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PUNJAB & HARYANA HIGH COURT
Grover, J.
Diwan Chand Aggarwal
Versus
Commissioner Of Sales Tax
Civil Writ No. 82 of 1961,
Decided On : APRIL 6, 1962
SALES TAX - X-RAY EQUIPMENT AND FILMS - CLASSIFICATION - WHETHER TAXABLE AT 7% AS PHOTOGRAPHIC GOODS OR 4% AS ELECTRO-MEDICAL EQUIPMENT - INTERPRETATION OF SCHEDULE ITEMS - DISTINCTION BETWEEN X-RAY AND PHOTOGRAPHIC CAMERAS - APPLICABILITY OF ALTERNATIVE REMEDIES - MAINTAINABILITY OF PETITION BY PURCHASER - SCOPE OF ARTICLE 226 RELIEF.
Fact of the Case:
The petitioner, a doctor, imported X-ray equipment for medical diagnosis and treatment. The Sales Tax Authorities classified the equipment and films as photographic goods, subject to a 7% sales tax, despite the petitioner's contention that they should be classified as electro-medical equipment, subject to a 4% sales tax. The petitioner challenged this classification, arguing that X-ray equipment and films are distinct from photographic cameras and accessories.
Finding of the Court:
The court held that X-ray equipment and films cannot be classified as photographic goods under item 6 of the First Schedule of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi. The court found that X-ray equipment and films serve a distinct purpose in medical diagnosis and treatment, and are not used for taking ordinary photographs. The court also noted that the Government Red Book classified X-ray apparatus under electro-medical apparatus, and that the duty on X-ray equipment was lower than that on photographic goods, indicating the government's intent to promote the import and use of medical equipment.
Issues: 1. Whether X-ray equipment and films can be classified as photographic goods under item 6 of the First Schedule of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi? 2. Whether the petitioner, as a purchaser, has the locus standi to challenge the classification of X-ray equipment and films as photographic goods? 3. Whether the petitioner has exhausted alternative remedies before approaching the court under Article 226 of the Constitution?
Ratio Decidendi: 1. The court held that X-ray equipment and films cannot be classified as photographic goods under item 6 of the First Schedule of the Act because: - X-ray equipment and films serve a distinct purpose in medical diagnosis and treatment, and are not used for taking ordinary photographs. - The Government Red Book classified X-ray apparatus under electro-medical apparatus, and the duty on X-ray equipment was lower than that on photographic goods, indicating the government's intent to promote the import and use of medical equipment. 2. The court held that the petitioner, as a purchaser, has the locus standi to challenge the classification of X-ray equipment and films as photographic goods because: - The petitioner is directly affected by the imposition of sales tax at the rate of 7% instead of 4%. - The Sales Tax Authorities recognized the petitioner's status in the matter and that he would be directly affected by the imposition of the sales tax. 3. The court held that the petitioner has exhausted alternative remedies before approaching the court under Article 226 of the Constitution because: - The petitioner had corresponded with the Sales Tax Authorities and had obtained an undertaking from respondent No. 3 that he would pay the balance if the sales tax was decided to be 7%. - The petitioner had no other remedy available to challenge the classification of X-ray equipment and films as photographic goods.
Final Decision: The court allowed the petition and issued a writ directing respondents Nos. 1 and 2 not to realize sales tax at the rate of 7% from the dealers concerned in respect of the sales effected in favor of the petitioner.
Grover, J.
1. This is a petition under Articles 226 and 227 of the Constitution in which the facts may be stated.
2. The petitioner is a doctor and carries on practice as a specialist in radiology, i.e., diagnosis and treatment of diseases with the help of X-ray appliances etc. Respondent No. 3, the East Asiatic Company (India) Private Ltd., supplied to the petitioner X-ray equipment consisting of-
(a) high tension generator (which raises the voltage from 200 volts to 1,25,000 volts);
(b) a control which regulates the voltage and amperage to the X-ray tube.
(c) X-ray tube itself which generates X-ray;
(d) stand to hold the tube; and
(e) one X-ray couch with which a 2nd X-ray tube is fitted and with which examination of different parts of inside of human body is made.
3. The total cost of this equipment is stated to be Rs. 1,60,000. The petitioner claims that the said appliances could be used only for the purpose of diagnosis as well as treatment of the patients and has been imported for that purpose alone. X-ray films on which an image of the inside body is received are used only for the aforesaid purpose and are not used for taking ordinary photographs.
4. The petitioner was informed by respondent No. 3 by means of a letter dated 27th November, 1959, that the X-ray equipment being electro-medical equipment was to be taxed at 4 per cent, of the turnover for the purpose of sales tax but respondents Nos. 1 and 2, namely, the Commissioner of Sales Tax and the Assistant Commissioner of Sales Tax had issued a circular letter to the effect that X-ray equipment did not fall under the category of electro-medical equipment but it was included in the category of photo goods which being luxury items were being taxed at the rate of 7 per cent. Accordingly the X-ray equipment were also proposed to be taxed at 7 per cent, under the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi (hereinafter to be referred to as the Act). It was suggested in the aforesaid letter that the petitioner should approach respondent No. 1 to persuade him to impose the tax at the rate of 4 per cent, and not 7 per cent. The petitioner was buying films also for taking X-ray photographs and he was being charged the tax by the sellers at the rate of 7 per cent, for those films: vide annexures C, D and E. It appears that the Commissioner of Sales Tax paid a visit to the clinic of the petitioner for seeing his apparatus and the X-ray films and thereafter the petitioner addressed a letter on 2nd December, 1959 (annexure F) in which he enclosed various letters and documents showing that for the purpose of import the Government Red Book showed that X-ray apparatus was included under the head electro-medical apparatus in Part V, Item 79 of that book and whereas the duty on photo equipments was 40 per cent, from U. K. and 50 per. cent, from Dollar Area, the duty on X-ray equipment was only 20 per cent. Similar data were furnished with regard to the films. It was mentioned in the representation that the X-ray and electro-medical apparatus were meant only for diagnostic and treatment purposes and the sales tax should be charged accordingly. On 28th June, i960, the petitioner addressed another letter to the Commissioner of Sales Tax saying that as respondent No. 3 had to submit returns of sales tax for the quarter ending 30th June it may be authorised to charge 4 per cent, on X-ray equipment sold to the petitioner. The petitioner undertook to deposit the excess with respondent No. 3 in case the sales tax was not reduced to 4 per cent, in spite of the representations which had been made by him to the Commissioner of Sales Tax. A reply was received (annexure 18) from the Commissioner of Sales Tax in the following words:-
* * * *
There is no objection to Messrs East Asiatic Co. charging sales tax at 4 per cent, on X-ray equipment sold to you and paying the same to the Government along with the return for the quarter ending 30th June, 1960, provided you give an und
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