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The State of Andhra Pradesh Vs. Raja Medical Stores - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revision Case No. 2 of 1980
Judge
Reported in[1983]53STC428(AP)
ActsAndhra Pradesh General Sales Tax Act; Drugs and Cosmetics Act, 1940; Madras General Sales Tax Act
AppellantThe State of Andhra Pradesh
RespondentRaja Medical Stores
Advocates:The Government Pleader for Commercial Taxes, Adv.
Excerpt:
sales tax - taxable items - andhra pradesh general sales tax act, drugs and cosmetics act, 1940 and madras general sales tax act - whether distilled water sold in vials falls within entry 37 of first schedule to a.p. general sales tax act or to be treated as general goods - distilled water sold in vials for purpose of being mixed with medicines and drugs before injecting - it falls under item 37 - tribunal's findings confirmed - distilled water undergoes manufacturing process - held, turnover with respect to 'distilled water' being second sales in hands of assessee cannot exigible to tax. - - the principle of the said decision clearly applies to the goods in the instant case as well......23 of 1940). 2. the tribunal has held in favour of the assessee, that is to say, that distilled water falls within entry 37. that finding is challenged in this tax revision case. 3. for answering the above question, it is necessary to find out what is 'distilled water'. it is chemically pure water, made free of all types of infection-producing pathogens and all other impurities, so that it can be mixed with injectable drugs and medicines. it is undoubtedly an integral component of the injected medicine. in other words, the injected medicine consists not only the substance or powder, as the case may be, but also the distilled water which is mixed with the powder or the substance before it is injected. looked at from this point of view and also from the common sense or commercial point.....
Judgment:

Jeevan Reddy, J.

1. The only question in this tax revision case is whether distilled water sold in vials by the respondent, who is a dealer in medicines and drugs, falls within entry 37 of the First Schedule to the Andhra Pradesh General Sales Tax Act, or should it be treated as general goods. Entry 37 reads as follows :

'Drugs and medicines (whether At the point of Four paise in the patent or proprietory), as first sale in rupee.' defined in section 3 of the the State. Drugs and Cosmetics Act, 1940 (Central Act 23 of 1940).

2. The Tribunal has held in favour of the assessee, that is to say, that distilled water falls within entry 37. That finding is challenged in this tax revision case.

3. For answering the above question, it is necessary to find out what is 'distilled water'. It is chemically pure water, made free of all types of infection-producing pathogens and all other impurities, so that it can be mixed with injectable drugs and medicines. It is undoubtedly an integral component of the injected medicine. In other words, the injected medicine consists not only the substance or powder, as the case may be, but also the distilled water which is mixed with the powder or the substance before it is injected. Looked at from this point of view and also from the common sense or commercial point of view it would be reasonable to hold that distilled water sold in vials for the purpose of being mixed with medicines and drugs before injecting, must be treated as falling under item 37. This is also the view taken by the Calcutta High Court in Ram Chandra Sundarka v. State of West Bengal 1971 Crl LJ 1369.

4. We may also refer in this connection to the decision of the Madras High Court in Sri Ram Products v. State of Tamil Nadu [1983] 52 STC 187 where the question was whether the absorbent cotton wool I.P. which goes through some manufacturing process, falls under item 2 of the Second Schedule, viz., cotton, that is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state, whether ginned or unginned, baled, pressed or otherwise, but excluding cotton water, or within item 95 of the First Schedule to the Madras General Sales Tax Act which reads :

'Drugs, patent or proprietary medicines as defined in section 3 of the Drugs and Cosmetics Act, 1940 (Central Act XXIII of 1940), or medicinal mixtures or compounds, the components of which have not already suffered tax, but excluding arishtams or asavas and including surgical dressing.'

5. Having regard to the process the absorbent cotton wool which is used for dressing undergoes the High Court held that it falls within item 95. Reference was also made to the fact that they are manufactured to Indian Pharmacopoeia Standards. The principle of the said decision clearly applies to the goods in the instant case as well. It may be remarked that even distilled water undergoes the manufacturing process and is manufactured to accord with the Indian Pharmacopoeia Standards. Hence, the Sales Tax Appellate Tribunal was right in holding that the turnover on this account would be second sales in the hands of the assessee and therefore not exigible to tax.

6. The tax revision case accordingly fails and is dismissed. No costs. Advocate's fee Rs. 250 (rupees two hundred and fifty only).


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