2019 (5) TMI 572 - HC - VAT and Sales Tax

Whether the medicines sold by the revisionist as CNF Agent is the Generic Salt Chloramphenicol which is exempt under the notification of the State Government dated 31.03.1992 issued under Section 4 (a) of the U.P. Sales (Trade) Tax Act, 1948 or not? - Whether the said medicine under the brand name 'Paraxin' is exempted from tax under the notification dated 31.03.1992 or not? HELD THAT - Before the Commercial Tax Tribunal, the revisionist-applicant has produced the material on the basis of which the composition of the product could be examined, but the Tribunal failed to exercise its jurisdiction and therefore it was the duty of the Tribunal to get the said product examined and verified by the expert authority who can give definite finding about this product that as to whether the 'Chloramphenicol' as mentioned in the Notification dated 31.03.1992 is exempted - The trade tax tribunal is duty bound to examine the products of the revisionist-applicant and give definite finding with regard to 'Chloramphenicol' product is liable for exemption or not. The matter is remanded back to the Commercial Trade Tax Tribunal, who will reexamine the products of the revisionist-applicant - revision allowed by way of remand.

Summary

Issues:
1. Interpretation of exemption under Section 4(a) of the U.P. Sales (Trade) Tax Act, 1948 for medicines containing Chloramphenicol.
2. Failure to verify if the product sold by the revisionist-applicant contains Chloramphenicol.
3. Duty of the Trade Tax Tribunal to examine and determine the eligibility for exemption.

Analysis:
The judgment of the Allahabad High Court involved a trade tax revision where the revisionist-applicant challenged the order of the Commercial Tax Tribunal dismissing their appeal and confirming the decision of the Assessing Authority. The revisionist claimed exemption under Section 4(a) of the U.P. Sales Tax Act, 1948 for medicines containing Chloramphenicol, specifically a product named 'PARAXIN 250'.

The revisionist argued that a notification dated 31.03.1992 exempted medicines containing Chloramphenicol, as listed in the Schedule. However, both the Assessing Authority and the Appellate Authority rejected the claim due to the lack of evidence proving that the product sold by the revisionist indeed contained Chloramphenicol, as required for exemption.

The High Court noted that the Tribunal based its decision on the lack of material provided by the revisionist to prove the presence of Chloramphenicol in the product. The Court acknowledged that the revisionist had presented the product wrapper mentioning Chloramphenicol, but the authorities had not verified this information.

In its analysis, the Court framed two questions of law regarding the presence of Chloramphenicol in the product and its eligibility for exemption under the notification. The Court found that none of the authorities had confirmed that the product 'PARAXIN' contained Chloramphenicol, leading to a negative answer to the posed questions.

The Court emphasized the duty of the Trade Tax Tribunal to examine and determine the presence of Chloramphenicol in the product for exemption eligibility. It criticized the Tribunal for not verifying the product composition despite the revisionist providing materials for examination.

Consequently, the High Court set aside the Tribunal's order, allowed the revision, and remanded the matter back to the Commercial Trade Tax Tribunal. The Tribunal was directed to reexamine the product with the possibility of seeking expert opinions from research laboratories like the Central Drug Research Institute. The revisionist was instructed to provide all relevant material to support their claim, and the Tribunal was given a timeline to make a decision.

In conclusion, the judgment highlighted the importance of verifying product composition for tax exemption eligibility and emphasized the Tribunal's duty to conduct a thorough examination in such cases.