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Commissioner of Sales Tax Vs. Kailash Medical Hall - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case Number Sales Tax Reference No. 803 of 1971
Judge
Reported in[1975]35STC174(All)
AppellantCommissioner of Sales Tax
RespondentKailash Medical Hall
Appellant Advocate The Standing Counsel
Respondent Advocate None
Cases ReferredU. P. v. Dr. Sukh Deo
Excerpt:
- - on appeal the findings as well as the quantum were affirmed......(revisions) repelled the submissions raised on behalf of the department that the assessee would be liable to sales tax in view of the amendment of entry no. 39 in the notification dated 1st april, 1960, introduced by means of the notification dated 11th october, 1962. the additional judge (revisions) further determined the taxable turnover in regard to imported medicines at rs. 1,265 only. he held that the assessee was taxable on this amount only.3. at the instance of the department the revising authority has referred the following question of law for our opinion :whether, on the facts and in the circumstances of the case, the assessee was assessable to tax on the turnover of the medicines dispensed by him ?4. the learned standing counsel invited our attention to the finding recorded by.....
Judgment:

Satish Chandra, J.

1. The assessee is a chemist. He prepares medicine mixtures according to doctors' prescriptions and sells them. The disclosed turnover amounted to Rs. 8,744. The assessing officer disbelieved the quantum and assessed the assessee to sales tax under Section 3-A of the U. P. Sales Tax Act as a manufacturer after determining the turnover at Rs. 20,000. The Sales Tax Officer rejected the contention of the assessee that he was not a manufacturer. On appeal the findings as well as the quantum were affirmed. The assessee took the matter in revision.

2. The Additional Judge (Revisions) held that in view of the decision of this court in Dr. Sukh Deo v. Commissioner of Sales Tax, U.P. [1963] 14 S.T.C. 581, to the effect that there cannot be a manufacture unless the resulting produce is a commercially different article, the assessee cannot be said to have manufactured a commercially different article. The view of the High Court was affirmed by the Supreme Court in Commissioner of Sales Tax, U. P. v. Dr. Sukh Deo [1969] 23 S.T.C. 385 (S.C.). In view of these decisions it was held that the assessee was not liable to tax under Section 3-A as a manufacturer. The Judge (Revisions) repelled the submissions raised on behalf of the department that the assessee would be liable to sales tax in view of the amendment of entry No. 39 in the notification dated 1st April, 1960, introduced by means of the notification dated 11th October, 1962. The Additional Judge (Revisions) further determined the taxable turnover in regard to imported medicines at Rs. 1,265 only. He held that the assessee was taxable on this amount only.

3. At the instance of the department the revising authority has referred the following question of law for our opinion :

Whether, on the facts and in the circumstances of the case, the assessee was assessable to tax on the turnover of the medicines dispensed by him ?

4. The learned standing counsel invited our attention to the finding recorded by the Assistant Commissioner (Judicial), Sales Tax, that even if the assessee may not be liable to sales tax under Section 3-A as a manufacturer, he was liable to pay tax on the turnover of medicines sold by him under Section 3 of the Act. The appellate authority, therefore, assessed the assessee under Section 3 of the Act on his entire turnover of the sale of medicines which was, however, fixed at Rs. 9,000. It was urged that the Additional Judge (Revisions) was in error in reversing the appellate order without applying his mind to this finding or setting aside the finding that the assessee was liable to be taxed under Section 3 as a dealer. It is true that the Additional Judge (Revisions) has not discussed this finding and that he has completely overlooked it. The result is that it cannot be said that the question whether the assessee was assessable to tax under Section 3 of the Act as a dealer does arise out of the revisional order ; because there is no allegation that this point was even argued before the Additional Judge (Revisions). Since the department has not got any question referred to us in regard to the omission by the Additional Judge (Revisions) in dealing with the applicability of Section 3 of the Act, we cannot, while answering the question referred to us, deal with that aspect. The question though widely worded cannot, in our opinion, include the applicability of Section 3 in regard to the assessment of tax on the medicines dispened by the assessee. In view of the revisional order the question referred to us must be confined to the liability of the assessee to be taxed under Section 3-A of the Act only.

5. Entry No. 39 in the notification dated 1st April, 1960, was as follows :

----------------------------------------------------------------------------------1 2 3 4 5----------------------------------------------------------------------------------39. Medicines and (a) If imported (a) Sale by (Omitted aspharmaceutical from outside importer not relevant.)preparations. U.P.(b) If manufactured (b) Sale byin U.P. manufacturer.----------------------------------------------------------------------------------

6. On 11th October, 1962, a notification was issued amending entry No. 39 with effect from 1st July, 1962. The amendment was that mixtures prepared by medical practitioners for their own patients under their own prescriptions and from their own dispensaries were exempt from tax. Since in view of the decisions of the High Court and the Supreme Court entry No. 39, when it imposed a tax on manufacturers in Uttar Pradesh, did not apply to or cover those who prepared mixtures of medicines because such a preparation does not in law amount to manufacturing a commercially different article, the fact remained that persons preparing medicine mixtures were exempt from tax under entry No. 39. The amendment of 11th October, 1962, only exempted medical practitioners in respect of preparation of mixtures for their patients. This express exemption will not make any change in the legal position declared by the High Court and the Supreme Court. Since the High Court and the Supreme Court had interpreted the word 'manufacturer' occurring in Section 3-A that will be the prevailing construction of that word in the statute and the notification. If a term used by the legislature in a particular statute has been judicially declared to have a particular meaning, the subordinate rule-making authority cannot by its notification or rule change that construction. It was hence not open to the State Government to have made a notification which would have the effect of making those preparing mixtures of medicines liable to tax as manufacturer. In this view of the law the submission that the amending notification of 11th October, 1962, by implication made all those chemists other than medical practitioners liable to tax as a manufacturer cannot be accepted.

7. In the result the question referred to us is answered in the negative, in favour of the assessee and against the department. Since no one has appeared on behalf of the assessee there will be no order as to costs.


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