Erode Medical Centre Vs State Tax Officer-2
Date: July 1, 2024
Subject Matter
GST demand set-aside & remanded for reconsideration
Summary
The Madras High Court dealt with a case involving GST liability concerning a rent-free canteen facility at Erode Medical Centre. The petitioner challenged a prior assessment order from March 27, 2024, claiming that the authorities did not properly consider key aspects of the case. The petitioner argued two main points: 1. The assessment incorrectly stated that there was non-payment of tax on medicine sales, even though the sales were by separate entities that had already paid the necessary taxes. 2. The GST was improperly imposed on the canteen facility, which was provided free of rent to hospital visitors. - Upon reviewing the case, the court found that the relevant information regarding the tax payments for medicines and the rent-free provision of the canteen was not sufficiently considered by the authorities in the assessment order. Due to this oversight, the court set aside the original assessment order and remanded the case back to the assessing authority for further examination. The court mandated that the respondent grant the petitioner a fair opportunity, including a personal hearing, and issue a new order within three months of receiving the court's directive.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In this writ petition, an order in original dated 27.03.2024 is impugned on the ground of non application of mind. Upon receipt of show cause notice dated 19.01.2023, the petitioner replied on 08.01.2024. The impugned order dated 27.03.2024 was issued thereafter.
2. Learned counsel for the petitioner referred to the impugned order and pointed out that defect no.1 related to alleged non payment of tax in respect of the sale of medicines. During this assessment period, he submits that medicines were not sold by the petitioner. They were sold either by EMC Pharmacy (HUF) or EMC Pharmacy, a partnership firm. He further submits that both these entities collected and remitted taxes in respect of such sales. Since the impugned order was issued without taking this aspect into account, in spite of the petitioner pointing it out in reply dated 08.01.2024, he submits that interference with the order is necessary. He also points out that the order deals with the imposition of tax on premises that the petitioner permitted a third party to use for running a canteen. Although the petitioner stated in the reply that rent was not collected in respect thereof so as to provide an additional facility to persons visiting the hospital, he submits that the tax proposal was confirmed by not taking such reply into account.
3. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent. As regards this assessment period, he submits that the factual aspects as to the identity of the supplier of medicines may be required to be reconsidered.
4. The petitioner has placed on record prima facie evidence that supplies were made by either EMC Pharmacy (HUF) or EMC Pharmacy, a partnership firm, during the relevant period. The invoices issued by the said entities indicate that tax was collected. It is asserted in the affidavit and in the petitioner’s reply that such taxes were remitted to the Government. As regards tax on rent, the petitioner has asserted that no rent was collected since it was intended as an additional facility for persons who visit the hospital. Since these aspects were not taken into account while issuing the impugned order, the matter requires reconsideration.
5. Therefore, the impugned order dated 27.03.2024 is set aside and the matter is remanded for reconsideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order within three months from the date of receipt of a copy of this order.
6. The writ petition is disposed of on the above terms without any order as to costs. Consequently, connected miscellaneous petitions are closed.