State of Kerala v. Baby Memorial Hospital, Calicut

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **FRIDAY, THE 22ND DAY OF MAY 2020 / 1ST JYAISHTA, 1942 OT.Rev.No.112 OF 2019** **AGAINST THE ORDER IN TA(VAT).271/2016 DATED 11-03-2019 OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE [ASSESSMENT YEAR 2009-10].** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REP. BY THE DEPUTY COMMISSIONER (LAW), KERALA GST DEPARTMENT, ERNAKULAM.** **BY SPL.GOVERNMENT PLEADER (TAXES) SRI.C.E.UNNIKRISHNAN.** ## **RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **M/S.BABY MEMORIAL HOSPITAL, CALICUT, PIN-673001** **R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SMT.G.MINI(1748)** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 22.05.2020, ALONG WITH OT.Rev.123/2019, OT.Rev.127/2019, OT.Rev.128/2019, OT.Rev.129/2019, OT.Rev.133/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **O.T.Rev.112 of 2019 & - 2 - connected cases** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **FRIDAY, THE 22ND DAY OF MAY 2020 / 1ST JYAISHTA, 1942** **OT.Rev.No.123 OF 2019** **AGAINST THE ORDER IN TA(VAT).272/2016 DATED 11-03-2019 OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE [ASSESSMENT YEAR 2010-11].** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REP. BY THE DEPUTY COMMISSIONER(LAW), KERALA GST DEPARTMENT, ERNAKULAM** **BY SPL.GOVERNMENT PLEADER (TAXES) SRI.C.E.UNNIKRISHNAN.** ## **RESPONDENT/APPELLANT/PPELLANT/ASSESSEE:** **M/S.BABY MEMORIAL HOSPITAL, CALICUT, PIN - 673 001** **R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SMT.G.MINI(1748)** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 22.05.2020, ALONG WITH OT.Rev.112/2019, OT.Rev.127/2019, OT.Rev.128/2019, OT.Rev.129/2019, OT.Rev.133/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **O.T.Rev.112 of 2019 & - 3 - connected cases** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **FRIDAY, THE 22ND DAY OF MAY 2020 / 1ST JYAISHTA, 1942** **OT.Rev.No.127 OF 2019** **AGAINST THE ORDER IN TA(VAT).1364/2018 DATED 11-03-2019 OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE [ASSESSMENT YEAR 2011-12].** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REP BY THE DEPUTY COMMISSIONER (LAW), KERALA GST DEPARTMENT, ERNAKULAM** **BY SPL.GOVERNMENT PLEADER (TAXES) SRI.C.E.UNNIKRISHNAN.** ## **RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **M/S. BABY MEMORIAL HOSPITAL, CALICUT-673 007** **R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SMT.G.MINI(1748).** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 22.05.2020, ALONG WITH OT.Rev.112/2019, OT.Rev.123/2019, OT.Rev.128/2019, OT.Rev.129/2019, OT.Rev.133/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **O.T.Rev.112 of 2019 & - 4 - connected cases** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **FRIDAY, THE 22ND DAY OF MAY 2020 / 1ST JYAISHTA, 1942** **OT.Rev.No.128 OF 2019** **AGAINST THE ORDER IN TA(VAT).1362/2018 DATED 11-03-2019 OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE [ASSESSMENT YEAR 2009-10].** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REP. BY THE DEPUTY COMMISSIONER (LAW), KERALA GST DEPARTMENT, ERNAKULAM** **BY SPL.GOVERNMENT PLEADER (TAXES) SRI.C.E.UNNIKRISHNAN.** ## **RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **M/S. BABY MEMORIAL HOSPITAL, CALICUT , PIN - 673001 R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SMT.G.MINI(1748).** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 22.05.2020, ALONG WITH OT.Rev.112/2019, OT.Rev.123/2019, OT.Rev.127/2019, OT.Rev.129/2019, OT.Rev.133/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **O.T.Rev.112 of 2019 & - 5 - connected cases** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **FRIDAY, THE 22ND DAY OF MAY 2020 / 1ST JYAISHTA, 1942** **OT.Rev.No.129 OF 2019** **AGAINST THE ORDER IN TA(VAT).1363/2018 DATED 11-03-2019 OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE [ASSESSMENT YEAR 2010-11].** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REP. BY THE DEPUTY COMMISSIONER (LAW), KERALA GST DEPARTMENT, ERNAKULAM.** **BY SPL.GOVERNMENT PLEADER (TAXES) SRI.C.E.UNNIKRISHNAN.** ## **RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **M/S. BABY MEMORIAL HOSPITAL, CALICUT - 673001** **R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SMT.G.MINI(1748)** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 22.05.2020, ALONG WITH OT.Rev.112/2019, OT.Rev.123/2019, OT.Rev.127/2019, OT.Rev.128/2019, OT.Rev.133/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **FRIDAY, THE 22ND DAY OF MAY 2020 / 1ST JYAISHTA, 1942** **OT.Rev.No.133 OF 2019** **AGAINST THE ORDER IN TA(VAT).273/2016 DATED 11-03-2019 OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE [ASSESSMENT YEAR 2011-12].** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REP. BY THE DEPUTY COMMISSIONER (LAW), KERALA GST DEPARTMENT, ERNAKULAM.** **BY SPL.GOVERNMENT PLEADER (TAXES) SRI.C.E.UNNIKRISHNAN.** ## **RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** **M/S.BABY MEMORIAL HOSPITAL, CALICUT-673001.** **R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SMT.G.MINI(1748)** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 22.05.2020, ALONG WITH OT.Rev.112/2019, OT.Rev.123/2019, OT.Rev.127/2019, OT.Rev.128/2019, OT.Rev.129/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **O.T.Rev.112 of 2019 & - 7 - connected cases** **K. Vinod Chandran & T.R.Ravi, JJ. -----------------------------------------------O.T.Rev.Nos.112, 123, 127, 128, 129 & 133 of 2019 -----------------------------------------------Dated, this the 22[nd] day of May, 2020** ## **ORDER** ## **Vinod Chandran, J.** **The revisions raise the very same issue of exigiblity to tax of the purchase and sale of Oxygen and Nitrous Oxide 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 affirm the orders passed by the Tribunal, which set aside the orders of assessment and penalty.** ## **O.T.Rev.112 of 2019 & - 8 - connected cases** **3. In the matter of assessments for three separate years, raised in O.T.Rev.Nos.112, 123 and 133 of 2019, respectively from T.A.(VAT) Nos.271, 272 and 273 of 2016 of the Appellate Tribunal; the revisions are rejected 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.** **4. With respect to the penalty orders, we do not think that there need be any such reservation since the very fact that there was a batch of writ petitions filed and there was a reference made to a Full Bench would indicate that the issue was debatable and the assessees had, under a** _**bona fide**_ **belief that no tax would be payable, failed to include the turnover for assessment in the returns filed. We rely on the decisions of the Hon'ble Supreme Court in** _**Cement Marketing Co. of India v. Assistant Commissioner of Sales Tax**_ **[** _**(1980) 1 SCC 71**_ **]** _**, E.I.D.Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes**_ **[** _**(2000) 2 SCC 321**_ **] and** _**Sree Krishna Electricals v. State of T.N.**_ **[** _**(2009) 11 SCC 687**_ **].** **O.T.Rev.112 of 2019 & - 9 - connected cases** **5. In** _**Cement Marketing Co. of India**_ **, the Hon'ble Supreme Court held that for imposition of penalty** _**mens rea**_ **is essential. Therein the assessee had not included freight in the returns, on the** _**bona fide**_ **belief that such item does not form part of sale price. It was found that the assessee cannot be said to have filed a false return especially in the absence of a guilty mind.** _**E.I.D.Parry (I) Ltd.**_ **is a case in which the assessee, a manufacturer of sugar, did not include the subsidy amounts of planting and transport, paid to the sugarcane growers in the taxable turnover for the purpose of determining the purchase tax. The said amounts were found by the Hon'ble Supreme Court to be included in the turnover. But the correct position of law being not clear and the assessee being under a** _**bona fide**_ **belief that the said amounts were not to be included in the taxable turnover, it was found that the authorities erred in levying penalty.** _**Sree Krishna Electricals**_ **was a penalty imposed alleging escapement of tax, which was only by reason of a claim raised for exemption. The exemption was disallowed by the Revenue authorities, but the goods on which exemption was claimed having been disclosed in the account books, it was declared that there was no reason for imposing penalty.** ## **O.T.Rev.112 of 2019 & - 10 - connected cases** **6. We are of the opinion that the penalty orders, in any event, cannot be sustained and we, hence, reject the said revisions, numbered as O.T.Rev.Nos.127, 128 and 129 of 2019 filed against the orders of the Appellate Tribunal in T.A.(VAT) Nos.1364, 1362 and 1363 of 2018.** **Ordered accordingly. Parties are left to suffer their respective costs.** **Sd/K.VINOD CHANDRAN JUDGE** **Sd/T.R.RAVI JUDGE** **Vku/-** **O.T.Rev.112 of 2019 & - 11 - connected cases** ## **APPENDIX OF OT.Rev 112/2019** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE A** **TRUE COPY OF PENALTY ORDER UNDER SECTION 67(1) OF KVAT ACT DATED 12.08.2013 HEARING NO.ER/III/01/2013-14 PASSED BY THE INTELLIGENCE OFFICER, SQUAD NUMBER-III, COMMERCIAL TAXES, CALICUT** **ANNEXURE B A TRUE COPY OF THE ORDER DATED 22.09.2016 IN KVAT REVISION PETITION NO.129/2014** **ANNEXURE C CERTIFIED COPY OF THE COMMON ORDER OF THE TRIBUNAL IN TA (VAT) 271/2016 DATED 11.03.2019** **O.T.Rev.112 of 2019 & - 12 - connected cases** ## **APPENDIX OF OT.Rev 123/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A** **A TRUE COPY OF PENALTY ORDER NUMBER SECTION 67(1) OF KVAT ACT DATED 12.08.2013 HEARING NO. ER/III/02/2013-14 PASSED BY THE INTELLIGENCE OFFICER, SQUAD NUMBER-III, COMMERCIAL TAXES,CALICUT** **ANNEXURE B** **A TRUE COPY OF THE ORDER DATED 22.09.2016 IN KVAT REVISION PETITION NO. 131 OF 2014** **ANNEXURE C** **CERTIFIED COPY OF THE COMMON ORDER OF THE TRIBUNAL IN T.A. (VAT) NO. 272 OF 2016 DATED 11.03.2019** **O.T.Rev.112 of 2019 & - 13 - connected cases** ## **APPENDIX OF OT.Rev 127/2019** **PETITIONER'S/S EXHIBITS:** ## **ANNEXURE-A** **A TRUE COPY OF ASSESSMENT ORDER UNDER SECTION 2591) OF KAVAT ACT DATED 12.07.2015 BEARING NO.32110880848/2011-12 PASSED BY THE COMMERCIAL TAX OFFICER, 3RD CIRCLE, KOZHIKODE** **ANNEXURE-B A TRUE COPY OF THE ORDER DATED 23.06.2018 IN KAVAT NO.1443 OF 2015** **ANNEXURE-C** **CERTIFIED COPY OF THE COMMON ORDER OF THE TRIBUNAL IN T.A.(VAT) NO.1364 OF 2018 DATED 11.03.2019** **O.T.Rev.112 of 2019 & - 14 - connected cases** ## **APPENDIX OF OT.Rev 128/2019** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE A** **A TRUE COPY OF ASSESSMENT ORDER UNDER SECTION 25(1) OF KVAT ACT DATED 02.02.2015 BEARING NO.32110880848/2009-10 PASSED BY THE COMMERCIAL PAX OFFICER, 3RD CIRCLE , KOZHIKODE.** **ANNEXURE B A TRUE COPY OF THE ORDER DATED 23.06.2018 IN KVATA.NO.755 OF 2015** **ANNEXURE C CERTIFIED COPY OF THE COMMON ORDER OF THE TRIBUNAL IN T.A. (VAT) NO. 1362 OF 2018 DATED 11.03.2019.** **O.T.Rev.112 of 2019 & - 15 - connected cases** ## **APPENDIX OF OT.Rev 129/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A** **A TRUE COPY OF ASSESSMENT ORDER UNDER SECTION 25(1) OF KVAT ACT DATED 12.7.2015 BEARING NO.32110880848/2010-11 PASSED BY THE COMMERCIAL TAX OFFICER, 3RD CIRCLE, KOZHIKODE.** **ANNEXURE B A TRUE COPY OF THE ORDER DATED 23.6.2018 IN KVATA NO.1442 OF 2015.** **ANNEXURE C** **TRUE COPY OF THE COMMON ORDER OF THE TRIBUNAL IN T.A.(VAT) NO.1363 OF 2018 DATED 11.3.2019.** **O.T.Rev.112 of 2019 & - 16 - connected cases** ## **APPENDIX OF OT.Rev 133/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A** **TRUE COPY OF PENALTY ORDER UNDER SECTION 67(1)OF KVAT ACT DATED 12/08/2013 HEARING NO.ER/III/03/2013-14 PASSED BY THE INTELLIGENCE OFFICER, SQUAD NUMBER-III, COMMERCIAL TAXES, CALICUT.** **ANNEXURE B** **A TRUE COPY OF THE ORDER DATED 22/09/2016 IN KVAT REVISION PETITION NO.130/2014.** **ANNEXURE C** **TRUE COPY OF THE COMMON ORDER OF THE TRIBUNAL IN TA (VAT) NO.273/2016 DATED 11/03/2019.** **[TRUE COPY]**