Sales tax not applicable to drugs, equipment used in course of treatment at hospital

The recent verdict of Maharashtra Sales Tax Tribunal brings a huge relief for consumers. It asserted that drugs, medicines, stents and other goods used during the course of a medical treatment in the hospital do not amount to sale and no sales tax can be levied on the same. The tribunal comprising of Judicial member CD Gongle and GB Indurkar held that the supply of medicines, drugs, stents or other equipment used during the course of medical treatment does not amount to sale under the Maharashtra Value Added Tax Act.The bench rule that while hearing an appeal moved by Saifee Hospital, a charitable institution in Mumbai. The bench further rules that the charges for specified bed and mattress are also not eligible to tax. Supply of food to inpatients are primarily included in the composite charges for the room rent and cannot be based under the MVAT Act, 2002. The revenue also argued that the drugs sold under the Drug Price Control Order are controlled and the MRP expressly includes sales tax/VAT. It claimed that the hospital is not liable to deduct the sales tax or VAT. It said that the hospital is not liable to deduct the sales tax/ VAT while billing in patients which indicate that there is sale and sales tax/ VAT is being collected by the hospital by virtue of the fact that it is charging full MRP. Revenue clarified that either the hospital should have sold such drugs after deducting the sales tax component or should pay over the sales tax collected over it. The tribunal then ascertained, & quot Whether supply of medicine in course of treatment discernible sale?& quot It relied on the judgement of Allahabad High Court in the matter of Tata Main Hospital case to say that the supply of medicines to inpatients during the course of treatment does not fall within the category of deemed sale. This decision by the tribunal would reduce the amount of the bill and brings a huge relief to the consumers.