Customs Duty Exemption is not Available for Diagnostic Centres, without IP Treatment Facilities: Bombay HC [Read Judgment]

Business Income - Bombay High Court 2 - Tax Scan

The division bench of the Bombay High Court recently confirmed the demand of customs duty from diagnostic centres, without indoor patient treatment facilities, in respect of import of medical equipment.

The Court clarified that such institutions are not eligible for duty exemption under the exemption Notification.

The petitioner, in the instant case, a charitable Trust running a medical diagnostic centre has applied to the Government of India for permission to import certain medical equipments by availing of this exemption from customs duty.The Deputy Director General of Health Services permitted the petitioners to import these items free of customs duty. The machineries so imported were duly imported and after some time, the petitioner was in need of some spare parts, some of which were not manufactured in India. Since exemption was granted while importing the machine, the petitioner applied for grant of Customs Duty Exemption Certificate from the authority. However, the goods were imported by executing a Bond favouring the President of India as demanded by the authority.Subsequently, the Department demanded customs duty from the petitioners in respect of the import on ground that diagnostic centres, without indoor patient treatment facilities, are not eligible for customs duty exemption.

Before the High Court, the petitioner contended that all the conditions stipulated in the Notification are complied with and therefore, they are eligible for exemption in respect of the hospital equipments.

The bench comprising of Justice S.C Dharmadhikari and Justice B.P Colabawalla observed that the demand is valid and is consistent with the provisions of the Notification.

“One cannot only take advantage of the fact that an institution of diagnostic treatment can be termed as a hospital and once certified by the Ministry of Health and Family Welfare, they are entitled to avail of the exemption Notification but in each case it must not only be providing medical, surgical or diagnostic treatment irrespective of the patients’ caste, creed, race, religion or language but must give free treatment, on an average, to at least 40% of all their outdoor patients and free to all indoor patients belonging to families with an income of less than Rs.500/per month, and keeping for this purpose 10% of the hospital beds reserved for such patients. On the own showing of the petitioner, it does not satisfy these conditions. It does not have any facility for treating indoor patients. There are no admissions against that category. Even the treatment provided, namely, the diagnostic treatment is not of the required percentage, as certified by the Director General.”

“To our mind, from a reading of the annexures to the writ petition it is apparent that the demand has been raised after a factual satisfaction. That satisfaction is based on inspection,scrutiny and verification of the records and documents provided by the petitioner itself. Once such is the basis for the demand and we do not find that to be vitiated by perversity or any error of law apparent on the face of the record, then, there is no warrant to interfere in writ jurisdiction. A conditional exemption is available and can be availed of on tendering proof of satisfaction of the terms and conditions thereof, else the exemption cannot be availed of. In the instant case, all the terms and conditions of the exemption Notification were made known and voluntarily accepted by the petitioner. It even executed a Bond and also submitted a Bank Guarantee and as noted by us here in above.” The court said.

Read the full text of the Judgment below.