STATE OF GUJARAT Vs. SINDH AYURVEDIC PHARMACY

JUDGEMENT

(1.) At the instance of Revenue, the Gujarat Sales Tax Tribunal at Ahmedabad has referred the following question of law for the opinion of this Court under Section 69 of the Gujarat Sales Tax Act, 1969 ("the Act" for short): Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal is justified in law holding that the Gulkand manufactured and sold by the opponent is covered by entry 26(1) of Schedule-II-Part-A of the Gujarat Sales Tax Act, 1969 and not either under entry 6 of Schedule-III or under entry 13 of Schedule-III of the Act

(2.) The assessee, i.e. M/s. Sindh Ayurvedic Pharmacy, is engaged in the business of manufacture and selling of ayurvedic drugs and medicines. The medicines are being manufactured at Bombay where the assessee has its head-office. The assessee has a branch at Ahmedabad. It is registered as a dealer under the provisions of the Act. The dispute pertains to assessment year 1980-81. Amongst other medicines, the assessee is manufacturing Gulkand. The assessee claimed before the Sales Tax Officer that the Gulkand manufactured by it was a medicinal preparation and exigible to tax at the rate of 4% under Entry 26(1) of Schedule II-A to the Act. The claim of the assessee was accepted and accordingly, the assessment was completed. However, for Samvat year 2036, i.e. assessment year 1981-82, the very Sales Tax Officer took a different view and recovered sales tax at the rate of 7% plus 3% surcharge (General Sales Tax) treating the Gulkand as falling within Entry 6 of Schedule III to the Act by rejecting the contention of the assessee that the Gulkand was a medicinal preparation. The above mentioned view was taken by the first appellate authority on the basis of an order dated September 14, 1977 passed by the Commissioner of Sales Tax under Section 62 of the Act.

(3.) Feeling aggrieved, the assessee went in appeal. The appellate authority noticed that the facts, which were mentioned in determination order passed under Section 62 of the Act by the Commissioner of Sales Tax and relied upon by the Sales Tax Officer, were quite different than the facts of the instant case and, therefore, concluded that the Sales Tax Officer was not justified in placing reliance on the said determination order for the purpose of coming to the conclusion that the assessee was liable to pay the sales tax at the rate of 7% plus 3% surcharge as provided in Entry 6 of Schedule III to the Act. In view of the said conclusion, the first appellate authority allowed the appeal filed by the assessee. Section 67 of the Act empowers the Commissioner of Sales Tax to exercise suo motu revisional powers. The Commissioner was of the opinion that the view taken by the first appellate authority was erroneous and, therefore, exercised suo motu revisional powers. In order to substantiate its claim that the Gulkand manufactured by it was a medicinal preparation, the assessee attempted to place reliance on Ayurvedic Pharmacopoeia published by the Health Ministry of the State of Government, but could not produce the same for consideration of the Revisional Authority. The Revisional Authority, after hearing the parties, noticed illegality and irregularity in the order passed by the first appellate order and, therefore, concluded that the appellate order deserved to be modified. The Revisional Authority noticed the decision of the Tribunal rendered in M/s. Raj Kamal Agency v. State of Gujarat 1979 GSTC 75 wherein the Gulkand was not treated as medicinal preparation. After following the said decision, the Revisional Authority held that the assessee was liable to pay sales tax at the rate of 7% plus 3% surcharge as contemplated by Entry 6 of Schedule III to the Act.