1989 (3) TMI 355

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.....   --------------------------------------------------   The judgment of the Court was delivered by   R.S. PATHAK, C.J.I.-The appellants in these two appeals are manufacturers of ayurvedic drugs and medicines, including arishtams and asavas. Arishtams and asavas contain alcohol, and it is said that the presence of alcohol is essential for the effective and easy absorption of the medicine by the human system and also because 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 31 per cent under the Tamil Nadu General Sales Tax Act, 1959. By a notification dated 4th March, 1974, the State of Tamil Nadu included a ....

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....hat arishtams and asavas manufactured by them are essentially ayurvedic medicines, and that in any event the object of controlling the consumption of liquor is amply served by several other existing statutes, including the Medicinal and Toilet Preparations (Excise Duty) Act, 1955, Drugs and Cosmetic Act, 1940, as amended in the year 1964, and Spirituous Preparations (Inter-State Trade and Commerce) Control Act, 1955. It is said that there are over 130 allopathic medicines containing alcohol which are potable as against only three ayurvedic medicines, and that therefore the levy of tax at 30 per cent on arishtams and asavas alone while other medicinal preparations are subjected to tax at 7 per cent (now increased to 8 per cent) results in an....

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.... basis, it is urged, there is justification for a higher rate of tax. We think that the appeals are entitled to succeed. Item No. 95 mentions the rate of 7 per cent (now 8 per cent) as the tax to be levied at the point of first sale in the State. Item No. 135 provides a rate of 30 per cent in respect of arishtams and asavas at the point of first sale. We see no reason why arishtams and asavas should be treated differently from the general class of ayurvedic medicines covered by item No. 95. It is open to the Legislature, or the State Government if it is authorised in that 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 ....

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....ught to tax under the relevant State Excise Act when medicinal preparations were liable to excise duty under the Medicinal and Toilet Preparations (Excise Duty) Act, which was a Central Act. The court held that the three preparations were medicinal preparations, and observed that the mere circumstance that they contained a high percentage of alcohol and could be used as ordinary alcoholic beverages could not justify their being treated differently from other medicinal preparations. The court said: "So if these preparations are medicinal preparations but are also capable 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....