Appeal No 2458 of 1966
Appeal by special leave from the judgment and decree dated April 1 1963 of the Allahabad High Court in Sales tax Reference No 391 of 1959
CBAgarwala and OP Rana for the appellant
JP Goyal and Sobhag Mal Jain for the respondent
711 The Judgment of the Court was delivered by Shah J
The Judge Revisions Sales Tax UP Lucknow referred the following question to the High Court of Allahabad for opinion Whether the preparation of medicines on prescriptions of the applicant amounted to a manufacture of medicines and pharmaceutical preparations within the meaning of notification No ST 3504X dated 10th May 1956 and whether the applicant was assessable to tax on the turnover of the medicines so dispensed  The High Court held that the respondent was not a manufacturer of medicines and pharmaceutical preparations within the meaning of the notification
Against the answer recorded by the High Court the Commissioner of Sales Tax UP has appealed to this Court with special leave
The respondent is a medical practitioner and in the performance of his professional duties he examines patients advises them and prescribes medicines which are issued from his dispensary
The Sales Tax Officer being of the view that the dispensing of medicines according to the prescriptions issued by the respondent amounted to manufacture of medicines within the meaning of the notification No ST 3504X dated May 10 1956 assessed the respondent to pay tax on a turnover of Rs 12943 for the year 1956 57
The order was confirmed in appeal by the Judge Appeals and was further confirmed by the Judge Revisions Sales Tax
The sole question which falls to be deterrained in this appeal is whether by virtue of the notification the respondent is exempt from liability to pay tax
Section 3 of the UP Sales Tax Act 1948 makes every dealer liable to pay in each assessment year a tax at a certain rate on the turnover
Section 3A provides Notwithstanding anything contained in section 3 the State Government may  declare that the turnover in respect of any goods  shall not be liable to tax except at such single point in the series of sales by successive dealers as the State Government may specify On May 10 1965 the Governor of Uttar Pradesh issued a notification No ST 3504X that In exercise of the powers conferred by section 3A of the UP Sales Tax Act 1948 as amended from time to time and in supersession of all the previous notifica 712 tions on the subject the Governor of Uttar Pradesh is hereby pleased to declare that with effect from May 8 1956 the turnover m respect of medicines and pharmaceutical preparations shall not be liable to tax except a in the case of medicines and pharmaceutical preparations imported from outside Uttar Pradesh at the point of sale by the importer
and b in the case of medicines and pharmaceutical preparations manufactured in Uttar Pradesh at the point of sale by the manufacturer And the Governor is further pleased to declare that such turnover shall with effect from the said date be taxed at the rate of   The respondent is not an importer of medicines and pharmaceutical preparations from outside Uttar Pradesh
That Is common ground
The Revenue authorities however held that when in his dispensary medicines and pharmaceutical preparations as prescribed by him were mixed the process of mixing resulted in manufacture of medicines by him as a manufacturer
The expression manufacture has in ordinary acceptation a wide connotation it means making of articles or material commercially different from the basic components by physical labour or mechanical process and a manufacturer is a person by whom or under whose direction and control the articles or materials are made
The notification in the first instance exempts from tax sales of medicines and pharmaceutical preparations
It then proceeds to withdraw the exemption in respect of two classes of sales of medicines and pharmaceutical preparations i sale by an importer of medicines etc imported from outside the State and ii sale by a manufacturer of medicines etc manufactured in the State
The tax levied in respect of the excepted categories is a single point tax it may be levied when medicines and pharmaceutical preparations manufactured in the State of Uttar Pradesh are sold by the manufacturer
In our judgment when as prescribed by a medical practitioner a mixture of different drugs is prepared by the medical practitioner or by his employees specially for the use of a patient in the treatment of an ailment or discomfort diagnosed by the medical practitioner by his professional skill and which mixture is normally incapable of being passed from hand to hand as a commercial commodity the medical practioner supplying the medicines cannot be said to be a manufacturer of the mixture and the mixture cannot be said to be manufactured within the mean 713 ing of the notification
Exemption granted by the notification ceases to apply under cl
a if the importer of medicines and pharmaceutical preparations manufactured outside the State sells them and under cl
b if the manufacturer of medicines and pharmaceutical preparations manufactured in Uttar Pradesh sells them
The scheme therefore is to levy sales tax at one point only viz at the point of sale by the importer in respect of medicines imported by him into the State
and at the point of sale by the manufacturer of medicines manufactured by him within the State
If preparation of a mixture of drugs as prescribed by a medical practitioner in his own dispensary is not manufacture of medicines or pharmaceutical preparation the exception clause of the notification will have no application
Acceptance of the contention by the Revenue would imply that a medical practitioner supplying to his patients medicines and pharmaceutical preparations separately is not liable to tax when under his direction they are mixed by his employees for the special use of a patient under his treatment and to achieve a specific purpose the turnover from the resultant mixture is taxable
In the absence of clearer phraseology the Court would not in a taxing provision be willing to give that interpretation
The appeal therefore fails and is dismissed
The delay in filing the respondent s statement of the case is condoned
There will be no order as to costs in this appeal
GC Appeal dismissed


Summary:
The respondent was a medical practitioner in Uttar Pradesh and maintained a dispensary from which medicines were issued to his patients according to his prescriptions
According to notification No ST 3504X dated May 10 1956 issued under section 3A of the UP Sales Tax Act 1948 tax in respect of sale of medicines and pharmaceuticals manufactured in the State was payable at single point on the sale effected by the manufacture
The Sales Tax Officer held that dispensing of medicines was manufacture  within the meaning of the aforesaid notification and assessed the respondent to sales tax for the year 1956 57 on the turnover of medicines dispensed
The order was confirmed by the appellate and revisional authorities but the High Court decided in favour of the respondent
The State appealed
HELD When as prescribed by a medical practitioner a mixture of different drugs is prepared by the medical practitioner or by his employees specially for the use of a patient in the treatment of an ailment or discomfort diagnosed by the medical practitioner by his professional skill and which mixture is normally incapable of being passed from hand to hand as a commercial commodity the medical practitioner supplying the medicines cannot be said to be a manufacturer of the mixture and the mixture cannot be said to be manufactured within the meaning of the notification
712 G H In the absence of clearer phraseology the Court would not in a taxing provision be willing to give an interpretation whereby a medical practitioner supplying to his patients medicines and pharmaceutical preparations separately is not liable to tax but when under his direction they are mixed by his employees for the special use of a patient under his treatment and to achieve a specific purpose the turnover from the resultant mixture is taxable
713 D