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OJCA/369/2009 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL
APPLICATION No. 369 of 2009
In
TAX
APPEAL No. 1673 of 2009
===================================
BHAILAL
AMIN GENERAL HOSPITAL - Applicant
Versus
STATE
OF GUJARAT & 1 - Respondents
===================================
Appearance
:
MR MIHIR
JOSHI, Senior Advocate for NANAVATI
ASSOCIATES for Applicant.
MS MAITHILI MEHTA, AGP for
Respondents.
===================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 12/01/2010
ORAL ORDER
(Per
: HONOURABLE MR.JUSTICE K.A.PUJ)
Leave to amend as per draft
amendment.
The
applicant a Charitable Trust is running General Hospital and
filed Tax Appeal No.1673 of 2009 challenging the order passed by the
Value Added Tax Tribunal in Appeal No.25 of 2008 dated 16.06.2009
whereby the Tribunal has dismissed the appeal and determination
order dated 07.06.2008 passed by the learned Joint Commissioner,
Commercial Tax, Gujarat State, Ahmedabad holding that the applicant
is dealer within the meaning of Section 2 (10) of the Gujarat Value
Added Tax Act is confirmed.
The
appeal was admitted by this Court on 05.10.2009 and Rule was issued
in the present application. In this application, a prayer is made
by the applicant to the effect that the respondents should be
restrained from making any recovery of the amount of duty and
penalty from the applicant pursuant to the order passed by the
Gujarat Value Added Tax Act, dated 16.06.2009. By way of draft
amendment, the applicant has also prayed for stay against the
operation and implementation of the impugned judgment and order and
also to take coercive action against the recovery.
Mr.
Mihir Joshi, learned Senior Advocate appearing for Nanavati
Associates for the applicant has submitted that the applicant is a
Public Charitable Trust running and maintaining a Public Hospital
which is an object not in the nature of business. He has further
submitted that the Tribunal has not correctly appreciated the
provisions contained in the Explanation (iii) to Section 2 (10) of
the Gujarat Value Added Tax, 2003 which taking the view that the
activity of purchase and sale of goods (medicines) by the applicant
is in the nature of business, as being a determining factor to
conclude the applicant as a Dealer overlooking the fact that the
Explanation contemplates that even an activity in the nature of
business, if undertaken by a Charitable Trust in performance of its
functions for achieving its avowed objects which are not in the
nature of business, would not make such a Trust a Dealer under
Section 2 (10) of the Act. Mr. Joshi, in support of his contention,
relied on the decision of the Apex Court in the case of Commissioner
of Sales Tax V/s. Sai Publication Fund, (2002) 4 SCC 57, wherein
it is held that if the main activity is not business, then any
transaction incidental or ancillary would not normally amount to
business unless an independent intention to carry on
business in the incidental or ancillary activity is
established. The Court further held that the onus of proof of an
independent intention to carry on business connected with or
incidental or ancillary sales will rest on the Department. Mr.
Joshi has, therefore, submitted that sales and purchase of medicines
was never the object of the Trust. Hence, the applicant cannot be
treated as Dealer. He has, therefore, submitted that since the
appeal is admitted and till it is decided, the impugned order passed
by the Tribunal be suspended.
Ms.
Maithili Mehta, learned Assistant Government Pleader appearing on
behalf of the respondents, on the other hand, has submitted that the
applicant has itself applied for registration and thereafter returns
are being filed regularly. She has, therefore, submitted that the
appeal becomes infructuous and no stay should be granted.
Having
heard learned advocates appearing for the respective parties and
having gone through the impugned order, we are of the prima facie
view that the applicant’s case is covered by the Explanation (iii)
to Section 2 (10) of the Act. Hence, we are showing our indulgence
in the impugned order to the extent that no demand should be raised
against the applicant on its activity in respect of sales and
purchases of medicines which are incidental or ancillary to the main
object of the applicant Trust i.e. to run the General Hospital. It
is, however, made clear that since the registration is granted to
the applicant and the applicant itself is filing returns, the same
shall be continued to be filed. However, no demand can be enforced
against the applicant Trust on such activity.
Subject
to the aforesaid clarification and observation, this Civil
Application is accordingly allowed. Rule is made absolute to the
aforesaid extent without any order as to costs.
Sd/-
[K. A. PUJ, J.]
Sd/-
[RAJESH H. SHUKLA,
J.]
Savariya
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