** ## **RESPONDENT:** ## **STATE OF KERALA** **THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 22.06.2020, ALONG WITH OT.Rev.101/2015, OT.Rev.112/2015, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** O.T. Rev.No.101/2015 and con.cases ::3:: **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 22ND DAY OF JUNE 2020 / 1ST ASHADHA, 1942** **OT.Rev.No.112 OF 2015** **AGAINST THE ORDER/JUDGMENT IN OTHERS 1165/2013 DATED 29-102014 OF VALUE ADDED TAX APPELLATE TRIBUNAL,ADDITIONAL BENCH,PKD** ## **REVISION PETITIONER/S:** **M/S.EDAPPAL HOSPITAL (P) LTD EDAPPAL, REPRESENTED BY ITS MANAGING DIRECTOR, MRS. CHITRA GOPINATH** **BY ADV. SRI.N.MURALEEDHARAN NAIR** ## **RESPONDENT:** **STATE OF KERALA** **THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 22.06.2020, ALONG WITH OT.Rev.96/2015, OT.Rev.101/2015, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** O.T. Rev.No.101/2015 and con.cases ::4:: ## **O R D E R** **[O.T. Rev.Nos. 101/2015, 96/2015 and 112/2015] (Dated this the 22[nd] day of June, 2020) K.Vinod Chandran, J** **The revisions raise the very same issue of exigiblity to tax of the purchase and sale of laboratory chemicals, surgical items, charges for X-ray by the assessee, a hospital. Admittedly the purchase was for the purpose of medical emergencies and the sale was also on prescription of the medical practitioner to the patients for therapeutic purposes. The issue stands covered by a judgment of the Full Bench of this Court reported in** _**Sanjose Parish Hospital (M/s.) and Others v. Commercial Tax Officer and Others [2019 (1) KHC 377 (FB)]**_ **.** **2. The contention of the learned Senior Government Pleader is that there is a Special Leave Petition filed before the Hon'ble Supreme Court in which, however, no stay has been granted admittedly. In the above circumstances, we do not think that the revisions need be kept pending and we follow the decision of the Full Bench to set aside the orders** O.T. Rev.No.101/2015 and con.cases **==> picture [20 x 9] intentionally omitted <==** **passed by the Tribunal and answering the questions in favour of the assessee and against the revenue.** **3. In the matter of assessments for three separate years, raised in O.T.Rev.Nos.101, 96 and 112 of 2015 respectively from T.A.(VAT) Nos.1166, 1163 and 1165 of 2013 of the Appellate Tribunal; the revisions are allowed with the reservation that if the Hon'ble Supreme Court reverses the aforesaid Full Bench judgment, then necessarily the assessee would also be subject to that and the State would be entitled to make demand on the basis of the assessment orders now set aside as modified by the first appellate authority, if any such modification is made.** **Ordered accordingly. Parties are left to suffer their respective costs.** **Sd/K.VINOD CHANDRAN, Judge** **Sd/T.R RAVI, Judge** **jma** O.T. Rev.No.101/2015 and con.cases ::6:: ## **APPENDIX OF OT.Rev 101/2015** ## **PETITIONER'S/S EXHIBITS:** ## **ANNEXURE A** **TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX OFFICER, PONNANI, FOR THE ASSESSMENT YEAR 200708 DATED 31.12.2010** **ANNEXURE B TRUE COPY OF THE 1ST APPELLATE ORDER PASSED BY THE ASSISTANT COMMISSIONER (APPEALS) O/OF THE DEPUTY COMMISSIONER (APPEALS) DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD, DATED 27.12.2011 ANNEXURE C TRUE COPY OF THE COMMON TRIBUNAL ORDER PASSED BY THE KERALA VALUE ADDED TAX ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD, IN T.A.VAT NOS 1163/2013,1165/2013 & 1166/2013 DATED 29.10.2014** O.T. Rev.No.101/2015 and con.cases ::7:: ## **APPENDIX OF OT.Rev 96/2015** ## **PETITIONER'S/S EXHIBITS:** ## **ANNEXURE-A** **TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX OFFICER, PONNANI, FOR THE ASSESSMENT YEAR 200506 DATED 31.12.2010.** ## **ANNEXURE-B** **TRUE COPY OF THE 1ST APPELLATE ORDER PASSED BY THE ASSISTANT COMMISSIONER (APPEALS),O/o OF THE DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD, DATED 27.12.2011.** ## **ANNEXURE-C** **TRUE COPY OF THE COMMON TRIBUNAL 0RDER PASSED BY THE KERALA VALUE ADDED TAX ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD, IN T.A.VAT. Nos.1163/2013, 1165/2013 & 1166/2013 DATED 29.10.2014.** O.T. Rev.No.101/2015 and con.cases ::8:: ## **APPENDIX OF OT.Rev 112/2015** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE -A** **TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX OFFICER, PONNANI, FOR THE ASSESSMENT YEAR 200607 DATED 31.12.2010** ## **ANNEXURE -B** **TRUE COPY OF THE 1ST APPELLATE ORDER PASSED BY THE ASSISTANT COMMISSIONER (APPEALS), O/OF THE DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD, DATED 27.12.2011** **ANNEXURE -C** **TRUE COPY OF THE COMMON TRIBUNAL ORDER PASSED BY THE KERALA VALUE ADDED TAX ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD, IN T.A.VAT.NOS. 1163/2013, 1165/2013 AND 1166/2013 DATED 29.10.2014**