1990 (4) TMI 275 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether "mritasanjibani" falls under item 67 of the Schedule to the Assam Finance (Sales Tax) Act, 1956.
2. Whether item 67 is violative of Article 14 of the Constitution of India by treating medicinal preparations containing more than 12% alcohol differently from other medicinal preparations.

Issue-Wise Detailed Analysis:

1. Whether "mritasanjibani" falls under item 67 of the Schedule to the Assam Finance (Sales Tax) Act, 1956:

The primary question is whether "mritasanjibani" qualifies as a "spirituous medicinal preparation" under item 67 of the Schedule to the Assam Finance (Sales Tax) Act, 1956, which reads: "Spirituous medicinal preparations under any pharmacopoeia containing more than 12 per cent by volume of alcohol (but other than those which are declared by the State Government by notification in the official Gazette to be not capable of causing intoxication)." The petitioner argued that "mritasanjibani" does not fall under item 67 because it does not contain added spirit but only self-generated alcohol. However, the court referred to the definition of "spirituous preparation" in the Spirituous Preparation (Inter-State Trade and Commerce) Control Act, 1955, which includes any medicinal preparation containing alcohol, whether self-generated or otherwise. Given that "mritasanjibani" contains self-generated alcohol, it qualifies as a spirituous medicinal preparation under this definition. Additionally, the court considered the Supreme Court's decision in A.M.B. Sakti Oushadhalaya Dacca (P) Ltd. v. Union of India, which recognized "mritasanjibani" as a medicinal preparation under ayurvedic pharmacopoeia. Based on these points, the court concluded that "mritasanjibani" falls under item 67 and is taxable.

2. Whether item 67 is violative of Article 14 of the Constitution of India:

The second issue is whether item 67, which imposes a higher sales tax on medicinal preparations containing more than 12% alcohol, violates Article 14 of the Constitution by being discriminatory. The petitioner contended that "mritasanjibani," being an ayurvedic medicine, should not be treated differently from other ayurvedic medicines that are exempt from sales tax. The court examined the justification for this differential treatment. The Advocate-General argued that the higher alcohol content and potential for intoxication justified the higher tax rate. However, the court referred to the Supreme Court's decision in Arya Vaidya Pharmacy v. State of Tamil Nadu, which held that ayurvedic medicinal preparations should not be treated differently based on alcohol content for tax purposes. The court concluded that "mritasanjibani," being an ayurvedic medicine, should be treated like other ayurvedic medicines and be exempt from sales tax. Therefore, item 67 was found to be violative of Article 14, and the court directed that "mritasanjibani" be reassessed as exempt from sales tax.

Conclusion:

The court allowed the writ petitions, set aside the impugned orders, and directed the assessing authority to reassess the turnover of the petitioner, treating "mritasanjibani" as exempt from sales tax like other ayurvedic medicines. No order as to costs was made.