Prescription medicines not treated as manufacture; turnover of dispensed medicines remained taxable under the charging provision.

The preparation of medicines on individual prescriptions was not manufacture because the mixture did not become a commercially different article from its ingredients, and it was outside the notification aimed at goods capable of being sold more than once under the one-point scheme. The assessee was therefore not entitled to treatment as a manufacturer. The notification did not exempt all medicines from the charging provision, and sales of dispensed medicines in the course of business remained taxable. The turnover of the prescription medicines was accordingly liable to sales tax, and the assessment was sustained.

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Issues: (i) Whether preparing medicines on individual prescriptions amounted to manufacture of medicines and pharmaceutical preparations within the notification; (ii) whether the turnover of such dispensed medicines was liable to sales tax under the charging provision.

Issue (i): Whether preparing medicines on individual prescriptions amounted to manufacture of medicines and pharmaceutical preparations within the notification.

Analysis: The preparation of medicines for named patients was held not to be manufacture because the resulting mixture was not a commercially different article from the ingredients. The notification was intended for goods capable of being sold more than once and attracting the one-point scheme, whereas prescription medicines were prepared for a single consumer and did not answer that description.

Conclusion: The preparation of medicines on prescriptions did not amount to manufacture within the notification, and the assessee was not entitled to treatment as a manufacturer.

Issue (ii): Whether the turnover of such dispensed medicines was liable to sales tax under the charging provision.

Analysis: The notification only regulated liability in respect of medicines manufactured in Uttar Pradesh and did not exempt all medicines from the charging section. Since the assessee sold medicines in the course of business, he was a dealer and the turnover of the medicines sold by him remained taxable under the charging provision.

Conclusion: The turnover of the medicines dispensed by the assessee was liable to tax, and the assessee was assessable under the charging provision.

Final Conclusion: The reference was answered against the assessee on both questions, and the sales tax assessment on the turnover of the medicines was sustained.

Ratio Decidendi: A prescription mixture that does not result in a commercially different article is not manufacture, and absence of coverage under an exemption notification does not exclude liability under the charging provision.

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