1952 (2) TMI 15 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the memorandum dated 12th July, 1948, by the Assistant Sales Tax Commissioner constituted an order.
2. Liability of the applicant's concern for registration under the Sales Tax Act.
3. Whether the dispensing of medicines by the applicant amounts to "sales" under Section 2(c) of the Sales Tax Act.
4. Entitlement to a refund of sales tax already paid.
5. Determination of "taxable quantum" for the applicant's concern.

Issue-wise Detailed Analysis:

1. Whether the memorandum dated 12th July, 1948, by the Assistant Sales Tax Commissioner constituted an order:
The Sales Tax Commissioner treated the memorandum as a reference under Section 19(a) of the Sales Tax Act, but this view was incorrect. The memorandum contained a decision on the appellant's application for a refund and should be deemed an appellate decision against the original order of the Assistant Sales Tax Commissioner. The order of the Sales Tax Commissioner is final under sub-section (4) of Section 22 but is subject to revision by the Board of Revenue under sub-section (5) of Section 22.

2. Liability of the applicant's concern for registration under the Sales Tax Act:
The applicant, a proprietor of "Dixit Medico Surgical Hall, Durg," applied for registration under Section 8 of the Madhya Pradesh Sales Tax Act, 1947. A certificate was issued on 28th August, 1947. The applicant paid sales tax for the first two quarters but did not pay for subsequent quarters based on Separate Revenue Department Memorandum No. 284-2228-VIII, which stated that medical practitioners dispensing medicines are not "dealers" under Section 2(c) of the Act.

3. Whether the dispensing of medicines by the applicant amounts to "sales" under Section 2(c) of the Sales Tax Act:
The Assistant Sales Tax Commissioner determined that the applicant's concern was engaged in the sale of patent medicines, both in packed bottles and loose under prescriptions, and thus liable for sales tax. The Sales Tax Commissioner upheld this view, stating that the applicant was a "dealer" as defined in Section 2(c) and was rightly registered and taxed. The court noted that the concern had both a consulting room-cum-dispensary and a drug store, and sales of patent medicines in packed containers, whether to patients or others, must be considered as transactions of a dealer.

4. Entitlement to a refund of sales tax already paid:
The applicant claimed a refund of Rs. 751-0-6 paid as sales tax for the first two quarters of 1947. The Assistant Sales Tax Commissioner denied the refund, stating that the registration certificate was not liable for cancellation and the claim for refund was not tenable. The Sales Tax Commissioner also denied the refund, emphasizing that no refund could be granted unless the assessment was canceled.

5. Determination of "taxable quantum" for the applicant's concern:
The applicant argued that sales of patent medicines were below the "taxable quantum." The court examined the figures provided by the applicant, noting that the total sales from the Medico Surgical Hall amounted to Rs. 32,780, with Rs. 4,338 for patent medicines sold in packed bottles and Rs. 15,616 for medicines issued under prescriptions. The court held that the concern was a "dealer" under Section 2(c) for transactions classified as those of a dealer and that the "taxable quantum" for importers of goods was Rs. 5,000. Since the sales of patent medicines in packed bottles fell short of this amount by Rs. 662, the court upheld the applicant's contention regarding the "taxable quantum."

Conclusion:
The order of the Sales Tax Commissioner was set aside. The court directed that a fresh order be passed after examining the accounts of the applicant's concern in light of the principles and criteria laid down, distinguishing between taxable and non-taxable transactions. The applicant's concern was deemed liable for sales tax on certain transactions, but the actual liability could not be established due to insufficient data on the "taxable quantum."

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