1975 (4) TMI 120 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to exemption for inter-State sales of medicines for the year 1967-68.
2. Validity of the interpretation of G.O. Ms. No. 388/65/Rev. dated 22nd April, 1965, in conjunction with section 8(2A) of the Central Sales Tax Act, 1956.
3. Scope of the exemption granted by G.O. Ms. No. 388/65/Rev. dated 22nd April, 1965, under section 8(2A) of the Central Sales Tax Act, 1956.

Detailed Analysis:

1. Entitlement to Exemption for Inter-State Sales of Medicines for the Year 1967-68:
The court examined whether the assessee, an Ayurvedic physician running "Vayaskara Medicals," was entitled to an exemption for inter-State sales of medicines totaling Rs. 746.85 for the year 1967-68, despite not filing a declaration in C form. The assessing authority taxed this turnover at 10%, a decision upheld by the Additional Appellate Assistant Commissioner. However, the Appellate Tribunal granted the exemption, interpreting section 8(2A) of the Central Sales Tax Act, 1956, and the relevant notification in favor of the assessee. The High Court disagreed, stating that the exemption provided was not general but conditional, thus not applicable under section 8(2A).

2. Validity of the Interpretation of G.O. Ms. No. 388/65/Rev. Dated 22nd April, 1965:
The court scrutinized the Appellate Tribunal's interpretation of G.O. Ms. No. 388/65/Rev. in conjunction with section 8(2A) of the Central Sales Tax Act, 1956. The notification exempted "sale of medicines dispensed by a medical practitioner owning a dispensary and dispensing medicines to his patients from his own dispensary." The court emphasized that this exemption did not extend to patent medicines and was therefore not general but conditional. The court cited various precedents to reinforce its interpretation, concluding that the Tribunal's interpretation was incorrect.

3. Scope of the Exemption Granted by G.O. Ms. No. 388/65/Rev. Dated 22nd April, 1965:
The court analyzed whether the exemption granted by G.O. Ms. No. 388/65/Rev. was subject to specified circumstances and conditions, thus not qualifying as a general exemption under section 8(2A) of the Central Sales Tax Act, 1956. The court referred to the explanation of section 8(2A), which clarifies that an exemption is not general if it is conditional or applicable only in specified circumstances. The court reviewed several judgments from different High Courts, including those from Madras, Mysore, Madhya Pradesh, Calcutta, Punjab and Haryana, Andhra Pradesh, and Allahabad, to support its conclusion that the exemption in question was not general. Consequently, the assessee was not entitled to the exemption under the Central Act.

Conclusion:
The High Court concluded that the Appellate Tribunal erred in extending the exemption under section 8(2A) of the Central Sales Tax Act, 1956, to the assessee. The petition was allowed, and the Tribunal's decision was overturned. The court expressed gratitude to the amicus curiae for assistance and ordered no costs.