Pentagon Healthcare Private Limited Little Flower Hospital and Research Centre, Angamaly v. Intelligence Officer (IB), Mattancherry; Deputy Commissioner Intelligence Commercial Taxes, Toll Junction, Edapally, Kochi

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN TUESDAY, THE 11[TH] DAY OF JULY 2023 / 20TH ASHADHA, 1945** ## **WP(C) NO. 38579 OF 2015** ## **PETITIONER/S:** PENTAGON HEALTHCARE PRIVATE LIMITED LITTLE FLOWER HOSPITAL AND RESEARCH CENTRE, ANGAMALY, PIN-683572, REPRESENTED BY ITS MANAGING DIRECTOR NORBERT GEORGE. BY ADVS. SRI.S.ANIL KUMAR (TRIVANDRUM) SRI.K.S.HARIHARAN NAIR SRI.P.F.JOY SMT.G.REMADEVI ## **RESPONDENT/S:** 1 INTELLIGENCE OFFICER (IB) MATTANCHERRY AT ALUVA,PIN-683501. 2 THE DEPUTY COMMISSIONERINTELLIGENCE COMMERCIAL TAXES,TOLL JUNCTION,EDAPALLY,KOCHI682024. BY GOVERNMENT PLEADER SRI.T.JAYAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** ## **JUDGMENT** The petitioner, a medical diagnostic centre attached to the Little Flower Hospital & Research Centre, is providing the facility for ultrasound scanning and various other types of human body scanning for patients. According to the petitioner, they are not having any taxable turnover under the Kerala Value Added Tax Act, 2003 (for short, the KVAT Act) and also under the Central Sales Tax Act, 1956 and they had been maintaining the books of accounts, which are being duly audited by the Chartered Accountants. While so, the first respondent issued summons for production of the books of accounts for the year 2009-10 to 2013-14, which has been complied with by the petitioner. However, after perusing the books of accounts, the first respondent issued penalty proposals for 2009-10 to 2013-14, to WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** which the petitioner filed a detailed reply. The petitioner also produced the details of tax payment and the purchase list maintained by them before the first respondent as per Exts.P2 series and P3 series. Thereafter, the first respondent issued Ext.P4 series penalty orders on the ground of tax liability on the purchase of consumables effected by the petitioner. According to the petitioner, they are not doing any sale and they have no liability under the KVAT Act. Ext.P4 series penalty orders were issued without properly appreciating the fact of payment of tax on purchases and without considering Exts.P2 series and P3 series bills, which are produced by the petitioner to prove the details of tax payment. Thereafter, the petitioner filed Ext.P6 rectification petition before the first respondent, on which no orders were passed, though the petitioner was heard. Hence, the petitioner filed Ext.P7 representation before the WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** second respondent for a consideration of Ext.P6 rectification petition. It is in this context, the petitioner has come up before this Court. 2. The first respondent filed a counter affidavit, contending that the audited statements for the years 2009-10 to 2013-14 produced by the petitioner show that they have declared expenditure towards consumption of medicines, films, chemicals and thermal papers, which are taxable items purchased and utilized by the dealer for their business activity. Thus, according to the first respondent, the petitioner is a “dealer” as defined under Section 2(xv) of the KVAT Act and also liable to be registered as a “dealer” and hence, a notice under Section 67(1) of the KVAT Act was issued to the petitioner giving sufficient time for personal hearing and also to compound the offence. It is further contended that since the petitioner was not willing to compound the offence, Ext.P4 WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** series penalty orders were passed. According to the first respondent, there is no estimation of sales and the sale is arrived at, from the taxable purchases; and the non remittance of tax due on sale of medicines and consumables is treated as suppression of sales turnover. It is contended that the issue involved in this case is already decided in favour of the Revenue Department by this Court in **Aswini Hospital Pvt. Ltd. & Others** v. **Intelligence Officer & Others** [2012:KER:36744]. It is further contended that the petitioner is a Scanning Centre and they use films, thermal paper and medicine and they are, in fact, dealers, who are liable to pay tax on the consideration received for the items, and the service of this nature would fall within the ambit of the expression “sale”. It is further contended that the petitioner was given an opportunity of hearing on 26.11.2015 as requested and they produced details regarding the WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** rectification application. However, on 25.10.2015, i.e., even before consideration and hearing, the petitioner approached the second respondent and requested for purchase tax exemption. According to the first respondent, the petitioner has efficacious alternate remedy under the KVAT Act and hence, the writ petition is only to be dismissed. 3. The petitioner filed a reply to the counter affidavit, refuting all the contentions raised by the first respondent. 4. Heard the learned counsel for the petitioner and the learned Government Pleader. 5. The learned counsel for the petitioner submits that the petitioner was not granted a further opportunity of being heard after filing objection. It is further submitted that the first respondent ought to have noted that the petitioner had paid tax on all the purchases as evident from Exts.P2 series & P3 series submitted WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** by the petitioner before the first respondent, however, it was without considering the same, Exts.P4 to P4(d) orders were passed by the first respondent. It is also pointed out that thereafter, though the petitioner had filed rectification petition as Ext.P6, the same was not considered by the respondents. Hence, the learned counsel requests for one more opportunity to hear the petitioner and to produce all the documents before the assessing authority so as to reconsider the case of the petitioner. The learned counsel for the petitioner also relied on the decisions of this Court in **M/s Sanjose Parish** **Hospital** v. **Commercial Tax Officer & Others** [2019:KER:16708] and **Amala Cancer Hospital Society** v. **State Tax Officer & Others** [2020:KER:14806], wherein the very same issue was considered and decided in favour of the petitioner. 6. _Per contra_ , the learned Government WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** Pleader submits that the objection filed by the petitioner was considered in detail and it is only after affording an opportunity of hearing, Ext.P4 series penalty orders have been passed against the petitioner. 7. On a perusal of Ext.P4 series penalty orders, it is seen that the petitioner was afforded an opportunity of hearing on 21.05.2015. However, Ext.P4 series penalty orders do not reflect any discussion on Exts.P2 series or P3 series produced by the petitioner. According to the petitioner, they had paid tax on all the purchases, which are evident as per Ext.P2 series and P3 series documents. The first respondent has passed the penalty orders without referring to those documents. The first respondent ought to have considered the objections raised by the petitioner. The failure to pass a speaking order considering the issues raised by the petitioner, amounts to violation of principles of natural WP(C) NO. 38579 OF 2015 **==> picture [31 x 8] intentionally omitted <==** justice. 8. Hence, on a consideration of the entire facts and circumstances of the case, I am of the opinion that the penalty orders have to be set aside and one more opportunity has to be given to the petitioner to establish their case before the first respondent. Accordingly, the writ petition is allowed and the following orders are issued; a)Ext.P4 series penalty orders are set aside. b)The petitioner is directed to appear before the first respondent on 23.08.2023. c)The petitioner shall produce all supporting documents, if any, before the first respondent to prove their case. The petitioner shall also produce copy of the judgments relied on by them. d)The first respondent shall consider and pass appropriate orders afresh after affording the petitioner an opportunity of hearing, within WP(C) NO. 38579 OF 2015 ..10.. a period of two months thereafter. The petitioner shall produce certified copy of this judgment along with the writ petition before the first respondent for compliance. ## **Sd/-** **SHOBA ANNAMMA EAPEN** **JUDGE** bka/- WP(C) NO. 38579 OF 2015 ..11.. ## **APPENDIX OF WP(C) 38579/2015** PETITIONER EXHIBITS P1 COPY OF REGISTRATION CERTIFICATE ISSUED TO THE PETITIONER TO CONDUCT THE SCANNING CENTRE ATTACHED WITH HOSPITAL P2 COPY OF THE STATEMENT OF PURCHASES MADE BY THE PETITIONER ALONG WITH DETAILS OF VAT PATMENT BILLS FOR THE YEAR 2009-10 P2(A) COPY OF THE STATEMENT OF PURCHASED MADE BY THE PETITIONER ALONG WITH DETAILS OF VAT PAYMENT BILLS FOR THE YEAR 2010-11 P2(B) COPY OF THE STATEMENT OF PURCHASES MADE BY THE PETITIONER ALONG WITH DETAILS OF VAT PAYHMENT BILLS FOR THE YEAR 2011-12 P2(C) COPY OF THE STATEMENT OF PURCHASES MADE BY THE PETITIONER ALONG WITH DETAILS OF VAT PAYHMENT BILLS FOR THE YEAR 2012-13 P2(D) COPY OF THE STATEMENT OF PURCHASES MADE BY THE PETITIONER ALONG WITH DETAILS OF VAT PAYHMENT BILLS FOR THE YEAR 2013-14 P3 COPY OF THE DETAILS OF CONSOLIDATED VAT PAYMENT MADE BY THE PETITIONER ON THE PURCHASES FOR THE YEAR 2009-10 P3(A) COPY OF THE DETAILS OF CONSOLIDATED VAT PAYMENT MADE BY THE PETITIONER ON THE PURCHASES FOR THE YEAR 2010-11 WP(C) NO. 38579 OF 2015 ..12.. P3(B) COPY OF THE DETAILS OF CONSOLIDATED VAT PAYMENT MADE BY THE PETITIONER ON THE PURCHASES FOR THE YEAR 2012-13 P3(C) COPY OF THE DETAILS OF CONSOLIDATED VAT PAYMENT MADE BY THE PETITIONER ON THE PURCHASES FOR THE YEAR 2012-13 P3(D) COPY OF THE DETAILS OF CONSOLIDATED VAT PAYMENT MADE BY THE PETITIONER ON THE PURCHASES FOR THE YEAR 2013-14 P4 COPY OF THE PENALTY ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2009-10 DATED 14-09-2015 P4(A) COPY OF THE PENALTY ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2010-11 DATED 14-09-2015 P4(B) COPY OF THE PENALTY ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2011-12 DATED 14-09-2015 P4(C)COPY OF THE PENALTY ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2012-13 DATED 14-09-2015 P4(D) COPY OF THE PENALTY ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2013-14 DATED 14-09-2015 P5 COPY OF JUDGMENT DATED 16-06-2014 OF THIS HON'BLE COURT IN W.P(C)11696/2013 P6 COPY OF RECTIFICATION PETITION FILED BEFORE THE 1ST RESPONDENT DATED 10-102015 WP(C) NO. 38579 OF 2015 **==> picture [37 x 8] intentionally omitted <==** P6(A) COPY OF THE NOTICE OF PERSONAL HEARING ON EXT.P6 DATED 17-11-2015 P7 COPY OF THE REPRESENTATION SUBMITTED BEFORE THE 2ND RESPONDENT DATED 25-112015.