TMI Blog1989 (3) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... . On this ground alone the appellants are entitled to succeed. The appellants held entitled to a refund of the excess paid as sales tax on account of the turnover being treated under Item 135 rather than under Item 95 - 1868 of 1974 - - - Dated:- 15-3-1989 - R.S. Pathak, CJI and Ranganath Misra, J. [Judgment per : Pathak, CJI]. - 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m growth of Ayurvedic Pharmacies preparing sub-standard Arishtams and Asavas for purposes other than medicinal use. The appellants contend that 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% on Arishtam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f customers who purchase them for their alcoholic content rather than their medicinal value. On that basis, it is urged, there is justification for a higher rate of tax. 6. We think that the appeals are entitled to succeed. Item 95 mentions the rate of 7% (now 8%) as the tax to be levied at the point of first sale in the State. Item 135 provides a rate of 30% 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 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with an acknowledged Ayurvedic formula, could be brought 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 these 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35 rather than under Item 95. Learned counsel for the appellants states that the appellants will inform all their customers, from whom the higher rate has been charged, that the customers are entitled to a refund of the excess paid by them and that an application will be invited for such refund and that if any part of the excess remains unrefunded to the customers the appellants undertake that such balance will be paid over to the Arya Vaidya Rama Varier Educational Foundation of Ayurveda. 10. The appeals are allowed, the judgment and order of the High Court on each writ petition are set aside and the Sales Tax Authorities are directed to reassess the turnover of the Arishtams and Asavas at the rate mentioned in Item No. 95 and to refund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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