Purposive construction of price control exemption extends relief to goods manufactured within the exempt period, despite later sale.

An exemption notification under the Drugs (Price Control) Order, 1995 was construed purposively to apply to drugs manufactured within the exempted period, even if sold after the cut-off date. The Court reasoned that the manufacturer had no control over the timing of ultimate retail sale and that limiting the exemption to sales completed by 31 October 1999 would produce an unworkable and absurd result. The notification was read in light of the object of the Essential Commodities Act, 1955 and the practical realities of manufacture, dispatch, distribution and sale. On that construction, the overcharge demand was unsustainable and the assessee's position was upheld.

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Issues: Whether the exemption notification issued under the Drugs (Price Control) Order, 1995 covered only those drugs both manufactured and sold by 31 October 1999, or also covered drugs manufactured within the exemption period but sold thereafter.

Analysis: The exemption under paragraph 25 of the Drugs (Price Control) Order, 1995 was granted in respect of the drug manufactured by the company and exempted it from the operation of price control for the stated period. The Court construed the notification in light of the object of the Essential Commodities Act, 1955 and the practical realities of manufacture, dispatch, distribution, and sale. It held that the manufacturer had no control over the exact time of ultimate retail sale and that reading the notification as limited to sale by the cut-off date would create an unworkable result and an absurdity. Applying purposive construction, the Court found that the exemption attached to the drug manufactured within the exempted period, not merely to sale completed within that period.

Conclusion: The exemption notification applied to drugs manufactured by 31 October 1999 even if they were sold thereafter, and the demand for overcharged amount was not sustainable.

Final Conclusion: The appeal failed and the High Court's view in favour of the assessee was sustained, with costs awarded against the appellant.

Ratio Decidendi: An exemption notification under a price control order must be construed purposively and in a workable manner, so that the exemption applies to goods manufactured within the exempted period where the notification is directed to the manufactured product, even if the actual sale occurs later.

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