Seth, J. - (1.) The short question involved in this case is as to whether a diagnostic center attached to a hospital carries on manufacturing process as defined in the Factories Act, 1948 and as such is a factory within the meaning of the Employees' State Insurance Act, 1948 (ESI Act) in order to cover the persons employed in the diagnostic center under the Employees' State Insurance Scheme.
(2.) The Employees' State Insurance Corporation through its letter dated 23rd November, 1998 (Annexure-A to the WP) required the respondent, Duncan Gleneagles Hospital Ltd., to submit its return. By another letter dated 4th of August 1999 (Annexure-D to the WP) the appellant issued a show- cause notice for recovery of a sum of Rs. 4,78,228/- from the respondent/writ petitioner. The respondent/writ petitioner took the defence that the ESI Act does not apply in its establishment. By an order dated 16th of February, 2000 (Annexure-J to the WP) the appellant held that the respondent/writ petitioner was liable to pay the contribution under Section 15A of the ESI Act, the amount of Rs. 4,78,228/- together with interest of Rs. 31,520/- for the period 10/98 to 6/99. These notices and orders respectively were challenged and sought to be quashed by the respondent/writ petitioner through the writ petition being WP No. 992 of 2000. The learned Single Judge by a judgment and order dated 29th August, 2003 was pleased to allow the writ petition and quash the said notices and the orders contained in Annexure A, D and J respectively. The decision by the learned Single Judge :
(3.) The learned Single Judge relying on the decisions in Collector of Central Excise, Madras v. M/s. Kutty Flush Doors and Furniture Co. (P) Ltd., AIR 1988 SC 1164 and The Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. Coco Fibres, AIR 1991 SC 378 was pleased to hold that through pathological tests nothing is manufactured nor anything is brought into existence, which by itself is a distinct commercial commodity capable of being sold or supplied; neither any new article is produced by the pathological laboratories recognized or known as such in the commercial parlance for sale or supply and distinguished the decision in Subodh S. Shah & Ors. v. Director, Food and Drugs, Food and Drugs Control Office, Ahmedabad & Anr., AIR 1997 Guj 83 holding that the activities carried on by a pathological laboratory located in the hospital is not a factory within the definition of Section 2(12) of the ESI Act and that the Circular dated 19th June, 1997 issued by the Headquarters of the ESI Corporation does not include pathological laboratories located in the hospitals. Submission of the Appellant:;