Attempt For Evasion Of Tax Or On The Ground That The Consigneewas Not A Registered Dealer v. Wp(C)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL FRIDAY, THE 04TH DAY OF DECEMBER 2020 / 13TH AGRAHAYANA, 1942 WP(C).No.23194 OF 2020(Y) PETITIONER: JUBILEE MISSION MEDICAL COLLEGE HOSPITALBISHOP ALPATT ROAD, PB NO. 737, THRISSUR - 680005, REPRESENTED BY ITS DIRECTOR, FR. FRANCIS PALLIKUNNATH. BY ADVS.SRI.S.ANIL KUMAR (TRIVANDRUM)SHRI.RAHUL A.SMT.APARNA ANIL RESPONDENTS: 1THE AGRICULTURAL INCOME TAX AND STATE TAX OFFICERSTATE GOODS AND SERVICE TAX DEPARTMENT, POOTHOLE, THRISSUR - 680004,2THE DEPUTY COMMISSIONER (APPEALS)STATE GOODS AND SERVICES TAX DEPARTMENT, POOTHOLE, THRISSUR, PIN - 680004, SR GP SRI C K GOVIND THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON04.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Dated this the 4th day of December 2020 Petitioner, a charitable institution is running a MedicalCollege and a Multi – Specialty Hospital, registered under Section12AA of the Income Tax Act, 1961 and also under Section 18C ofthe Kerala Value Added Tax Act, 2003. The petitioner has beenpurchasing medicines required for the hospital only from dealerswho are paying tax at compounded rate on the MRP, inaccordance with the provisions of Section 8 of the Act. Similarly,in the case of other consumer goods which are available in theState, only from the dealers after paying tax. But for use in theoperation theater as well as in the intensive care units, liquidmedical oxygen has to be supplied in order to protect the life ofaffected patients. In this manner the petitioner had beentransporting liquid medical oxygen supplied by the dealers outside State duly supported by invoices issued by the suppliers.During the aforementioned process certain consignments of liquidmedical oxygen were detained at the check post under theprovisions of Section 47(2) of the KVAT Act, 2003 alleging attempt for evasion of tax or on the ground that the consigneewas not a registered dealer. 2.Sri.Anil Kumar, learned counsel appearing on behalf ofthe petitioner submits that respondent conducted an enquiryunder Section 47(5) and imposed the penalty as evidenced fromseries of documents Exts.P1 to P1(j). Petitioner preferred anappeal before the 2[nd] respondent which has been dismissed videorder Ext.P4. The controversy in the issue involved is alreadycovered by the Division Bench judgment of Punjab-Hariyana HighCourts in M/s Fortis Healthcare Limited And v. State ofPunjab And Others on 23.01.2015 and M/s Hometrail EstatePvt.Ltd v. The State of Punjab & Anr on 27.08.2018 and FullBench of this Court in Sanjose Parish Hospital v. CommercialTax Officer [2019 (1) KLT 336]. Even the Full Bench of thisCourt has also held that such consignments providing liquidmedical oxygen to the indoor patients during the course oftreatment and purchase of the same from a dealer is not exigibleunder the KVAT Act. In support of the contention, relies upon thejudgment of this Court in W.P(C).4150/20 and connected case, setting aside the penalty orders by relying upon the judgmentreferred to above. 3.The learned Government Pleader do not deny thefactum of judgment rendered by me as well as the Full Bench ofthis Court and the Punjab-Hariyana High Court. He submits thatagainst the Full Bench, an SLP is pending but there is no interimorder. setting aside the penalty orders by relying upon the judgmentreferred to above. 3.The learned Government Pleader do not deny thefactum of judgment rendered by me as well as the Full Bench ofthis Court and the Punjab-Hariyana High Court. He submits thatagainst the Full Bench, an SLP is pending but there is no interimorder. 4.I have heard the learned counsel for the parties. I amof the view that the controversy is squarely covered by thejudgments aforementioned, particularly when the issuance ofcertificate under Section 12AA of the Income Tax for the relevantassessment year issued by the department is not in dispute. InM/s Fortis Healthcare Limited (supra), the Division Bench ofPunjab and Hariyana High Courts after noticing the provisions ofPunjab Value Added Tax Act and as well as Power to Impose SalesTax and VAT clause flowing from entry 54 of list to schedule 7 andArticle 366 (29-A) of the Constitution of India did not accept thecontention of the state for the applicability of doctrine ofseverance with regard to the services provided to the indoor patients involving medicines supply of surgical items, stents,implants valves with or without medical procedure or medicaltreatment. During all the aforementioned procedure supply ofoxygen is also a sine qua non. All these services are in apackaged form and have to be consumed and cannot besegregated during the course of the treatment. Thus for allintends and purpose is rightly so held to be not exegible to tax.No doubt the SLP Nos.21097/2019 and 21102/2019 against theFull Bench of the Kerala High court in Sanjose Parish Hospital ispending adjudication, but there is no interim order. Revenuecollecting authorities consisting of Assessing Officers, interceptionstaffs who are assigned to deal with the penalty proceedingscannot be permitted to adopt a pick and choose policy. Thejudgments referred to above, have to apply in letter and spiritand not wishfully. The KVATA Orders Nos.40/20 to 50/20,whereby the demands raised by the Assessing Officer have beenconcededly affirmed in appeal obtained finality in the absence ofany further challenge. The cumulative reading of the reasoning assigned herein above would leave an irresistible conclusion that the penaltyorders do not stand touchstone of reasonability or any deviationfrom the provisions of Section 18C of the Kerala Value Added TaxAct 2003, particularly when as per the proviso the petitioner-thecharitable hospital is not required to obtain registration.Therefore, the penalty notice/order is quashed and this writpetition is allowed. nak Sd/- AMIT RAWAL JUDGE WP(C).No.23194 OF 2020(Y) APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1COPY OF ORDER NO.R10(E) 151/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(a)COPY OF ORDER NO.R10(E) 152/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(b)COPY OF ORDER NO.R10(E) 153/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(c)COPY OF ORDER NO.R10(E) 154/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(d)COPY OF ORDER NO.R10(E) 155/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(e)COPY OF ORDER NO.R10(E) 156/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(f)COPY OF ORDER NO.R10(E) 157/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(g)COPY OF ORDER NO.R10(E) 158/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(c)COPY OF ORDER NO.R10(E) 154/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(d)COPY OF ORDER NO.R10(E) 155/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(e)COPY OF ORDER NO.R10(E) 156/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(f)COPY OF ORDER NO.R10(E) 157/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(g)COPY OF ORDER NO.R10(E) 158/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(h)COPY OF ORDER NO.R10(E) 159/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(i)COPY OF ORDER NO.R10(E) 160/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT.DATED 16.09.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P1(j)COPY OF ORDER NO.R10(E) 161/2017-18 DATED 16.09.2019 ISSUED BY THE 1ST DATED 16.09.2019 ISSUED BY THE 1ST EXHIBIT P2 EXHIBIT P3 EXHIBIT P4 RESPONDENT. COPY OF HEARING NOTE OF VIDEO CONFERENCE. COPY OF THE JUDGMENT DATED 09.03.2020 OFTHIS HON'BLE COURT IN WP(C) NO.4150 OF 2020 AND WP(C) NO. 4998 OF 2020. COPY OF THE COMMON ORDER DATED APPEAL. 16.07.2020 OF THE 2ND RESPONDENT IN THE