TAMIL NADU VALUE ADDED TAX ACT, 2006

Section 4

Levy of tax - Leviability - Applicability of VAT on stents, valves, medicines, x-ray and other goods used while treating in-house patients in course of providing medical service by private hospital -

Issue arose as to whether in course of providing medical service, petitioner who was private hospital, was liable to pay Value Added Tax (VAT) under provisions of the Tamil Nadu Value Added Tax Act, 2006, on the stents, valves, medicines, x-ray and other goods used while treating their in-house patients. Held: There was merit in contention of revenue that medical/Health services rendered by petitioners could fall within ambit of Article 366 (29A) of Constitution of India read with provisions of Tamil Nadu Value Added Tax Act, 2006. At same time, dispensing of medicine to such patients while they undergo treatment as an in-patient in hospital cannot come within purview of the definition of 'works contract'. Consequently, no tax can be demanded on value of such medicine. There is not only transfer of possession of prosthetics into physiology of patient but also the ownership of such prosthetics to patient for consideration in course of the provision of medical/health service. Similarly, in course of taking x-ray, scan, MRI/CT Scan for such in-patient, cost of which gets included into the package are taxable as such activity can be termed as the processing of moveable property. Revenue was directed to exclude value of medicine and other consultation charges while determining taxable value. Demand shall be confirmed to value of prosthetics and charges incurred towards X-ray, C.T. Scan, PET Scan, etc.

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FAVOUR : Partly in favour of petitioner

A.Y. :

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