Meaning of "supplied directly" under exemption notification extended to E.S.I.C.-approved chemist outlets, preserving notification benefit.

The exemption notification turned on the meaning of "supplied directly" in the context of medicines routed through E.S.I.C.-approved retail chemist shops. The arrangement was treated as a supply under the E.S.I.C. scheme, with the approved chemist shops functioning as outlets for the Government department and sales made on contractual terms fixed with E.S.I.C. The limited remand was confined to the factual verifications directed by the higher appellate authority and could not widen the inquiry. On that basis, the expression "directly" was construed broadly enough to include supply through such approved outlets, and the supplies were held eligible for the notification.

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Issues: Whether medicines supplied through E.S.I.C.-approved retail chemist shops could be treated as supplied directly to a Government department for the purpose of Notification No. 117/66 dated 16-07-1966.

Analysis: The dispute turned on the meaning of the expression "supplied directly" in the exemption notification. The supply was made under the E.S.I.C. arrangement, the approved chemist shops functioned as outlets for the Government department, and the medicines were sold on the contractual terms fixed with E.S.I.C. The limited remand could not enlarge the scope of inquiry beyond the factual verifications directed by the superior appellate authority. On merits, the expression "directly" was held wide enough to cover supply through such approved outlets.

Conclusion: The supplies were eligible for the notification and the demand was not sustainable.

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