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The State of Madras Vs. Dr. Sathu V. Narayanaswami Pillai - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 286 to 288 of 1967
Judge
Reported in[1973]31STC522(Mad)
AppellantThe State of Madras
RespondentDr. Sathu V. Narayanaswami Pillai
Appellant AdvocateK. Venkataswami, First Assistant Government Pleader (Tax)
Respondent AdvocateC. Venkataraman, Adv.
Cases ReferredSomasundara Mudaliar v. State of Madras
Excerpt:
- .....is an ayurvedic medical practitioner and he has been selling medicines and medicinal oils as also tooth-powder with the name (sic). the taxes and the penalty in respect of each of the years levied by the assessing authority are set out below :___________________________________________________________assessment taxable tax levied penalty leviedyear turnover___________________________________________________________1959-60 254.46 15.27 22.911960-61 15,834.16 335.68 503.921961-62 31,644.34 670.86 1,006.291962-63 31,199.34 661.39 992.09___________________________________________________________2. the assessing officer took the view that the sales of the above articles by the respondent are liable to sales tax and, therefore, proceeded to assess the respondent on the basis of his best.....
Judgment:

Ramanujam, J.

1. These cases relate to three assessment years 1959-60, 1961-62 and 1962-63 and arise out of a common judgment rendered by the Tribunal. The respondent who is the same in all these three cases is an ayurvedic medical practitioner and he has been selling medicines and medicinal oils as also tooth-powder with the name (sic). The taxes and the penalty in respect of each of the years levied by the assessing authority are set out below :

___________________________________________________________Assessment Taxable Tax levied Penalty leviedyear turnover___________________________________________________________1959-60 254.46 15.27 22.911960-61 15,834.16 335.68 503.921961-62 31,644.34 670.86 1,006.291962-63 31,199.34 661.39 992.09___________________________________________________________

2. The assessing officer took the view that the sales of the above articles by the respondent are liable to sales tax and, therefore, proceeded to assess the respondent on the basis of his best judgment after rejecting the turnover shown in the books of account of the respondent. According to the respondent, all the above articles sold by him were medicinal preparations supplied only to his patients on the prescriptions issued by him and not to any other persons and that as such, he is entitled to the benefit of the notification under Section 17 exempting sales of medicines by every medical practitioner owning dispensaries and dispensing medicines to his patients only, from the payment of tax from 1st April, 1959. The assessing officer rejected the above contention holding that the respondent is found to have sold medicines in certain cases to outsiders and that, therefore, he is not entitled to the benefit of the exemption.

3. So far as the account books are concerned, the assessing officer was not inclined to accept the same and proceeded to make the assessment on the basis of certain statements made by the respondent in the course of the assessment proceedings. The assessing officer also dealt with the medicinal oils as edible oils and subjected the same to 3 per cent. at single point.

4. So far as the turnover relating to tooth-powder is concerned, the assessing officer following the decision of this court in Somasundara Mudaliar v. State of Madras [1963] 14 S.T.C. 943, held that tooth-powder is liable to be taxed only at the general rate of 2 per cent.

5. There were appeals to the Appellate Assistant Commissioner in respect of all these years but without success. The respondent, therefore, filed three appeals before the Tribunal questioning the said assessments. The Tribunal held, disagreeing with the view taken by the authorities below, that the facts clearly establish that the respondent has been supplying medicines only to his patients on prescriptions from the dispensary run by him and that, therefore, he is entitled to the benefit of the exemption under the notification referred to above. He, therefore, set aside the assessment so far as it related to the medicinal preparations. So far as tooth-powder is concerned, the Tribunal agreed with the view of the assessing authority that it is taxable only at multi-point at the rate of 2 per cent. and not at the rate of 3 per cent. single point. But it held that as the taxable turnover in respect of each of the years is less than Rs. 10,000, the turnover relating to tooth-powder could not be brought to charge. In that view, the Tribunal set aside the assessment in entirety in respect of all the years.

6. In these tax cases filed by the revenue, it is contended that the view of the Tribunal that the respondent is entitled to the benefit of the exemption set out above is not correct and that, in any event, the setting aside of the entire assessment orders in respect of the three years is not justified. We are not able to accept the first contention that the respondent is not entitled to the benefit of the notification referred to above in respect of sales of medicinal preparations. The Tribunal has specifically found that the respondent has supplied medicines on prescriptions to his patients from the dispensary and that there has been no sale of medicines to outsiders. On this finding, we are of the view that the respondent is entitled to the benefit of the G. O. and the Tribunal is right in giving the benefit of the exemption to the respondent in respect of the medicinal preparations.

7. On the other question as to whether the Tribunal was justified in setting aside the entirety of the assessment orders, it is pointed out by the learned Government Pleader that the sales of tooth-powder are taxable under the Act and that the Tribunal itself has upheld the assessment at 2 per cent. on the sales of tooth-powder ; but it has set aside the assessment on that turnover only on the ground that the taxable turnover was less than Rs. 10,000. According to the revenue, the Tribunal has not properly understood the scope of Section 3(1) read with the definition of 'total turnover' in Section 2(q). The above contention, in our view, has considerable force. The Tribunal's view that unless a person has got a taxable turnover of Rs. 10,000, he is not assessable under Section 3(1) does not seem to be in accord with the statutory provisions. Section 3(1), at the relevant time, stated that every dealer whose total turnover for a year is not less than ten thousand rupees, shall pay a tax for each year at the rate of two per cent. of his taxable turnover. 'Total turnover' has been defined under Section 2(q) as referring to the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax. The view that an assessee should have a taxable turnover of Rs. 10,000 to make him liable for sales tax runs counter to the definition of 'total turnover' in Section 2(q). We, therefore, disagree with the Tribunal and hold that the respondent whose total turnover even according to the books of account is more than Rs. 10,000 for 1961-62 and 1962-63 is liable to pay tax on the turnover relating to tooth-powder. In respect of the assessment year 1959-60, it is conceded that the total turnover itself is less than Rs. 10,000 and, therefore, the Tribunal is right in setting aside the assessment.

8. The result is that T. C. No. 288 of 1967 relating to the assessment year 1959-60 is dismissed ; but T. C. Nos. 286 and 287 of 1967 are allowed in part and the assessment orders so far as they relate to the turnovers in tooth-powder are held to be valid. There will be no order as to costs.


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