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2017 Supreme(Bom) 256
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI & B.P. COLABAWALLA, JJ.
M/s. Biostar Pharmaceuticals Limited and Ors. – Petitioners
Versus
The State of Maharashtra and Ors. – Respondents
WRIT PETITION NO. 2635 OF 1995, 5421 OF 2005
Decided On : 27-02-2017
For the Petitioner:Mr. V. Sridharan, Senior Advocate with Mr. Jeshan Sinha and Mr. Arpit Singhvi i/b. M/s. Wadia Ghandy and Co.
For the Respondent: Mr. C. P. Yadav, AGP
Important Point: The person who is sought to be branded as a "related person" must be a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other.
Headnote:(A) Writ Petition--- Writ of certiorari--- The Medicinal and Toilet Preparations (Excise Duties) Act, 1995---Pharmaceutical product---Betonin---Since the medicinal preparation contains alcohol, it would be permissible for the State Excise Department to recover and collect the duty difference, provided the requirement and pre-requisites thereof are satisfied---That is an Act, which was enacted so as to bring uniformity in the rates and procedures for collection of the duty on medicinal and toilet preparations containing alcohol.
(B) Central Excise and Salt Act, 1944---Section 4---Merely because M/s. Boots is the sole distributor, is selling the entire production of the petitioner with unusually big margin between so called manufacturers' price and the price the goods can fetch in the market is termed as unusual, coupled with making available the trade mark of the goods by M/s. Boots, does not mean that petitioner no. 1 and M/s. Boots are related persons---The law is that being a sole distributor is not enough to hold that the manufacturer and such distributor are related persons---There is no presumption that the manufacturer supplying its entire production to a sole distributor would mean they have an interest in the business of each other---There was no question of then calling upon the petitioners to alter their price structure and pay any differential duty.
Result—Petitions succeeds.
S.C. Dharmadhikari, J.
1. The writ petition (W. P. No. 2635 of 1995) was placed for directions by us as it is pending from 1995. We have, as a policy to give priority to old matters, listed such petitions under the caption “for directions”, but with a clear understanding to the parties and their counsel that if they are ready, we would take them up forthwith for hearing and final disposal. It is in terms of such understanding that both parties requested us to dispose of these petitions by a final order. That is how we have proceeded in the matter.
2. The writ petitions, as originally filed and subsequently amended, claim a writ of certiorari or any other appropriate writ, order or direction, calling for the records in relation to the communications, more particularly set out in prayer clause (a) of the Writ Petition No. 2635 of 1995 and to quash and set aside an order passed by respondent no. 3 dated 20th July, 1995 Annexure 'GG' to the said writ petition.
3. The facts lie in a very narrow compass. The petitioners before us manufacture a product known as Betonin. The first petitioner is in the business, inter alia, of manufacturing and sale of various drugs and pharmaceutical products. One of the products is Betonin 200 ml. and 450 ml., which is referred to as “the said goods” hereafter, which is a sugar free B-complex Elixir (syrup) administered to patients suffering from vitamin 'B' deficiency and especially to diabetic patients.
4. The respondents to these petitions are the State of Maharashtra and the officials empowered by the Medicinal and Toilet Preparations (Excise Duties) Act, 1995 to recover duties of excise on the said goods, as the same contain alcohol.
5. The petitioners state that they filed a price list in respect of the said goods dated 1st July, 1994. It was duly approved by the second respondent, by his letter dated 28th September, 1994. Copies of these documents are annexed as Annexures 'A' to 'D' to the petition.
6. Then, the petitioners received a letter dated 3rd January, 1995, in which, the second respondent stated that the prices of the said goods, declared by the petitioners in their approved price list of 1st November, 1994, were less than those previously declared by M/s. Boots on 15th July, 1993. Hence, the petitioners were called upon the explain why this reduction in price. The petitioners were informed to pay excess duty on differential price of the said goods, namely, a difference in the prices as per the price list of M/s. Boots dated 15th July, 1993 and that of the petitioners dated 1st November, 1994. Then, by further letter dated 21st January, 1995, the second respondent purported to state that the approved price lists of the petitioners dated 1st July, 1994 and 1st November, 1994 were being cancelled. The approved price list of M/s. Boots dated 15th July, 1993 stood provisionally approved in the case of the first petitioner and that is how they were called upon to pay the differential excise duty. Then, on 25th January, 1995, the second respondent purported to state that the amount of excise duty paid by the first petitioner on the basis of the approved list of 1st June, 1993 was in excess of the amount paid on the basis of the first petitioner's approved list of 1994 and therefore, a differential sum of Rs.7,96,043.08/- be paid.
7. The petitioners gave a detailed reply to these letters by pointing out that the value of the goods declared in their price list was the correct value as arrived at under the provisions of the said Act read with section 4(1)(a) of the Central Excise and Salt Act, 1944. The petitioners gave a detailed explanation and replied by their letter dated 3rd February, 1995, copy of which is at Annexure 'H' to the petition. However, respondent no. 2 persisted in the demand and reiterated it by his letter dated 13th February, 1995, copy of which is at Annexure 'I'. The second respondent also issued a notice to the petitioner to remain present in his office with the requi
