1958 (10) TMI 31 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Whether Mritasanjibani Sura should be regarded as a country liquor exempt from tax under item No. 10 of Notification No. STGL-60/51-4280 F.T. dated 2nd April, 1951.

Detailed Analysis

Issue 1: Whether Mritasanjibani Sura should be regarded as a country liquor exempt from tax under item No. 10 of Notification No. STGL-60/51-4280 F.T. dated 2nd April, 1951

Statement of Case:
The case involves the assessment of sales tax on Messrs Sadhana Ausadhalaya for the years 1952-53 and 1953-54. The assessee was assessed to sales tax by the Superintendent of Sales Tax, Urban Circle, Patna, and subsequently moved through various appellate and revision authorities, ultimately leading to a reference to the High Court.

Arguments and Contentions:
The assessee argued that Mritasanjibani Sura should be exempt from sales tax as it qualifies as a country liquor under item No. 10 of the relevant notification. The assessee's claim was based on the composition of Mritasanjibani Sura, which primarily includes molasses, a common ingredient in country liquor.

Legal Framework:
The relevant notification exempts "country liquor including toddy and pachwai but excluding potable foreign liquor and medicated wine" from sales tax. The primary legal question is whether Mritasanjibani Sura falls under the category of country liquor or medicated wine.

Findings of the Court:
The court examined the composition and preparation method of Mritasanjibani Sura, which includes various medicinal herbs and molasses. The Deputy Commissioner of Sales Tax had previously concluded that Mritasanjibani Sura is a medicated wine, not a country liquor, based on its ingredients and medicinal properties. The court agreed with this assessment, noting that the preparation method and the medicinal properties of the ingredients used in Mritasanjibani Sura clearly indicate that it is a medicated wine.

Key Points from the Judgment:
- The court emphasized that the essential ingredients and the method of preparation of Mritasanjibani Sura leave no doubt that it is a medicated wine.
- The court noted that Mritasanjibani Sura is used for medicinal purposes and is not sold by ordinary liquor vendors but by Ayurvedic Ausadhalayas.
- The court rejected the argument that the dominant use of molasses makes it a country liquor, stating that the presence of medicinal herbs and the intended medicinal use are more significant factors.
- The court also addressed the constitutional argument, noting that the power to levy excise duty on medicinal preparations containing alcohol lies with the Union, while the State has the power to impose excise duty on alcoholic liquors for human consumption. However, these considerations were deemed immaterial to the classification of Mritasanjibani Sura for sales tax purposes.

Conclusion:
The court concluded that Mritasanjibani Sura is a medicated wine and not a country liquor. Therefore, it is not exempt from sales tax under item No. 10 of the relevant notification. The assessment of sales tax on the assessee for the periods 1952-53 and 1953-54 was held to be legally valid. The questions referred by the Board of Revenue were answered in favor of the State of Bihar and against the assessee.

Costs:
The opposite party (State of Bihar) was entitled to costs of the references, with a consolidated hearing fee of Rs. 200 for all three cases.

Separate Judgments:
- RAMASWAMI, C.J. concurred with the judgment.

References Answered Accordingly:
The references were answered in favor of the State of Bihar and against the assessee.