AYURVEDA PHARMACY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) 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 medicines were originally subject to a multipoint levy of 31/2% under the Tamil Nadu General Sales Tax Act, 1959. By a notification dated 4 March, 1974, the State of Tamil Nadu included a large number of items in the First Schedule to the aforesaid Act in order to make them subject to a single-point -levy. While all other patent or proprietary medicinal preparations belonging to the different systems of medicines were taxed at the rate of 7% only, arishtams prepared under the Ayurvedic system were made subject to a levy of 30%. It seems that representations were made to the State Government against the high rate of tax on Arishtams, and therefore a separate entry was introduced by Tamil Nadu Act No. 23 of 1974 in the First Schedule as item 135 dealing specifically with Arishtams and Asavas. They were shown as attracting a rate of 30% while all other medicinal preparations were shown under item No. 95 and subjected to tax at 7%.

(2.) The appellants filed writ petitions in the High Court of Madras challenging the levy at 30% on Arishtams and Asavas, but on 2 September, 1974 the High Court dismissed the writ petitions.

(3.) From the counter-affidavit filed by the Government of Tamil Nadu in the writ petition, out of which one of the present appeals arises, it appears that the higher levy of sales tax on Arishtams and Asavas was introduced by the State Legislature to curb the abuse of medicinal preparations for their alcoholic content by drink addicts and to eliminate the mushroom 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 Cosmetics 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 Arishtams and Asavas alone while other medicinal preparations are subjected to tax at 7% (now increased to 8%) results in an invidious discrimination against the manufacturers of those Ayurvedic preparations thus violating Art. 14 of the Constitution. It is contended that the impugned rate of tax also offends Article 19(1)(g) of the Constitution. The appellants in Civil Appeal No. 1868 of 1974 have also taken the point that the high rate of tax on Arishtams and Asavas has been imposed by the State of Tamil Nadu with the object if discouraging the import of these Ayurvedic medicines from the neighbouring State of Kerala, and consequently the measure is violative of Art. 301 as well.