1974 (1) TMI 89 - HC - VAT and Sales Tax

Summary

Issues:
Sales tax assessment under Punjab General Sales Tax Act and Central Sales Tax Act for the year 1957-58. Determination of whether an ayurvedic practitioner, who gives medicines to patients on his prescriptions, is a manufacturer of medicines and a dealer under the Acts.

Analysis:
The case involved Sales Tax References under the Punjab General Sales Tax Act and the Central Sales Tax Act for the year 1957-58. The primary issue was whether an ayurvedic practitioner, who provided medicines to patients based on his prescriptions, could be considered a manufacturer of medicines and a dealer under the Acts. The court was tasked with determining if the practitioner's activities constituted the sale of goods in the normal course of trade and business. The practitioner toured India, provided medicines to patients, and filed returns under both Acts. The Assessing Authority made assessments, which were later appealed and revised. The Financial Commissioner concluded that the practitioner was a manufacturer of medicines, patronized by the public, and set aside previous decisions. The practitioner sought a reference to the High Court, challenging the classification as a dealer and manufacturer.

The definition of "dealer" under section 2(d) of the Punjab Act was crucial in determining the practitioner's status. The court referred to previous cases where a doctor dispensing own prescriptions was considered a dealer and manufacturer. However, conflicting judgments highlighted the need for clarity. The court examined the Supreme Court's ruling in a similar case involving a medical practitioner in Uttar Pradesh. The Supreme Court held that preparing a mixture of drugs for a patient's treatment did not constitute manufacturing under the notification, exempting the practitioner from tax liability. Applying this precedent, the court analyzed the practitioner's activities, including preparing medicines from precious stones for individual patient needs. The court concluded that the practitioner's actions did not amount to manufacturing medicines for sale, thus not qualifying as a dealer under the Acts.

In light of the Supreme Court's interpretation and the practitioner's personalized approach to medicine preparation, the court ruled in favor of the practitioner. The court held that the practitioner's activities did not align with the definition of a dealer or manufacturer under the Acts. Therefore, the court answered both questions in the negative, supporting the practitioner's position. The judgment was delivered by P.C. Pandit and P.S. Pattar, JJ., with Pattar, J., concurring. The reference was answered in the negative, providing clarity on the practitioner's classification under the sales tax laws.