A full bench of the Kerala High Court has held that sales tax cannot be levied for medicines, implants, and other consumables used as part of a surgical procedure or other medical treatments in hospitals.
KOCHI: A full bench of the Kerala High Court has held that sales tax cannot be levied for medicines, implants, and other consumables used as part of a surgical procedure or other medical treatments in hospitals.
The bench comprising justices K Vinod Chandran, A Muhamed Mustaque, and Ashok Menon were answering a question referred by a division bench as to whether sales tax can be levied for the medicines supplied, implants carried out, consumables used and surgical tools exclusively used in a particular procedure, as part of treatment of patients in a hospital. The tax was to be levied under Kerala Value Added Tax Act, 2003.
It was held by the full bench that the state government cannot enlarge the scope of the definition in the 46th constitutional amendment, which was introduced in 1982 regarding tax on sales of goods.
Dominant intention in hospital services is providing medical care and treatment to effectively cure the patient or his or her ailment and it is not the sale of drugs, implants or other consumables, the court said.
The judgment said, “With respect to hospital services, we cannot but observe that the sale of drugs, implants and other consumables are part of the medical treatment rendered. There is no identity of the medicines or consumables or implants, as it does not lie in the mind or mouth of the patient to identify the drugs to be administered in the course of the treatment. Though a patient on his volition could refuse to take a particular drug, he cannot demand, as a matter of right, that a drug be administered to him in the course of the medical treatment. A demand of that nature will not be complied with by either a medical practitioner or a hospital, the latter of whom dispenses medicines only in accordance with the directions of the attending Physician or Surgeon. A person visits a hospital primarily for the purpose of curing an ailment or arresting or preventing it…. The cost of the implants, consumables or the drugs is irrelevant in so far as deciding what is the dominant nature of the transaction or service rendered to the patient in a hospital, which without any doubt is the therapeutic treatment rendered. The patient has no control or say, has limited control, on the procedures taken in the course of the treatment, the drugs administered and the consumables used.”
Two earlier high court judgments (Malankara Orthodox Syrian Church Vs. Sales Tax Officer, 2003; Comtrust Eye Hopsital Vs. Adl Sales Tax Officer, 2005) that held that sale tax can be levied for medicines, implants, and consumables used in as part of treatment do not propound and declare the correct position in law, the full bench declared.
