2015 (8) TMI 446 - HC - VAT and Sales Tax

High Court dismisses petition against drug price discounts, suggests Competition Act recourse

The Kerala High Court dismissed the writ petition filed by the Secretary of All Kerala Chemists and Druggist Association of Kollam District, seeking a ... Unfair trade practices - high discount on the sale price of the drugs - Held that:- Essentially the claim of the petitioner appears to be complaining of unfair practices adopted by certain medical retailers. The monopolic tendency of such retailers indulging unfair practices are highlighted. - it is beyond the scope of Commissioner of Sales Tax, to probe. The Statute like Competition Act, 2002 has made a mechanism to deal with such issues. The petitioner has to work out such remedy either by availing the redressal mechanism of such Act or such other mechanism. No relief can be granted by this Court. - Decided against appellant. Issues: Unfair trade practices by medical retail outlets offering high discounts in violation of Drugs (price) Control Order 2013, causing revenue loss to the state exchequer.Analysis:1. The petitioner, the Secretary of All Kerala Chemists and Druggist Association of Kollam District, filed a writ petition alleging unfair trade practices by medical retail outlets in the State offering high discounts to customers, contravening the Drugs (price) Control Order 2013. The petitioner claimed that these discounts were leading to significant revenue loss for the state exchequer. The petitioner sought a mandamus directing the respondents to conduct a comprehensive enquiry into the functioning of these discount retail medical shops and their sources of bulk medicine supply, posing a threat to legally operating retail medical shops in the state.2. The 1st respondent filed a statement refuting the petitioner's claims, stating that there was no actual revenue loss to the Government Exchequer as the compounded tax at MRP had been remitted at the initial distribution phase in the State. The respondent argued that medical shops like Aswas, Viswas, and Sevana were operating under societies focused on Community Pharmacy principles to provide affordable medicines to the public. The State seemed to support these activities aimed at making medicines accessible to the common man.3. The judgment highlighted the petitioner's complaint about unfair practices by certain medical retailers, emphasizing their monopolistic tendencies. However, the court opined that it was not within the purview of the Commissioner of Sales Tax to investigate such matters. The court pointed out that mechanisms like the Competition Act, 2002 were in place to address such issues. Consequently, the court ruled that the petitioner should seek redressal through the appropriate mechanisms provided by the Competition Act or other suitable avenues, as no relief could be granted by the court in this instance. The writ petition was disposed of, granting the petitioner liberty to pursue alternative redressal mechanisms.This detailed analysis of the judgment from the Kerala High Court provides a comprehensive overview of the issues raised, the arguments presented by both parties, and the court's decision, emphasizing the legal principles and remedies available in such cases.