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TMI Blog1988 (2) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... till the date of refund. 2.. Petitioners manufacture under a licence dated July 13, 1967, issued by the Drugs Controller under the Drugs and Cosmetics Act, 1940, which was amended on September 7, 1987, several products, inter alia, zinc oxide adhesive plaster B.P.C. (leukoplast); surgical wound dressing (handyplast); belladonna plaster B.P.C.; capsicum plaster B.P.C. and cotton crepe bandages B.P.C. (leukocrepe). 3.. The aforesaid goods or products were liable to local sales tax as well as Central sales tax and prior to 1st November, 1981, the rate of the local sales tax leviable on them being of 6 per cent and under section 8(2-A) of the Central Sales Tax Act, the rate of the Central sales tax of 4 per cent. By the Notification No. 14/41/81-Fin (R C), dated October 28, 1981, drugs and medicines were exempted from the levy of local sales tax in excess of 3 per cent and thus, according to the petitioners, as a result of this exemption, the Central sales tax leviable under section 8(2-A) of the Central Sales Tax Act was also reduced to 3 per cent. 4.. The petitioners however had been paying Central sales tax at the rate of 4 per cent on the sales of the goods and also local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to December 31, 1986. 7.. No action was, however, taken by the respondents on the said letters claiming refund of the tax paid in excess till the time of the institution of the present writ petition. However, after the admission of this writ petition, the Assistant Sales Tax Officer made orders dated December 24, 1987 for the period commencing on January 1, 1983 and ending on December 31, 1983. He rejected the claim for refund, applying the principle or the doctrine of unjust enrichment. 8.. The petitioners' case is that the aforesaid products or goods are "drugs and medicines" and therefore, fall under the purview of the exemption Notifications No. 14/41/81-Fin (R C) and No. 5/5/87 (R C)-8. The assessment orders under challenge are accordingly illegal and liable to be set aside and the petitioners are entitled to the refund of the taxes paid under a mistake of law and collected by the respondents without authority of law. Respondents however contend that the aforesaid products are not "drugs and medicines", and as such, the question of the refund of the taxes paid does not at all arise. Hence, two are the questions that fall for our determination, namely, (a) whether the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the petitioners are well within the meaning of drugs and medicines given in section 3 of the Drugs and Cosmetics Act, 1940. That apart, the learned counsel further urged that that had been the understanding of the excise authorities who had consistently classified the said products as drugs and medicines falling under tariff item No. 68, but exempted from payment of duty under Notification No. 55/75 dated March 1, 1975. Finally, the learned counsel, placing reliance on Leukoplast (India) Ltd. v. Union of India (1983) ELT 2106 (Bom), contended that the Division Bench of this Court has held that zinc oxide self-adhesive plaster B.P.C. manufactured by the petitioners is a drug and medicine and has, as such, granted refund of tax collected. He also placed reliance in support of his contentions in the decision of the Supreme Court in Chimanlal Jagjivandas Sheth v. State of Maharashtra AIR 1963 SC 665. 10.. We have already mentioned that the case of the respondents is that the products in question manufactured by the petitioners are not drugs and medicines and that therefore, the petitioners are not entitled to the sought refund of duty. The learned Advocate-General has indeed cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eGeneral, therefore, contended that in the absence of any definition of "drugs and medicines" in the excise law, the definition given to drugs in the Drugs and Cosmetics Act is of no significance and does not advance the petitioners' case. He further placed reliance in support of his submission that the popular understanding of the word and not its technical meaning is to be considered in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh [1981] 47 STC 359 (SC), as well as in the decision of the single judge of this Court in Prabhudas Kalyanji Adhia v. State AIR 1970 Bom 134. He equally placed reliance in Nippon Yusen Kaisha v. Ramjiban Serowgee AIR 1938 PC 152 to support his contention that definitions given in one statute cannot be used to interpret the same expression occurring in a different Act or statute. The learned Advocate-General, proceeding with his arguments, further contended that definitions given in the Pharmaceutical Codex are not binding as observed in Prabhudas Adhia's case AIR 1970 Bom 134, and in any event, the definition given in section 3(b) of the Drugs and Cosmetics Act is, as the word "includes" shows, inclusive in nature. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rous to seek to construe one statute by reference to the words of another will suffice. But if this is true and correct, it may be also pointed out that this is not an absolute principle of law. Generally it is so, but in a given case, the definition given in a particular statute, not being repugnant, may be used to construe and interpret the same expression occurring in another statute. The learned Advocate-General is further right in his submission that inasmuch as the excise law is concerned, it is the understanding which a product has in trade or popularly that counts. 12.. The question whether the technical or the commercial meaning is to be considered while interpreting the entries in the Schedule of the Sales Tax Act fell for the determination of the Division Bench of this Court in Uday Minerals' case (W.P. No. 85 of 1986 dated November 3, 1987). The Division Bench, relying on the observations made by the Supreme Court in Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh [1967] 19 STC 469; AIR 1967 SC 1454 and in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286; AIR 1961 SC 1325, held that it is clear that while construin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture for sale, or sell, or stock or exhibit for sale, or distribute any drug which is not of standard quality or any misbranded drug or any adulterated drug and any patent or proprietary medicine unless it is displayed in the prescribed manner; any drug which by means of any statement, design or device accompanying it or by any other means purports or claims to cure or mitigate any such disease, any cosmetic containing any ingredient which may render it unsafe or harmful for use, in contravention of any of the provisions of the chapter unless such manufacture is done under a licence issued for such purpose under the said chapter. Then, section 27 imposes penalties for the manufacture, sale, stock, exhibit for sale and distribution of drugs in contravention with the provisions of the Act and make it, inter alia, punishable with imprisonment. This being so, the learned counsel contended, in view of the mandate incorporated in the Drugs and Cosmetics Act, it is not open to a manufacturer to manufacture or sell or exhibit to sell or distribute any drug unless he manufactures it under a licence issued by the Drugs Controller under the said Act, and further, in compliance with the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch drugs, as well as of cosmetics. Chapter IV deals with the manufacture, sale and distribution of drugs and section 18(c), inter alia, provides that no person shall himself or by any other person on his behalf manufacture for sale, or sell, or stock, or exhibit for sale or distribute any drug or cosmetic except under a licence issued for such purpose under the said chapter. Clauses (a) and (b) prohibit the manufacture for sale, the sale, the stocking, the exhibition for sale and distribution of any drug or cosmetic which is not of standard quality, which is misbranded or adulterated or which has been imported or manufactured in contravention of any of the provisions of the Act or the Rules made thereunder. Section 27 provides for penalties to the contraventions of the provisions of the Act and specifically lays down that whomsoever, himself or by any other person on his behalf, manufactures for sale, sells, stocks or exhibits for sale or distributes, inter alia, without a valid licence as required under clause (c) of section 18 shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to 10 years and shall also be liable to fine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cosmetics Act. 16.. We now turn to the next contention of the learned AdvocateGeneral. He urged that in Leukoplast (India) Private Ltd. v. Union of India (1985) 20 ELT 70, a Division Bench of this Court has held that surgical dressings known as handyplast, manufactured by the petitioners, are not a drug or a medicine. He contended that once the Division Bench has held that "handyplast" is not commercially understood as a drug or medicine and since the petitioners had clubbed together several products, including handyplast, in this petition, it necessarily follows that the said products are similar to handyplast, and therefore, what was held by the Division Bench as regards handyplast applies to them. Then, with a view to elaborate the above submission, the learned Advocate-General took us minutely through the judgment delivered in the said case and contended that, though the court has stated in paragraph 4 that the question which was falling to its determination was whether the said product handyplast is a drug or medicinal preparation falling under item 14E of the First Schedule of the Tariff for purposes of duty, the fact remains that while addressing to that question, the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or not any curative or healing qualities in order to make it fall under item 14E of the First Schedule of the Act. The Division Bench then proceeded to discuss the matter in detail and while doing so, addressed to the question whether handyplast was a drug or medicinal preparation without specifically stating again that this determination was for the sole purpose of determining whether the said product was falling under item 14E of the First Schedule of the Tariff. After a detailed discussion, the Division Bench, finally held the view that handyplast does not constitute a drug or medicinal preparation falling within the purview of item 14E of the First Schedule which deals with patent or proprietary medicines, i.e., drugs or medicinal preparations. The above discussion and analysis of the judgment in Leukoplast's case (1985) 20 ELT 70 (Bom) suffices to clearly show that the submissions of the learned Advocate-General above referred to have no merit and what was held in the said case was for the limited purposes of determining whether handyplast was or not a product falling under item 14E of the First Schedule of the Tariff for the purposes of duty. The Division Bench has not, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stake of law and collected by the Revenue without authority of law, the party who paid such duty is entitled to the refund thereof. The learned counsel further urged that the same view was taken by another Division Bench of this Court (Jahagirdar and Puranik, JJ.) in Assistant Collector of Central Excise, Kalyan Division v. Dipsi Chemicals Pvt. Ltd. (1987) 32 ELT 556. In that case, the learned Judges, after considering the decision in Rapidur (India) Ltd. [1987] 65 STC 400 (Bom); (1987) 27 ELT 222 (Bom) as well as the difference of opinion between Shah and Kolse-Patil, JJ., in Associated Bearing Co. Ltd. (Writ Petition No. 679 of 1979-Bombay High Court) and Garware (Writ Petition No. 3007 of 1980-Bombay High Court) cases and after discussing in detail the law regarding the precedents and that the interpretation given by a High Court of a decision of the Supreme Court is binding in a co-ordinate Bench of the same High Court as held in Panjumal Hassomal Advani v. Harpal Singh Abnashi Singh Sawhney AIR 1975 Bom 120, held that the view taken by Kolse-Patil, J., was erroneous and concluded in a very expressive manner by saying that "the total effect is therefore, as far as this Court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 30 ELT 180 (Bom) but also because Vyankatlal's case [1987] 64 STC 6 (SC); AIR 1985 SC 901 was dealing merely with a statutory order dealing with prices and not with a fiscal statute as such. We reiterate that we are bound by the decisions of the Division Benches of this Court in the cases cited above and therefore, it is not possible for us to accept the contention of Mr. Nadkarni as regards the revival of the doctrine of unjust enrichment. 21.. Petitioners barely averred in paragraph 9 that without being aware of the correct legal position that both local and Central sales tax was payable at the rate of 3 per cent, had paid Central sales tax at 4 per cent on the said goods. They did not state the precise date on which they found their mistake. Therefore, in the light of the law laid down in D. Cawasji's case AIR 1975 SC 813, the question arises as to whether petitioners have approached this Court in time; Dealing with this question, Mr. Hidayatullah submitted that it is obvious that the petitioners would not have paid duty in excess if they had been aware of the exemption. Hence, the allegation made that they became aware of the exemption only when the concerned authorities st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied therein is of 4 per cent. This being so, according to the learned Advocate-General, it necessarily follows that the case of the petitioners does not fall within the purview of the said notification. That apart, he submitted that, section 8(2-A) of the Central Sales Tax Act provides that notwithstanding anything contained in sub-section (1-A) of section 6 or in sub-section (1) or clause (b) of sub-section (2) of section 8, the tax payable under the Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is under the sales tax law of the appropriate State exempt from tax generally or subject to tax generally at a rate which is lower than four per cent whether called a tax or fee or by any other name shall be nil or as the case may be shall be calculated at the lower rate. The learned AdvocateGeneral emphasised that the above provision of law refers to exemption from tax generally or subject to tax generally at a rate which is lower than 4 per cent. Since the Notification No. 14/41/81-Fin (R C) did not reduce the rate of duty levied but had only reduced the tax payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the interpretation given to the said provision by Mr. Nadkarni is not acceptable on this count also. 24.. It is now well-settled that an order, validity of which is challenged, stands or falls on its own strength and it cannot be supplemented and any existing loop-holes cannot be plugged in by explanations given in affidavits or otherwise. This is the law laid down by the Supreme Court as far back as in Commissioner of Police, Bombay v. Gordhandas Bhanji [1952] 54 BLR 383. Bose J., dealing with such question, observed as under: "An attempt was made by referring to the Commissioner's affidavit to show that this was really an order of cancellation made by him and that the order was his order and not that of Government. We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of the explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpting partly the sale of drugs and medicines from the payment of duty. Therefore, the key to *Here italicised. the problem does not rest in the rate, as submitted by Mr. Nadkarni, but as rightly pointed out by Mr. Hidayatullah, is in the amount of the tax payable. Section 7 of the Goa, Daman and Diu Sales Tax Act provides for the tax payable. Section 8 of the Central Sales Tax Act postulates in its sub-section (2-A) that the tax payable under the said Act shall be nil, or as the case may be, shall be calculated at a lower rate, if there is an exemption of the tax or if the product is subject to a tax at a rate lower than 4 per cent. We already mentioned that the learned Advocate-General urged that since the minimum rate prescribed in section 7 of the Goa, Daman and Diu Sales Tax Act is of 4 per cent, the effect of the above provision of sub-section (2-A) will be that the benefit of the said section cannot be given to the petitioners. The learned Advocate-General indeed submitted that the rate of duty was not reduced and what was reduced was the amount of tax payable. This argument is undoubtedly enticing and subtle but we are unable to accept it, since we are in one with Mr. Hiday ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India AIR 1977 SC 597, there is no estoppel in law against a party in a taxation matter. We may also make a brief reference to another argument advanced by Mr. Nadkarni as regard the definition given in section 3(b) of the Act. He submitted that the use of the word "includes" indicates that the definition is merely inclusive and therefore, the word "includes" occurring therein does not connote the idea of meaning. But here too, we again fail to agree with the learned Advocate-General. As Mr. Hidayatullah submitted, placing reliance on the decision of the Supreme Court in South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat AIR 1977 SC 90, the word "includes " should not always be read as meaning an extension and there may be cases where the word connotes the idea of meaning. In the context of section 3(b) of the Drugs and Cosmetics Act, we are inclined to think that the word "includes" occurring in the said section should not be read as a word of extension with reference to its context, but on the contrary, it is equal to "means". 27.. Petitioners seek, inter alia, a mandamus directing the respondents to refund the excess of Central and local sales tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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