Physician-supplied medicines can constitute a sale, making the clinic owner a dealer for sales tax purposes.

A physician who supplies medicines from his clinic to patients, without showing any separate consultation fee, may be treated as carrying on a business activity rather than only rendering professional services. Where the amounts received are linked to the medicines supplied and property in those medicines passes for consideration, the transaction is treated as a contract of sale under the Bihar Sales Tax Act, 1947. On those facts, the physician is a dealer and the supply of medicines is taxable as sale.

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Issues: (i) Whether a physician who supplies medicines to patients from his clinic in the course of treatment is a dealer under the Bihar Sales Tax Act, 1947. (ii) Whether the supply of medicines by such physician to patients amounts to a sale under the Bihar Sales Tax Act, 1947.

Issue (i): Whether a physician who supplies medicines to patients from his clinic in the course of treatment is a dealer under the Bihar Sales Tax Act, 1947.

Analysis: The decisive question was whether the amounts received represented a consolidated professional fee or the price of medicines supplied. The findings of the taxing authorities showed that the assessee examined patients, supplied medicines from the clinic, did not charge a separate consultation fee, and realised amounts corresponding to the medicines supplied. On those facts, the transactions were not merely professional services but a business activity involving supply of goods for price.

Conclusion: The physician was a dealer within the meaning of the Bihar Sales Tax Act, 1947.

Issue (ii): Whether the supply of medicines by such physician to patients amounts to a sale under the Bihar Sales Tax Act, 1947.

Analysis: The Court accepted that the property in the medicines passed to the patients for consideration and that the price charged was linked to the medicines supplied. That created a contract of sale between the physician and the patients. The case was distinguished from authorities dealing with manufacture or notifications fixing tax points, since the present dispute concerned the character of the transaction itself.

Conclusion: The supply of medicines amounted to sale within the meaning of the Bihar Sales Tax Act, 1947.

Final Conclusion: The reference was answered against the assessee and the sales tax assessment was upheld on the footing that the supply of medicines to patients was a taxable business sale by a dealer.

Ratio Decidendi: Where a physician supplies medicines to patients from his clinic for a price, without any separate professional fee being shown, the transaction constitutes a sale and the physician is a dealer liable to sales tax.

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