Sales tax exemption for excisable medicinal and toilet preparations continued where excise duty was levied under the Punjab Excise Act.

Spirituous medicinal or toilet preparations remained within the sales tax exemption for goods on which duty was or could be levied under the Punjab Excise Act, 1914, even after the State continued the excise levy under Article 277 of the Constitution. The duty on the finished goods was treated as one levied under the Punjab Excise Act notwithstanding the constitutional continuation and any change in computation method. As the articles themselves continued to bear excise duty under that Act, they fell within item 37 of the Schedule to the East Punjab General Sales Tax Act, 1948 and were exempt from sales tax.

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Issues: Whether spirituous medicinal or toilet preparations were exempt from sales tax under item 37 of the Schedule to the East Punjab General Sales Tax Act, 1948 when excise duty was levied on them by the State under the Punjab Excise Act, 1914 as continued by Article 277 of the Constitution of India.

Analysis: The exemption entry covered all goods on which duty is or may be levied under the Punjab Excise Act, 1914 or the Opium Act, 1878. The goods manufactured by the assessee had been liable to excise duty before the Constitution, and after the Constitution the State continued to levy the same duty by virtue of Article 277. The duty was treated as one levied under the Punjab Excise Act, 1914 notwithstanding the constitutional change and the alteration in the mode of computation. Since the finished articles themselves continued to bear excise duty under that Act, they fell within the exemption entry.

Conclusion: The goods were exempt from sales tax and the reference was answered in favour of the assessee.

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