Advanced Medical Beds for Expecting Mothers Subject to Luxury Tax: Kerala High Court

The court made this observation in a plea filed by Cradle Calicut Maternity Care, a private limited company providing specialized maternity care. They argued that advanced medical beds imported from abroad were used to provide the best maternity care and were outside the scope of luxury tax.

Justice Harisankar V. Menon Undoubtedly, expectant mothers are allowed to enjoy amenities and services while staying in non-controversial hospital rooms, he noted. He said:

“Therefore, what ultimately needs to be examined is whether the facility provided is a necessary requirement for the average member of society. There can be no dispute that a pregnant mother can give birth even without the assistance of the medical bed provided by the petitioner.”

“It has been determined that the plaintiff is obliged to pay the luxury tax under the Act in return for receipts for the use of medical beds,” the court said.

The petitioner has four suite rooms and eighteen deluxe rooms and is registered under the Kerala Luxuries Tax Act, 1976. The petitioner said that it provides advanced medical beds to patients/pregnant women requiring special medical care and collects a separate amount for the same. use of this bed. The petitioner is deemed to have incurred the luxury tax on the room rent collected. However, for the fees related to the “medical bed” facility, the petitioner had not declared the receipts in accordance with the law and was also not paying tax; He argued that receipts for the use of medical beds were outside the scope of luxury practice. Tax according to law.

The Commercial Taxes Department initiated proceedings under Section 17A of the Act and the assessing authority imposed penalty on the applicant for failure to pay luxury tax for the use of medical beds. The applicant challenged the decisions of the assessing authority before the Supreme Court.

The petitioner’s lawyer argued that advanced medical beds were provided to expectant mothers who needed special care and that they were outside the scope of luxury tax. It was argued that medical beds were an essential part of the professional services provided in the hospital and were not subject to tax.

On the other hand, participants stated that advanced medical beds are luxury and are not exempt from taxes.

The court held that under Section 4 of the Act, if the charges collected from the patient exceed Rs 1,000, luxury tax at a certain rate may be collected from the hospital for accommodation charges for residents for amenities and use of services. . It noted that exemption can only be provided for meal charges, medicine charges and professional services charges under Section 4(2)(e) and medical beds cannot avail exemption under these three exceptions.

The court added: “I am of the view that no such objection can be raised on account of the specific exclusion of only three items under Section 4(2)(e) referred to earlier..I am of the view that the petitioner is liable to pay tax on the fees collected for medical beds provided by him.”.

Moreover, the Court observed that the medical bed at the plaintiff’s hospital also provided special facilities. The court stated that the plaintiff was taxed for his experience of the luxury of using accommodation and facilities at the hospital.

The court further stated that the plaintiff cannot be punished under Section 17A as he has not made any untrue or erroneous statement. The court stated that they used the medical beds in the good faith belief that they were not liable to pay luxury tax and that men’s rea was not available.

“The fact that what is imposed is a penalty shows that no penalty can be imposed unless mens rea is determined. “There cannot be any disrespect due to the above amounts not being included in the declaration.”

Accordingly, the Court annulled the decision regarding the sentencing. And the Court directed the assessing authority to issue a fresh assessment order.

Case Title: M/S. Cradle Calicut Maternity Care Pvt. Ltd v. State of Kerala and Related Case

Petitioner’s Counsel: Attorney Jose Jacob

Counsel for Respondents: Senior Government Advocate Sayed M Thangal

Case Number: WP(C) NO. 28762 OF 2017 and Connected Chassis

Quote: 2024 LiveLaw (Ker) 760