1978 (9) TMI 167 - HC - VAT and Sales Tax

Summary

Issues:
- Whether an ayurvedic medicine called mritasanjiwani sura attracts levy of Finance sales tax.
- Interpretation of items 28 and 67 of the Assam Finance (Sales Tax) Act, 1956.
- Applicability of the amendments made in 1972 to the taxation of ayurvedic medicines.

Analysis:
The petitioner, a dealer in ayurvedic medicines, challenged the appellate order upholding the levy of Finance sales tax on mritasanjiwani sura for the assessment year ending on 31st March, 1969. The dispute revolved around the interpretation of items 28 and 67 of the Assam Finance (Sales Tax) Act, 1956. Item 28 exempted Ayurvedic, Homoeopathic, and Unani medicines from tax, while item 67 related to spirituous medicinal preparations containing alcohol. The court noted that the amendments made in 1972 clarified that certain ayurvedic medicines were exempt from tax, except those covered by item 67. The critical term "pharmacopoeia" was analyzed to determine the applicability of the tax. The court emphasized that the amendments were not retrospective, and therefore, mritasanjiwani sura, being an ayurvedic preparation, was not subject to Finance sales tax as per the law existing until 31st March, 1969.

The court highlighted that the amendments in items 28 and 67 were prospective in nature, as indicated by the use of phrases like "shall be substituted" and "shall be inserted." Consequently, the court concluded that mritasanjiwani sura was not liable for Finance sales tax during the relevant period. Accordingly, the court allowed the petition, setting aside the tax levy on the petitioner's turnover of mritasanjiwani sura. Notably, since the specific argument regarding the tax exemption was not raised before the lower authorities, each party was directed to bear their own costs. The judgment was delivered unanimously by both judges, with Justice Lahiri concurring with the Chief Justice's decision to allow the petition and quash the tax imposition on the ayurvedic medicine.

In conclusion, the judgment clarified the tax liability of ayurvedic medicines under the Assam Finance (Sales Tax) Act, 1956, emphasizing the importance of statutory interpretation and the non-retrospective nature of legislative amendments. The ruling provided a comprehensive analysis of the legal provisions and their application to the specific case, ultimately resulting in the quashing of the tax assessment on mritasanjiwani sura for the relevant assessment year.