Judgment

SHAH, J.: The Judge (Revision) Sales Tax, U. P., Lucknow, referred the following question to the High Court of Allahabad for opinion:

"Whether the preparation of medicines on prescriptions of the applicant amounted to a manufacture of "medicines and pharmaceutical preparations" within the meaning of notification No. S.T. 3504/X dated 10th May, 1956, and whether the applicant was assessable to tax on the turnover of the medicines so dispensed?"

The High Court held that the respondent was not manufacturer of "medicines and pharmaceutical preparations within the meaning of the notification. Against the answer recorded by the High Court, the Commissioner of Sales Tax, U.P. has appealed to this Court with special leave.

2. The respondent is a medical practitioner and in the performance of his professional duties he examines patients, advises them and prescribed medicines which are issued from his dispensary. The Sales Tax Officer being of the view that the dispensing of medicines, according to the prescriptions issued by the respondent, amounted to manufacture of medicines within the meaning of the notification No. S. T. 3504/X dated May 10, 1956, assessed the respondent to pay tax on a turnover of Rs. 12,943/- for the year 1956-57. The order was confirmed in appeal by the Judge (Appeals) and was further confirmed by the Judge (Revisions) Sales Tax.

3. The sole question which falls to be determined in this appeal is whether by virtue of the notification, the respondent is exempt from liability to pay tax.

4. Section 3 of the U. P. Sales Tax Act 1948, makes every dealer liable to pay in each assessment year a tax at a certain rate on the turnover. Section 3A provides:

"Notwithstanding anything contained in section 3 the State Government may.... declare that the turnover in respect of any goods. . . .. . ..shall not be liable to tax except at such single point in the series of sales by successive dealers as the State Government may specify."

5. On May 10, 1965, the Governor of Uttar Pradesh issued a notification No. S. T. 3504/X that-

"In exercise of the powers conferred by section 3A of the U. P. Sales Tax Act, 1948, as amended from time to time, and in supersession of all the previous notifications on the subject, the Governor of Uttar Pradesh is hereby pleased to declare that with effect from May 8, 1956, the turnover in respect of medicines and pharmaceutical preparations shall not be liable to tax except

(a) in the case of medicines and pharmaceutical preparations imported from outside Uttar Pradesh, at the point of sale by the importer, and

(b) in the case of medicines and pharmaceutical preparations manufactured in Uttar Pradesh, at the point of sale by the manufacturer;

And the Governor is further pleased to declare that such turnover shall with effect from the said date be taxed at the rate of * * * *."

The respondent is not an importer of medicines and pharmaceutical preparations from outside Uttar Pradesh. That is common ground. The Revenue authorities, however, held that when in his dispensary medicines and pharmaceutical preparations as prescribed by him were mixed, the process of mixing resulted in "manufacture" of medicines by him as a "manufacturer. The expression "manufacture" has in ordinary acceptation a wide connotation: it means making of articles, or material commercially different from the basic components, by physical labour or mechanical process; and a manufacturer is a person by whom or under whose direction and control the articles or materials are made. The notification in the first instance exempts from tax sales of medicines and pharmaceutical preparations. It then proceeds to withdraw the exemption in respect of two classes of sales of medicines and pharmaceutical preparations, (i) sale by an importer of medicines etc. imported from outside the State and (ii) sale by a manufacturer of medicines etc. manufactured in the State. The tax levied in respect of the excepted categories is a single point tax: it