In a recent ruling, the Madras High Court held that the hospital is not liable to pay Sales Tax under Tamil Nadu Value Added Tax Act in respect of import of medical equipments for its personal consumption.
Justice T S Sivagnanam, while allowing an appeal filed by the assessee, M/s.Eye Foundation Ltd, noted that the imported sophisticated equipments and devices for performing highly advanced eye surgeries, was used by the petitioner in their hospital.
The petitioner is a hospital established and functioning in Coimbatore, specializing in Eye surgery. During the year 2012, the petitioner secured an import license for importing sophisticated equipments and devices for performing highly advanced eye surgeries.
The petitioner case was related to an imported equipment costing Rs. 63, 30,642/- and this equipment was exclusively meant for their personal use in their hospital. The commercial tax officer (second respondent) treated the aforesaid transaction as a sale within the state of Tamilnadu and tax has been proposed to be imposed at 14.5% by proceedings. Then, the goods were detained and one-time tax has been demanded and compounding fee being two times of the one-time tax has also been demanded.
The petitioner had challenged the impugned order alleging that it is a sheer harassment.
When the case came up before court, the petitioner argued that the company had a valid import license for the import of subject equipment. The reason for the second respondent to initiate action by issuing a detention notice is that the subject ‘import’ has been made for the purpose of sale within the State of Tamil Nadu and also added some unpleasant act faced by the respondent.
The court found the main intending issue was whether the imported equipment is being used by the petitioner in their hospital or as alleged by the second respondent; it is intended for sale within the State of Tamil Nadu.for this court directed the joint commissioner for the inspection of the petitioner’s hospital.
During the verification it was found that the imported equipment is being used by the petitioner for eye surgery. It was contended on behalf of the department that the petitioner should have a valid registration as a dealer under the TNVAT Act and CST Act and in the absence of such registration proposed to treat the import transaction as a sale within the State and imposed tax at 14.5% and levied compounding fee at the rate of two times the one-time tax.
Finally the court declared that import has been effected by the petitioner using the import licence granted in their favour and the goods are put to use in their hospital. This goes to show that the import has been effected by the petitioner using the import licence granted in their favour and the goods are put to use in their hospital. “Thus, there is no ground to treat the transaction as a sale within the State of Tamil Nadu.”
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