D.Y.CHANDRACHUD, J. - (1.) IN these proceedings under Article 226 of the Constitution, the petitioner has sought to question the legality of an order of the Deputy Commissioner, Commercial Tax dated 27 September 2013 insofar as it brings to tax, under the provisions of the U.P. Value Added Tax Act, 2008 (hereinafter referred to as the Act), stents and valves used by the petitioner as an intrinsic and integral element in the performance of a heart procedure at a super -speciality hospital. The petitioner has set up a super -speciality integrated hospital at Noida. Patients who are required to undergo treatment are admitted to the hospital and are treated as indoor patients. According to the petitioner, whenever a stent or a valve is required to be implanted in a patient, neither the hospital nor its pharmacy sells the implants directly to the patient. In other words, the implants are used during the course of a surgical procedure and there is no 'sale' when such a procedure is performed on the patient. During the course of assessment proceedings for the AY 2008 -09, notices were issued to the petitioner by the Deputy Commissioner, Commercial Tax proposing to impose tax on the value of stents and valves used for providing medical services. In the reply which was submitted by the petitioner, reliance was placed on a judgment of the Supreme Court in Bharat Sanchar Nigam Ltd. and another v. Union of India and others1 and on a judgment of a Division Bench of the Jharkhand High Court in Tata Main Hospital v. The State of Jharkhand & Ors.2 in support of the submission that the use of stents and valves in the course of angioplasty or surgical procedure is incidental to the medical service which is provided by the hospital and the stents and valves would not be taxable under the Act.
(2.) AN order has been passed by the Deputy Commissioner, Commercial Tax on 27 September 2013 by treating the purchase of stents and valves by the Hospital as being from unregistered dealers and bringing them to tax @ 12.5% and also subjecting to tax, at the same rate, the use of the stents and valves in the medical services provided by the Hospital. The order has been challenged in the writ proceedings. At the hearing of these proceedings, a preliminary objection has been raised by the learned Standing Counsel to the maintainability of the writ petition on the ground that an appeal would be maintainable against the order of assessment under the provisions of Section 55 of the Act. We shall revisit this issue, as the essential aspects of the case would be dealt with during the course of the judgment, but at the present stage, it would be material to note that for the purposes of the petition, there is no dispute on the governing facts. The only issue which arises for consideration is a question of law, namely as to whether a 'sale' within the meaning of Section 2 (ac) of the Act takes place when a stent or valve is implanted in a patient in the course of a surgical procedure in the hospital.
(3.) THE contention of the Revenue is that the contract between the patient and the hospital is a divisible contract in which the sale element involving the 'sale' of the stent or valve to the patient is distinct from the surgical procedure and hence, the Firm is assessable to tax. On the other hand, the assessee has relied upon the judgment of the Supreme Court in Bharat Sanchar Nigam Ltd. (supra) and on the judgment of the Jharkhand High Court in Tata Main Hospital (supra) against which a special leave petition has been dismissed by the Supreme Court. Entry 54 of the State List to the Seventh Schedule of the Constitution provides for a tax on the sale and purchase of goods. For the purpose of these proceedings, it would not be necessary to advert in detail to the legislative history leading to the introduction of Article 366 (29 -A) in the Constitution by the 46th Amendment since that has been the subject matter of a considerable amount of judicial pronouncement. In State of Madras v. Gannon Dankerley & Co. (Madras) Ltd.3 and in the decisions which followed it, the expression 'sale' was given a restricted meaning as contained in the Sale of Goods Act. The 46th Amendment to the Constitution was brought into force so as to provide a deeming definition of what will constitute tax on the sale and purchase of goods. Article 366 (29 -A) provides as follows: - "366. (29 -A) 'tax on the sale or purchase of goods' includes - (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire -purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other value consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made" .;