D P DAVE Vs. STATE OF BOMBAY

JUDGEMENT

(1.) Messrs D. P. Dave, who will hereafter be referred to as "the assessees", are carrying on business of selling drugs in the town of Ahmedabad. Under entry 4 of Schedule II of the Bombay Sales Tax Ordinance (No. 2) of 1952 they were assessed to pay special tax on medicinal preparations which included alcohol on the footing that such medicinal preparations were "foreign liquor" as defined in clause (17) of section 2 of the Bombay Prohibition Act. The assessees claimed that they were not liable to pay special tax as well as general tax. That contention was negatived by the taxing authorities and also by the Sales Tax Tribunal. The Sales Tax Tribunal has at the instance of the assessees referred the following question :

(2.) The period for which sales tax is charged is between the 1st of November, 1952, to 8th of October, 1953, and at that material time the liability to tax had to be determined under the Sales Tax Ordinance (No. 2) of 1952. By section 10 of the Ordinance every dealer was made liable to pay a special tax at the rates specified in column 2 of Schedule II in respect of sales of special goods and by Item 4 of the Second Schedule, special tax was payable on "foreign liquor as defined in clause (17) of section 2 of the Bombay Prohibition Act, 1949, read with the proviso thereto". If the drugs sold by the assessees were "foreign liquor" as defined in clause (17) of section 2 of the Bombay Prohibition Act, 1949, evidently, the assessees were liable to pay the special tax at the rate prescribed by the Act, Second Schedule. The expression "foreign liquor" is defined in clause (17) of section 2 of the Bombay Prohibition Act, 1949, as inclusive of all liquor brought into India by sea, air or land provided that the State Government may, by notification in the Official Gazette, declare that any specified description of country liquor shall, for the purposes of the Act, be deemed to be foreign liquor. By clause (8) of section 2, "country liquor" is defined as inclusive of all liquor produced or manufactured in India, and by clause (24) of section 2, so far as it is material, "liquor" was defined as inclusive of spirits of wine, denatured spirits, wine, beer, toddy and all liquids consisting of or containing alcohol. There is no dispute that for all purposes of the Prohibition Act liquor produced or manufactured in India was by virtue of the notification dated 20th March, 1950, issued by the State Government in exercise of the powers conferred by the proviso to clause (17) of section 2 declared "foreign liquor". By that notification certain descriptions of country liquor were for the purposes of the Act to be deemed to be foreign liquor and one of the descriptions was No. 5 which was "All liquor medicinal preparations containing self-generated alcohol prepared by a process of fermentation." Undoubtedly the Sales Tax Ordinance imposes liability for special tax on "foreign liquor"; but it is not on the sale of foreign liquor as understood in its ordinary or colloquital sense but on the sale of foreign liquor as defined in clause (17) of section 2 of the Bombay Prohibition Act read with the proviso thereto that special tax is imposed, and in the connotation of the expression "foreign liquor" as defined in clause (17) of section 2 read with the proviso thereto are included by virtue of the notification issued by the State Government on the 20th of March, 1950, all liquor medicinal preparations containing self-generated alcohol prepared by a process of fermentation.

(3.) Mr. Palkhiwalla, who appears on behalf of the assessees contends that even if liquor medicinal preparations which contain self-generated alcohol prepared by a process of fermentation may be "foreign liquor" within the meaning of the Bombay Prohibition Act and for the purposes of that Act, these preparations are not "foreign liquor" for the purposes of the Sales Tax Act. We are unable to accept that contention. The Legislature has not only included the definition of foreign liquor in clause (17) of section 2 of the Bombay Prohibition Act in the Second Schedule but has provided that the definition shall be read with the proviso enacted by the Legislature under the Bombay Prohibition Act, 1949. It must, therefore, be held that in ascertaining whether a particular substance is foreign liquor, regard must be had not only to the definition of foreign liquor in clause (17) of section 2 but also to the Notification issued under the proviso thereto.