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SUPREME COURT OF INDIA
ADBYAKSHA MATHUR BABUS SAKTI OUSHADHALAYA DACCA PRIVATE LIMITED
versus
Union of India
Decide on September 7, 1962
EXCISE DUTY - Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955) - Ayurvedic preparations - Whether liable to duty under the Act or under the various Excise Acts in force in the States - Held, liable to duty under the Act and not under the State Excise Acts.
Fact of the Case:
The petitioners, manufacturers of Ayurvedic medicines, challenged the levy of excise duty by State Governments on three Ayurvedic preparations, namely, Mirtasanjibani, Mritasanjibani Sudha, and Mritasanjibani Sura, under various Excise Acts in force in the respective States. The petitioners contended that these preparations were medicinal preparations as defined in the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955) (the Act) and were therefore liable to duty under the Act and not under the State Excise Acts.
Finding of the Court:
The Court held that the three Ayurvedic preparations in question were medicinal preparations as defined in the Act and were therefore liable to duty under the Act and not under the various Excise Acts in force in the States. The Court further held that the omission of these preparations from the list attached to the Rules framed under the Act did not make any difference to their being medicinal preparations within the meaning of the Act.
Issues: 1. Whether the three Ayurvedic preparations in question were medicinal preparations as defined in the Act? 2. Whether the omission of these preparations from the list attached to the Rules framed under the Act made any difference to their being medicinal preparations within the meaning of the Act?
Ratio Decidendi: 1. The Court held that the three Ayurvedic preparations in question were medicinal preparations as defined in the Act because: a. They were remedies prepared for internal use of human beings. b. They were intended to be used for or in the treatment, mitigation, or prevention of disease in human beings. c. They conformed to the definition of "medicinal preparation" in Section 2(g) of the Act. 2. The Court held that the omission of these preparations from the list attached to the Rules framed under the Act did not make any difference to their being medicinal preparations within the meaning of the Act because: a. The Act was a fiscal statute for taxing medicinal preparations enacted by Parliament under Entry 84 of List I of the Seventh Schedule to the Constitution. b. The Excise Acts of the various States were corresponding taxing Statutes for these preparations and were repealed by Section 21 of the Act so far as taxation on these preparations was concerned.
Final Decision: The Court allowed the petitions and directed that the three medicinal preparations in question should not be taxed under the various Excise Acts in force in various States and could only be taxed in accordance with the provisions of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955).
Judgment
WANCHOO
( 1 ) THESE six petitions under Art. 32 of theconstitution raise a common point and will be dealt withtogether. The main question raised in all these petitionsis whether the State-Governments are entitled to tax thethree Ayurvedic preparations, namely Mirtasanjibani,mritasanjibani Sudha and Mritasanjibani Sura, which aremanufactured by these petitioners, under the various Exciseact in force in the respective States. Further points wereraised in the petitions as regards the validity of therestrictions imposed in the matter of the import, export,possession and sale of these three Ayurvedic preparations. But the learned counsel for the petitioners stated before usthat he was not pressing any other point except one viz. ,whether the various State-Governments could tax these threeayurvedic preparations under the various Excise Acts inforce in the States concerned. We propose therefore to dealwith this point only in the present cases.
( 2 ) THE case of the petitioners is briefly this. They carry onbusiness as manufacturers of medicinal preparationsaccording to the Ayurvedic system of medicines and among theayurvedic medicines manufactured by them are these threepreparations. These Ayurvedic preparations are manufacturedby the process of fermentation and distillation inaccordance with the Ayurvedic system of medicinefollowing the formula in standard books known as Ayurvedsangraha, Bhaisajya Ratnabali and Arka Prakash. Thesebooks, according to the petitioners, contain extracts fromall authoritative ancient Ayurvedic treatises acceptedthroughout India and are in vogue as Ayurvedicpharmacopoeias in the various States. Though the threepreparations have three different names they are in realityonly one medicine and are prepared according to a singleformula in these books. The petitioners aver that thesethree preparations are manufactured in accordance with thestandard Ayurvedic pharmacopoeias in vogue, in variousstates and are efficacious amongst others in the followingdiseases: - (a) in typhoid fever (Sannipatik Jwara)during collapsed condition; (b) in cholera; (c) in case of loss of appetite to increasepower of digestion; (d) In rheumatism, sciatica etc. , and (e) to remove weakness, impart strength andvigour and also as a general tonic andrestorative for convalescent patients.
( 3 ) BEFORE the Constitution came into force, all these threepreparations were liable to Provincial excise duty underitem 40 of List II of the Seventh Schedule to the governmentof India Act, 1935. The Constitution however made a changein the three legislative Lists with respect to excise andunder item 51 of List II of the Seventh Schedule the Stateshave the power to levy excise duty on alcoholic liquor forhuman consumption and on opium, Indian hemp, and othernarcotic drugs and narcotics but not including medicinal andtoilet preparations containing alcohol or any substance likeopium etc. Further, under item 84 of List I of theseventh schedule the Union has the power to impose duties ofexcise on tobacco and other goods manufactured or producedin India except (i) alcoholic liquors for human consumptionand (ii) opium, Indian hemp and other narcotic drugs andnarcotics, but including medicinal and toilet preparationscontaining alcohol or any substance like opium etc. Thusthe Constitution took away the power of the States to imposeduties of excise on medicinal and toilet preparationscontaining alcohol or any substance like opium etc and givethat power to the Union. However, Art. 277 of theconstitution provided that `any taxes, duties, cesses orfees which, immediately before the commencement of thisconstitution were being lawfully levied by the government ofany State or by any municipality or other local authority orbody for the purposes of the State, municipality, districtor other local area may, notwithstanding that those taxes,duties, cesses or fees are mentioned in the Union List,continue to be levied and to be applied to the same purposesuntil provis
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