Pl. Observe: "Cartel of Doctors, Pharma, Diagnostic Labs fleecing patients: Madras HC take suo motu cognizance" The Madras High Court on Monday took suo motu cognisance of unethical practices in the medical industry. As recorded in the order passed by the Bench of Justices N Kirubakaran and P Velmurugan, “… it is complained that drugs are overpriced and unnecessary drugs are being prescribed by a section of medical practitioners at the instance of pharmaceutical companies, apart from prescribing unnecessary tests, scans, X – Rays etc., for commission from diagnostic laboratories. It is being said that Medical Mafia is controlling the pharmaceutical field and they are responsible for overpricing of the drugs.” The case prompting the observation was a an appeal by the Income Tax department against an order of the Income Tax Appellate Tribunal (ITAT), which had ruled in favour of a Pharma company, Fourrts (India) Labs Pvt. Ltd. The tax dispute emerged after income returns submitted by Fourrts for the assessment year 2012-2013 came under scrutiny. The company had claimed a deduction of Rs 5,45,77,209 as Licences & Taxes and Rs 42,81,986 towards “Sales and Promotion Expenses” including payments to doctors for the promotion of the Company’s brands of medicine. It was also noted that in the previous year, the National Pharmaceutical Pricing Authority [NPPA] had ordered Fourrts to refund the excess amount collected by overcharging drugs higher than those fixed or notified by the Government, within interest. Whereas Fourrts contended that the same could not be considered a penalty and that the same was a refund, the assessing officer disagreed on this aspect. The assessment order was challenged by the Fourrts before the Commissioner of Income Tax (Appeals), who dismissed the appeal. The appellant, however, succeeded on second appeal before the ITAT. The High Court was approached by the Income Tax Department on further appeal. While the Court admitted the appeal, the Bench also opined that the case raises larger issues which the Court ought to consider suo motu. “Though the case on hand is a Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 this Court suo motu invokes Article 226 to consider the larger issues of bribing of doctors and overpricing of drugs by Pharmaceutical Companies, as they directly affect citizens violating their rights under Article 21 of Constitution of India. This Constitutional Court cannot restrict itself to the issue involved in the appeal and it is duty bound to issue remedial directions to address the above larger issues.”
more