Tax classification of ayurvedic medicine failed where higher alcohol content was used alone to justify unequal treatment.

An ayurvedic preparation made according to recognised texts was treated as a spirituous medicinal preparation because it contained more than 12% alcohol by volume, bringing it within item 67 of the Assam Finance (Sales Tax) Act schedule and attracting sales tax under that entry. The Court also held that taxation must rest on a rational classification: the mere presence of higher alcoholic content did not justify singling out this ayurvedic medicine for tax while other exempt medicinal preparations remained untaxed. Differential treatment on that basis was held arbitrary and violative of Article 14, so the assessments could not be sustained and the turnover required reassessment on the same footing as exempt ayurvedic medicines.

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Issues: (i) Whether mritasanjibani is a spirituous medicinal preparation falling under item 67 of the Schedule to the Assam Finance (Sales Tax) Act, 1956; (ii) whether item 67 is discriminatory and violative of Article 14 of the Constitution of India.

Issue (i): Whether mritasanjibani is a spirituous medicinal preparation falling under item 67 of the Schedule to the Assam Finance (Sales Tax) Act, 1956

Analysis: The preparation was found to be an ayurvedic medicinal preparation made according to recognised ayurvedic texts. The expression "spirituous medicinal preparation" was treated as covering medicinal preparations containing alcohol, including self-generated alcohol. The Court relied on the pharmacopoeial formula and expert opinion to conclude that the preparation contained more than 12 per cent alcohol by volume and satisfied the statutory description in item 67.

Conclusion: Yes. mritasanjibani falls within item 67 and is liable to sales tax under that entry.

Issue (ii): Whether item 67 is discriminatory and violative of Article 14 of the Constitution of India

Analysis: The Court held that although the State has a wide discretion in taxation, commodities in the same class cannot be subjected to unequal treatment without a rational basis. mritasanjibani remained an ayurvedic medicinal preparation, and the mere fact of higher alcoholic content did not furnish a valid basis to segregate it from other ayurvedic medicines exempt from tax. Differential treatment of medicinal preparations on this ground was held to amount to arbitrary discrimination.

Conclusion: Yes. Item 67 is violative of Article 14 and cannot be sustained.

Final Conclusion: The impugned tax assessments could not be sustained against the petitioner's ayurvedic medicine, and the turnover had to be reassessed by treating it like other exempt ayurvedic medicines.

Ratio Decidendi: A medicinal preparation remains in the same taxable class as other medicinal preparations, and a higher tax burden cannot be imposed merely because it contains a high percentage of alcohol if no rational basis exists for differential treatment.

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