Figures of institution, Disposal and Pendency of Appeals as on 1-1-2018

Bench Institution Disposal Pendency Smc Pendency
Mumbai 709 698 15765 251
Pune 314 174 7094 730
Nagpur 21 16 962 139
Raipur 26 0 1183 225
Panaji 65 43 332 39
Delhi 752 536 21414 864
Agra 36 46 999 134
Lucknow 86 132 1082 194
Allahabad 77 135 756 59
Jabalpur 37 6 567 65
Kolkata 199 362 4885 271
Patna 23 0 506 64
Cuttack 63 55 858 46
Guwahati 44 20 402 49
Ranchi (Jharkhand) Circuit Bench 54 0 783 238
Chennai 339 225 3534 62
Bengaluru 395 288 4325 166
Kochi 37 64 878 25
Ahmedabad 371 336 8718 1560
Surat 108 12 3151 991
Indore 199 24 2107 268
Rajkot 93 45 1737 298
Hyderabad 315 116 3823 517
Visakhapatnam 29 74 916 239
Chandigarh 106 104 2109 270
Amritsar 73 9 1449 217
Jaipur 161 127 1070 371
Jodhpur 67 115 252 27
Total 4799 3762 91657 3879

The below mentioned amendments effective from 19th December, 2017 along with the above- mentioned provisions: –

Sr. No. Amendment – Effective date of implementation 19th December, 2017 Earlier provision
1 The provisions of the Act shall be applicable on establishments employing 10 or more employees. Therefore the registration under the Act shall not be applicable for establishments having less than 10 employees (However the same shall not be applicable for the establishments already registered and having the valid S&E and till the expiry of the said registration. Registration was applicable even for zero head count
2 The application for registration under the Act should be filed within 60 days from the commencement of operation. Earlier it was within 30 days from the commencement of operation
3 The renewal of registration need to be applied online, not less than 30 days before the date of expiry of registration. In case in delay of submission of renewal, 50% of the renewal of registration fee to be paid as late payment. Earlier it was 15 days prior to the expiry
4 No women shall be discriminated in the matter of recruitment, training, transfers, promotion or wages. Earlier there was no such provisions
5 Women employees with their consent shall be allowed to work between 9.30 p.m. and 7 a.m., in any establishment in which adequate protection of their dignity, honour and safety, protection from sexual harassment and their transportation from the establishment to the doorstep of their residence as may be prescribed are provided by the employer or his authorised representative or manager or supervisor. Earlier 8.30 PM to 7AM
6 The spread-over of an employee in establishment shall not exceed 10.5 hours in any day. Earlier 11 hours in any day
7 The total number of overtime hours shall not exceed 125 hours in a period of 3 months. Earlier 6 hours in a week
8 If an employee is denied weekly holiday, the compensatory leave in lieu thereof shall be given within two months of such weekly holiday. Earlier there was no such provision
9 The employer of an establishment shall furnish to every worker an identity card. Such card shall contain the following and such other particulars as may be prescribed, namely :—

the name of the employer; the name, if any, and the postal address, of the establishment; the name and age of the worker; date of joining, department, nature of work, designation; the signature (with date) of the employer or manager; Blood Group; Aadhaar Card Number.

Earlier there was No such provisions
10 Earned Leave – One day earned leave for every 20 days of work Earlier 21 days in year
11 Casual Leave 8 days Earlier there was no provision for casual leave
12 Maximum accumulation of EL shall not exceed 45 days.

In case the employee applies for earned leave and not granted, the earned leave which exceeds 45 days to be encashed at the rate of actual wages. At the time of separation, the earned leave which is due to an employee should be encashed

Earlier 42 days of accumulation and there was no such provision for encashment incase the leaves exceeds the accumulation limit
13 National and festival holidays – employees shall be entitled for holidays on 26-Jan, 1-May, 15-Aug, & 2-Oct and 4 such other festival holidays, agreed by the employer and employees. Earlier: 26-Jan, 1-May, 15-Aug, & 2-Oct No provision of Festival holidays
14 Establishment wherein fifty or more workers are employed, there shall be provided and maintained a suitable room or rooms as crèche for the use of children of such workers. Provided that, if a group of establishments, so decide to provide a common crèche within a radius of one kilometre, then, the same shall be permitted by the Chief Facilitator, subject to such conditions as may be specified in the order. Earlier No such provision
15 There is a provision for annual return under the Act, which will be notified by the authority through a separate notification. No such provision
16 The penalty for contravention of the New Act and the rules has been enhanced to INR 100,000 and in case of continuing contravention an additional fine which may extend to INR 2,000 for every day during which the contravention continues. Further, for repeated offenders the fine may extend to INR 2,00,000. The Earlier Act provides for a minimum fine of INR 1,000 and a maximum fine of INR 5,000.

Subject : Time of supply of goods and ITC when price is not known at time of delivery

1. Querist has purchased certain raw material from ABC Ltd. which will be delivered within 15 days of the execution of the agreement. This raw material will be used in the production of export goods which will thereafter be sold in foreign markets. The export goods are manufactured within India itself.

2. However, the price of the raw materials is not stipulated in the agreement. Parties have agreed that the price payable to ABC Ltd., will be equivalent to the 50% of the profits from the sale of the export goods.

3. Querist seeks to know the time of supply of the purchase of raw material and the availability of input tax credit on the purchase of the raw material.


1. This is a contract for sale of goods against deferred monetary consideration. Such a contract can come into existence even if an exact price is not determined by the parties before the delivery of goods. This is apparent from a bare reading of Section 5(1) read with 9(1) of the Sale of Goods Act, 1930:

“5. Contract of sale how made

(1) A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed.

9. Ascertainment of price

(1) The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties.


2. Thus, only a promise to pay money is sufficient for a contract of sale to come into being. The quantum of money can be fixed later.

3. This transaction is undoubtedly liable to GST. However, it is impossible to determine the actual price at the time of delivery, since the price is based on the share of profits which will be determined after delivery.

4 Thus, as a matter of necessity, the time of supply will arise only at the time the price is determined and the invoice is raised by ABC Ltd., or the payment is made by Querist (whichever is earlier). The invoice itself cannot be issued before the exact details of the share of profit is calculated.

5. However, determination of time of supply and the time of issue of invoice is really ABC Ltd.’s problem, since it is ABC Ltd., which is liable to pay tax on the supply of goods and issue the invoice. Querist’s only real interest is the availability of Input Tax Credit on the payments made to ABC Ltd. as and when the share of profit is tendered to ABC Ltd., (or if the invoice is issued by ABC Ltd., before the payment by Querist). It is pertinent to note that under the GST Act and the rules, recipient’s right to claim input tax credit is not dependent on whether the supplier has wrongly determined the time of supply or whether the supplier has issued the invoice at the wrong time. As long as the Querist is in possession of the tax invoice and the tax is actually paid into the Government Treasury by ABC Ltd., there is no prohibition whatsoever on taking of credit.

Subject : Composite v. Mixed Supply – Renting of banquet halls along with decoration and food services

Querist is engaged in providing duly decorated and furnished banquet halls on rent to various parties for different kinds of social and family functions and ceremonies. Querist not only provides space, but also supplies food, decoration services and other incidental and ancillary services as a package to its customers.

Querist wishes to know the Service Accounting Code for the said service. We are informed that the Querist is contemplating classification of its services under SAC 9963 which deals with “accommodation, food and beverages”.


1. We are of the view that the SAC applicable to this service is 997212, which is the accounting Code applicable for “rental or leasing services involving own or leased non-residential property”.

2. SAC 9963 is not relevant because the Querist is not providing accommodation services or food or beverage services as such. Even though food and beverages are supplied during the course of these services and even though it is true that the SAC 9963 applies to “supply of food or beverage as a part of any service”, it must be remembered that the rules of composite and mixed supply cannot be overlooked while determining classification of services.

3. In the case of the services provided by the Querist, it is quite clear that the supply of rental services is the principal supply and the supply of food and beverages during the course of the entire supply is only an incidental or ancillary supply. As such, under section 8 of the CGST Act and the SGST Act, the incidental and ancillary supply will take on the identity of the principal supply and will completely lose any separate identity. The food and beverage supply will thus merge into the identity of the rental supply and the entire supply will take the colour of rental services as per section 8.

4. The words “as a part of” are used in SAC 9963 “supply of food …. as part of any service” cannot be interpreted in such a way so as to put in SAC 9963 all supplies where food does not even form a principal element. To do so would tantamount to elevating an incidental supply of food or beverage to the status of a principal supply in contravention of section 8. The SAC and the classification of services are notified through delegated legislation which cannot override Section 8, which is a provision contained in the parent Act. Thus, SAC 9963 can only apply to those cases in which food and beverage is supplied as a principal supply and not where they are supplied incidentally.

5. Therefore, the services of renting banquet halls along with decoration, food, beverage and other services is classifiable under SAC 997212.

Subject : Whether sending of defective goods for repair/replacement is a “supply”?

Querist has sold certain products to XYZ Ltd. which is situated in Kolkata, West Bengal. IGST at the due rate has already been paid on this sale.

After the goods were delivered, certain defects were noticed in those products and they were sent back by XYZ Ltd. to the Kolkatta branch of Querist for repairs and replacements.

XYZ Ltd., has again charged IGST when sending the goods back to Querist for repairs and replacements.

Querist has not yet paid the tax element to XYZ Ltd. Querist seeks to know whether XYZ Ltd., is correctly charging tax on sending back of defective goods for repairs or replacements and whether input tax credit is available on such a transaction?


We are of the considered view that there is no “supply” which takes place when defective goods are sent for repairs or replacements. These goods are generally sent back as a part of free warranty obligations or additional commercial warranty obligations. There is no consideration for sending of such goods.

Since there is no supply, XYZ Ltd., should not pay any tax on the sending back of goods for repairs or replacements. If Querist pays the same to XYZ Ltd., and takes credit of the same, it is quite possible that the GST Department will seek to deny input tax credit on the same on the ground that there was no “supply” in the first place and that the tax was not payable by XYZ Ltd., at all.

It is our view that Querist should not pay any tax to XYZ Ltd., and should not take any credit to avoid unnecessary and avoidable litigation on such issues.


Tax on Hospitals


VAT authorities in Maharashtra are taking view that the medicines used in treatment of patients admitted in hospital (in-patients or ‘in house-patients’) are liable to Sales Tax under MVAT Act, 2002. What is the correct position?


In hospital, when the patient is admitted, he is given medical treatment. The treatment includes services of doctors as well as giving medicines as may be required. In this transparent era, normally hospitals show charges towards medicines separately and other charges like bed charges, room charges etc., separately. In case of Saifee Hospital, a view was taken that the receipts toward medicines are liable to tax under MVAT Act. Similarly estimations were made towards food supply out of composite charges for room. There were also receipts towards special beds and mattresses. These charges were also held to be liable to VAT under ‘Transfer of right to use goods’.

Against the above first appeal order, second appeal was filed before Hon. M.S.T. Tribunal. Hon. Tribunal has delivered judgment in case of Saifee Hospital (Second Appeal No.190 of 2016 dated 8-12-2017).

Issues raised by first appeal order

Hon. Tribunal has noted that following issues are raised by the First Appellate Authority and after giving hearing held them as liable to tax under MVAT Act.

1) The supply of drugs and medicines and other surgical goods effected by pharmacy/drugstore to indoor admitted patients, is sale, liable to VAT.

2) Provision of food in hospital to admitted patients received in the composite charges received from patients for the bed charges is a sale of food and liable to VAT.

3) Supply of dental materials/implants by dental Department is a sale liable to VAT.

4) Hire charges for mattresses are liable to VAT.

5) Provisions of goods like special beds and equipments where hire charges have been received from patients is deemed sale in the nature of transfer of right to use any goods.

Hon. Tribunal noted the submissions made by the appellant in detail. Appellant made submissions on following focus issues:

a) The Commissioner of Sales Tax, vide letter dated 26-12-2007, has clearly stated that the dominant intention in administering medicines to in-patients is treatment of diseases and not supply/sale of medicines, consumables or implants.

b) The Sales Tax Department has further issued Circular No. 7A of 2008 dated 13-3-2008, wherein also, following BSNL (145 STC 91)(SC), same position is reiterated.

c) Even if pharmacy from where medicines are supplied is owned by hospital, so far as supply of medicines for treatment to
in-patients is concerned it is not sale. Sale by pharmacy over the counter to outpatients or general public is considered as sale under MVAT Act and due VAT has been discharged.

d) In particular, following judgments vary on same issue were cited:

(i) Dr. Hemendra Surana (90 STC 251) wherein it is held that taking x-ray and giving report is not a works contract activity.

(ii) Bharat Sanchar Nigam Ltd. (145 STC 91)(SC), where it is observed that medicines provided by doctor/hospital is not sale.

(iii) International Hospital Pvt. Ltd. (Writ Petition No. 68 of 2014 decided on 6-2-2014) in which use of stents for treatment of patient is held as not amounting to sale.

(iv) Tata Main Hospital (2208 NTN Vol-36 149) and Fortis Healthcare (CWP 1922 to 1924 of 2012 dated 23-1-2015).

In above judgments also respective High Courts have held that treatment of in-house patients is not amounting to sale.

e) Even the extended meaning of ‘sale’ under Article 366 (29A) does not cover such services. Various judgments were cited in support of the same.

f) In relation to charging the medicines at MRP used for in-patient, it was contended that there is no tax collection. Reliance was placed on the judgment of Hon. Supreme Court in case of Hindustan Lever Ltd. (93 VST 452).

Supporting the order of the First Appellate Authority argument on behalf of Sales Tax department were as under:

(a) In pharmacy, there is common stock and there is no difference between supplying medicines over the counter and supplied for treatment of in-patient.

(b) To show sales of goods, Department also cited instances that the patients take away unused medicines with them while taking discharge.

(c) Judgments cited by hospital including BSNL were tried to be distinguished on ground that they relate to composite transactions and not the one where sale is discernible.

(d) Judgments of Kerala High Court in case of Malankara Orthodox Syrian Church (135 STC 224)(Ker./) and PRS Hospital v. State of Kerala, 2003 (11) KTR 176 were relied upon. In those judgments, based on facts and legal position under respective Acts, the activity of Hospital was held as covered by Sales Tax Acts.

(e) The arguments were also made to treat these transactions as deemed sales by Works Contract or transaction of hotel service on ground there is transfer of medicines for human consumption.

(f) The provisions of MRP/Drug Price Control Order relied upon, to suggest that the prices are inclusive of tax. It was contended that tax is collected which cannot be allowed to be retained by hospital.

Hon. Tribunal has analysed arguments from both sides in elaborate manner.

Hon. Tribunal held that the basic nature of transaction is of rendition of services. The intention of parties is not to sell/purchase medicines but to be administered by doctors in course of treatment.

Hon. Tribunal examined position whether there is discernible sale or not, in following words.

“44. The next question is whether the supply of medicine in the course of treatment are discernible sale so as to attract the main definition of sale i.e., sale as per the Sales of Goods Act. The Appellant Officer in para 116 of his order remarks that intention of private hospital is to sell the medicine and earn profit. This may be so, but whether the patient intends to purchase medicine when admitted to hospital? Even in a composite contract, for a sale to be discernible, it must satisfy all the criteria for sale as per Sale of Goods Act. In Gannon Dunkerley (8 STC) the concept of sale has been discussed.

In para 16 the Court has said:

“.. In order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring goods which of course presupposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction property must actually pass in goods. Unless all these elements are present, there can be no sale.”

“We are accordingly of the opinion that on true interpretation of expression ‘sale of goods’ there must be an agreement between the parties for the sale of very goods in which property eventually passes.”

45. Thus, when a patient is admitted to hospital, his intention is not to buy medicine, nor are the medicines identified or agreed to be delivered to patient before administering the same during course of the treatment. It is not correct to say that as soon as bills are prepared by pharmacy, the goods are ascertained and delivered to the patients. These bills to in-patient according to appellate authority himself, are as per requirement of DCPO and for the purpose of books to be maintained according to DCPO. In large organisations, which to an outsider is single entity, there may be internal divisions incorporating the concept of profit centre for each division. Such divisions do not make them a separate entity from the single whole for transaction with outside person. Internal dynamism may allow pharmacy to operate as a profit Centre treating everything issued from it same as any other sale but that does not make it a sale same as over the counter sale to customer. The fact that billing from over the counter and to in-patient is same and same price is charged also does not make it different. In a restaurant, there may be sale from counter as well as service. The billing may be same and even price may be same for the both types of sales, yet first is sale simplicitor and second is a deemed sale.”

Tribunal with reasons rejected arguments of department.

The argument that it can be deemed sale under clauses 366(29A) is also rejected. It is held that it is transaction of service and not works contract.

It is also held that the circular issued by Commissioner of Sales Tax is binding. It is also held that though charges for medicines are at MRP, there is no collection of tax, but it is price.

Hon. Tribunal thus concurred with appellant hospital and deleted levy.

In respect of argument about charges for special bed etc., also Tribunal held that there is no lease transaction. The patient cannot take such goods outside. Therefore, there is no lease sale in respect of such goods also.

Similarly, there cannot be tax on food included in room rent as it is not separable nor provided for in Rules. Rule 59 of MVAT Rules is meant for hotels and not for hospitals. Tribunal deleted such levy also.

In final, Hon. Tribunal allowed appeal of appellant in all respects. The sum and substance of the issue is that the Hospital treatment transaction is held as service transaction and cannot be subjected to VAT.