1968 (8) TMI 169 - HC - VAT and Sales Tax

Issues Involved:
1. Competence of the writ petition under Articles 226/227 of the Constitution of India.
2. Liability of a medical practitioner to sales tax under the Punjab General Sales Tax Act.
3. Definition and scope of 'dealer' and 'manufacturer' under the Act.
4. Applicability of previous judgments and notifications on the present case.

Issue-wise Detailed Analysis:

1. Competence of the Writ Petition:
The petition was filed under Articles 226/227 of the Constitution of India to quash the order dated 17th January 1966, passed by the Joint Excise and Taxation Commissioner, Punjab. The respondents raised a preliminary objection regarding the competence of the petition, arguing that the petitioner should have approached the Court by way of reference through the Financial Commissioner under section 22 of the Act. However, the Court overruled this objection, citing previous judgments that established that when the departmental instructions predetermine the stand to be taken in appeal or revision, the remedy by way of appeal or revision becomes futile and illusory. The Court decided to admit the petition on merits, noting that there was no decided case on the point of law involved in the writ petition.

2. Liability of a Medical Practitioner to Sales Tax:
The petitioner, a medical practitioner, argued that he was not liable to sales tax as his primary business was to treat patients and not to sell medicines. He contended that the price charged for medicines included his fee for professional services, making the contract of treatment indivisible. The Court, however, held that the professional services end once the prescription is written, and the preparation of medicine from that prescription does not involve any particular skill. Thus, the sale of medicine to the patient is a contract of sale and is taxable. The Court upheld the decision of the Financial Commissioner in Dr. Dev Raj Aggarwal's case, which stated that sales of medicines by medical practitioners, whether patent or dispensed, attract the levy of sales tax, and the doctor is both a dealer and a manufacturer.

3. Definition and Scope of 'Dealer' and 'Manufacturer':
The petitioner argued that he was not a manufacturer of medicines and should not be considered as one under the Act. The Court referred to previous judgments and definitions in the Act, concluding that the petitioner is a dealer within the meaning of section 2(d) of the Act and manufactures or produces goods for sale as contemplated in section 4(5)(b). The Court drew parallels between a chemist who prepares medicines on prescriptions and a doctor who dispenses his own prescriptions, stating that both are engaged in the business of selling goods.

4. Applicability of Previous Judgments and Notifications:
The petitioner relied on the judgment of the Allahabad High Court in Dr. Sukh Deo v. Commissioner of Sales Tax, which held that preparing medicines according to prescriptions did not amount to manufacturing. The Court, however, preferred the view of the Calcutta High Court in North Bengal Stores Ltd. v. Member, Board of Revenue, which held that a dispensing chemist produces goods for sale. The Court concluded that the petitioner, by dispensing his own prescriptions, produces goods for sale and is liable to sales tax.

Conclusion:
The Court dismissed the petition, holding that the petitioner is a dealer and manufacturer under the Punjab General Sales Tax Act and is liable to pay sales tax on the medicines dispensed. The decision emphasized that the professional services of a doctor end with the writing of the prescription, and the subsequent sale of medicine constitutes a taxable event. The petition was dismissed with no order as to costs.

← Previous Next →