TaxTMI 
TaxTMI 
1989 (3) TMI 187
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....e it acts as a preservative. All the Ayurvedic preparations as well as Allopathic, Siddha and Unani medicines were originally subject to a multi-point levy of 3-1/2% under the Tamil Nadu General Sales Tax Act, 1959. By a notification dated 4 March, 1974, the State of Tamil Nadu included a large number of items in the First Schedule to the aforesaid Act in order to make them subject to a single-point levy. While all other patent or proprietary medicinal perparations belonging to the different systems of medicines were taxed at the rate of 7% only, Arishtams prepared under the Ayurvedic system were made subject to a levy of 30%. It seems that representations were made to the State Government against the high rate of tax on Arishtams, and ther....
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....otable as against only three Ayurvedic medicines, and that therefore the levy of tax at 30% on Arishtams and Asavas alone while other medicinal preparations are subjected to tax at 7% (now increased to 8%) results in an invidious discrimination against the manufacturers of those Ayurvedic preparations thus violating Art. 14 of the Constitution. It is contended that the impugned rate of tax also offend Article 19(1) (g) of the Constitution. The appellants in Civil Appeal No. 1868 of 1974 have also taken the point that the high rate of tax on Arishtams and Asavas has been imposed by the State of Tamil Nadu with the object of discouraging the import of these Ayurvedic medicines from the neighbouring State of Kerala, and consequently the measur....
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....hat behalf by the Legislature, to select different rates of tax for different commodities. But where the commodities belong to the same class or category, there must be a rational basis for discriminating between one commodity and another for the purpose of imposing tax. It is commonly known that considerations of economic policy constitute a basis for levying different rates of sales tax. For instance, the object may be to encourage a certain trade or industry in the context of the State policy for economic growth, and a lower rate would be considered justified in the case of such a commodity. There may be several such considerations bearing directly on the choice of the rate of Sales tax, and so long as there is good reason for making the....
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....able of being used as ordinary alcoholic beverages, they will fall under the (Central) Act and will be liable to duty under Item No. 1 of the Schedule at the rate of Rs. 17.50 per gallon of the strength of London proof spirit. On a consideration of the material that has been placed before us, therefore, the only conclusion to which we can come is that there preparations are medicinal preparations according to the standard Ayurvedic text books referred to already, though they are also capable of being used as ordinary alcoholic beverages. They cannot, however, be taxed under the various Excise Acts in force in the concerned States in view of their being medicinal preparations which are governed by Act." 7. We are of opinion that similar c....