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TMI Blog1968 (8) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... the years 1959-60 to 1962-63 under the Act for showing cause why he should not be assessed to sales tax. He gave a reply to the notices stating that he was carrying on the profession of a doctor and, therefore, was not liable to sales tax under the Act. He further pleaded that he was not a manufacturer of medicines and even if by any stretch of interpretation he could be brought under the Act, he could not be considered as a manufacturer but could only be taxed as an ordinary dealer. It may be noted that the taxable quantum in the case of a dealer is Rs. 50,000 while in the case of a dealer who manufactures any goods for sale it is Rs. 10,000. The assessing authority accepted that the petitioner was a registered medical practitioner carrying on the profession of a doctor and that he was not running any business as a chemist. It was also accepted that he did not prepare medicines on the prescriptions of other doctors. He was, however, considered as a manufacturer and since his gross turnover was assessed at a figure higher than Rs. 10,000, sales tax was imposed on him by order dated 29th June, 1963, under section 11(6) of the Act. The petitioner filed appeals before the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnal District, Karnal1966 All Tax Reports 48., Civil Writ No. 2134 of 1965, decided on 27th October, 1965, by Capoor and Dua, JJ. The petitioner of that case filed a petition under Article 226 in this Court against the assessment order because in the appellate order of the Deputy Excise and Taxation Commissioner, Ambala Division, dated 20th April, 1965, which also was an appeal from the order of the assessing authority, Karnal, for the assessment year 1963-64, he held that rice polish was a commodity different from rice bran and while rice bran was husk of rice, rice polish could not be included in the exempted item of rice husk. Inter alia, the appellate order also mentioned that the rice bran and rice polish are regarded as two different commodities by the department, the former being non-taxable under item 15 and the latter taxable. This view was based on certain instructions issued by the Excise and Taxation Commissioner, Punjab, with regard to the taxability of rice polish. On these facts, it was held by the learned judges that "since the Deputy Excise and Taxation Commissioner, Ambala Division, who was the appellate authority from the order of the respondent, felt himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate authority that the petitioner does not dispense the prescriptions of other doctors but only dispenses his own prescriptions for the benefit of his patients. It is urged that the price which the petitioner charges for the medicines supplied to the patients also includes his fee for his skill in diagnosing the ailments and the contract of treatment being one and indivisible, which includes professional services, cannot be split into two so as to confine one part to merely prescribing the medicines after diagnosing the ailments and the second part relating to the sale of medicines. For this proposition, he relies upon the judgment of Narula, J., in Associated Hotels of India Ltd. v. The Excise and Taxation Officer, Simla, and Another[1966] 17 S.T.C. 555. , which was affirmed on appeal by a Division Bench as reported in State of Punjab and Another v. Associated Hotels of India Ltd.[1967] 20 S.T.C. 1. This case related to a hotelier who charged consolidated amount from resident clients which included the supply of various meals and the learned Single judge (Narula, J.) held: "A transaction between a hotelier and its resident client is an indivisible contract of multiple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer. The other point decided by the Financial Commissioner does not arise in the present case. Reliance has been placed by the learned counsel for the petitioner on the decision of a Division Bench of the Allahabad High Court in Dr. Sukh Deo v. Commissioner of Sales Tax, Lucknow[1963] 14 S.T.C. 581., in which the following question of law was considered: "Whether the preparation of medicines on prescriptions of the applicant amounted to a manufacture of medicines and pharmaceutical preparations within the meaning of Notification No. ST-3504/X dated 10th May, 1956, and whether the applicant was assessable to tax on the turnover of the medicines so dispensed." That decision was, therefore, in reference to a particular notification and the decision was mainly confined to the determination of the point whether the preparation of medicines on prescriptions amounted to manufacture of medicines and pharmaceutical preparations. In that connection, it was held as under: "I have no doubt that the assessee cannot be said to be a manufacturer of the medicines. 'Manufacture' has been interpreted in a wide sense by a Bench of this Court of which I was a member in Badri Prasad Prab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n article commercially different from the ingredients that are mixed. The ingredients are only added together and the resultant is not at all different in form, nature, effect etc. from the ingredients. Every different prescription results in a different mixture; the assessee prepares as many mixtures as there are prescriptions. For every prescription he prepares just one mixture. In the circumstances it is difficult to say that he manufactures every time he dispenses a prescription. In North Bengal Stores Ltd. v. Member, Board of Revenue, Bengal(1), a dispensing chemist was held to come within the definition of a dealer because the word was defined in the relevant statute to mean a person who manufactures or produces any goods. If the chemist was held to be a dealer because he produces goods the decision is of no help in this case. But Das, J., held him to be a dealer also on the ground that he manufactures goods. The word 'manufacture' cannot be given the same meaning in every statute regardless of context and I do not think that the word used in the notification can be given the same meaning as the word used in the statute dealt with in that case. I would answer the first limb o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applies to a dispensing chemist whose gross turnover exceeds Rs. 10,000 during the prescribed year. Upon the assumption that questions (ii) and (iii) in the reference include the words 'produces any goods' in addition to the word 'manufactures' in those two questions, in my opinion the answers to the three questions should be in the affirmative." Das, J., observed in that case as under: "There is no definition of the terms 'manufacture' and 'produce' in the Act. These expressions, therefore, will have to be construed in their ordinary natural meaning according to the accepted usages of English speech and having regard to the context in which they are used in the Act. Etymologically 'to manufacture' is 'to make by hand'. The term 'manufacture' is, however, used in common parlance in a wider sense. According to the Oxford Dictionary 'to manufacture' is 'to work up (material) into forms suitable for use', or 'to make or fabricate from material; to produce by labour (now especially on a large scale)'. As a noun the term connotes 'the action or process of making articles or material (in modern use on large scale) by the application of physical power or mechanical power' or 'an article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance, something different from a mere lump of gold. When a cobbler uses leather and makes a pair of boots, the leather does not lose its existence, it still remains leather, but the pair of boots is, commercially, as in ordinary speech, a thing different from the leather with which it is made. When a carpenter makes a box out of wood, the box, though it is still wood, is different from mere wood. When a tailor makes a suit of clothes, it does not cease to be cloth, but commercially it is a different thing. In each of these cases a thing is made which is capable of being sold or supplied as a particular commercial article. When a dispensing chemist mixes different drugs according to the prescription of a physician, the drugs may or may not be transformed into a different matter. The mixture may become a chemical compound in which the drugs used may have been transformed into a totally different thing in their character and properties, or it may result in what is called a mechanical or physical mixture, in which each drug retains its original properties. But in either case the resulting mixture is a distinct product brought into being in a particular form suitable for the particul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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