While quashing a VAT demand, a division bench of the Rajasthan High Court has held that the implants, surgical items and medicines sold by the hospital to the in-house patients.
The High Court, while hearing a bunch of petitions by the department and hospitals wherein the department contended that the respondents, who are clinical establishments, nursing homes, hospitals providing health care services to the in-house patients, while selling medical equipment/devices, implants during the course of treatment, surgery, have not discharged sales tax/VAT on the said transactions even though it has been admitted that implants, consumables, drugs, pharma etc. have been sold during the course of treatment.
Justice Pankaj Bhandari and Justice Sameer Jain held that the significance of Entry 86 is attracted in the case of outdoor patients when the transaction in question is an isolated transaction of sale of goods in the form of medical equipment/devices and implants. There is no predominance of medical treatment in the said transaction, unlike in the case of indoor patients. Therefore, the provisions of Schedule-IV and Entry 86 are not attracted and applicable in the case of medical treatment given to indoor patients even though, while rendering medical treatment, certain services like supply of medical equipment, devices, installation of implants/lenses is involved.
Holding in favour of the assessee, the Court held that the value recovered by the hospitals towards the cost of medicines, implants, stents, lenses and various other charges towards room rent, supply of food cannot be classifiable as sale or supply of goods but the transaction will be of service on account of Predominant Test/ Aspect Doctrine.