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TMI Blog2011 (7) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner is to take back the stock from the dealers on expiry of the shelf-life. Manufacturing companies market medicines by appointing distributors/agencies and selling it to them who in turn sell to retail dealers from whom customers purchase medicines. During the assessment years 2001-02 and 2002-03, the company claimed exemption from sales tax on the value of goods recalled or returned by retailers on expiry of shelf-life before sale. Return of such life expired medicines by the retailers is to the distributors who in turn returns the same to the company. These goods taken back are destroyed by the petitioner. The case of the petitioner is that the goods so collected back on expiry of shelf-life and destroyed have suffered tax on first s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with potency and what is returned much after sale and second round of sale is medicines, the life period of which is over. Having gone through the scheme of marketing, that is, selling medicines which have a pre-fixed period of potency, it is unlikely that sales return of life expired medicines will be within three months. Manufacture of medicines itself is geared to patient demand and soon after manufacture marketing is done. Therefore, when first sales are made, the medicines sold will have beyond three months shelf-life. Therefore, sales returns do not happen within three months of sales. So much so, under the existing rules which permit deduction of sales return only within three months of sale, the petitioner or other medical compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, goods reach retail dealers only on second sales and admittedly the petitioner has not directly sold medicines to the retail dealers who return the goods through distributors. Therefore, the petitioner's claim that the sale has not taken effect and on return of the medicines after expiry of the shelf-life, the original sale gets cancelled or frustrated is unacceptable. The practice followed is that shelf-life expired medicines are collected by the company from distributors and destroyed as part of the condition of the marketing to save dealers from loss. In fact such loss is essentially borne by the manufacturing company, and the dealers or distributors obviously and rightly are not called upon to meet the loss. Further, as a m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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