1960 (5) TMI 21 - HC - VAT and Sales Tax

Prescription Receipts Taxable for Partnership Firm under Sales Tax Act

Messrs Pearl & Co. Versus The State of Bombay

The court upheld the order to tax receipts from prescriptions in the hands of a partnership firm under the Bombay Sales Tax Act, 1953. The firm failed to ... - Issues:1. Whether receipts from prescriptions are taxable under the Bombay Sales Tax Act, 1953.Analysis:The case involved an application against an order made by the Additional Collector of Sales Tax, Bombay City Division, regarding the taxation of receipts from prescriptions. The applicants, a partnership firm called Messrs Pearl & Co., included receipts from prescriptions in their turnover for assessment. The main issue raised was whether these receipts, amounting to Rs. 6,998-8-0, are taxable in the hands of the applicants under the Bombay Sales Tax Act, 1953. The key contention was whether the receipts constituted the sale of goods, as required for taxation under the Act.The court noted that the liability to tax arises under section 8(a) of the Bombay Sales Tax Act, 1953, which permits taxation on the turnover of sales of goods specified in the Act. The definition of 'goods' under section 2(8) includes movable property but excludes professional services. The court emphasized that what is taxable is the sale of goods, not professional services. The challenge for the applicants was to prove that the receipts from prescriptions were not related to the sale of goods but potentially included consultation charges.It was established that Dr. Desai, one of the partners in the firm, conducted medical consultations in the same premises where the firm operated. However, since only one set of accounts was maintained, and the receipts from prescriptions were entered in the firm's books, it indicated a connection to the firm's business activities. The court highlighted that without evidence showing that the receipts included consultation charges, it could only be assumed that the prescriptions represented the sale of medicines, which constituted goods under the Act.The court acknowledged the argument that professional services by Dr. Desai should not be subject to sales tax. Still, without concrete proof that the receipts included consultation fees, it was deemed speculative to assume otherwise. The court concluded that based on the available records and lack of evidence regarding the breakdown of the receipts, the inclusion of prescription receipts in the firm's turnover for taxation was justified. Therefore, the court dismissed the application, upholding the order to tax the receipts from prescriptions in the hands of the applicants under the Bombay Sales Tax Act, 1953.