^V ( IPCA Laboratories Ltd. >€^: 'y^^ ^ »ENTS;/1. State of Ghhattisgarh, Through Secretary Commercial Tax Department, Commissioner Commercial Tax Chhattisgarh Asslstant Commercial Tax Commissloner PETIT10NER HIGH COURT OF CHHATTISGARH: BILASPUR Writ Petition No. 3649 of 2003 IPCA Laboratories Ltd., C/o Chopda Enterprises, C & F Agent, 8-A, Recreation Ground, Choubey Cotony, Raipur. RESPONDENTS Versus State of Chhattisgarh, through Secretary, Commercial Tax Department, Raipur. Commissioner of Commercial Tax, Chhattisgarh State Government, Raipur. And Writ Pefrtion No. 3785 of 2006 PETITIONER IPCA Laboratories Ltd., C/o Chopda Enterprises, C & F Agent, 8-A, Recreation Ground, Choubey Colony, Raipur. Versus RESPONDENTS 1. State of Chhattisgarh, through Secretary, Commercial Tax Department, Raipur. 2. Commissioner, Commercial Tax, Chhattisgarh, Raipur. 3. The Assistant Commissioner, Commercial Tax, Raipur. (Writ petition underArticles 226 and 227 ofthe Constitution of India) Single Bench : Hon'ble Shri Satish K. Agnihotri, J. Present: Shri H.S. Shrivastava, Sr. Advocate with Shri Ashish Shrivastava, Advocate for the petitioner. Shri Alok Bakshi, Govt. Advocate for the State. JUDGMENT & ORDER (Passed on this 5 day of IVIay, 2009) 1. Both these petitions involve common facts and question of law, thus they are being considered and disposed of by this common order. W.P.No.3649 of 2003 : Challenge in this petition is to the order dated 7-7-2003 (Annexure - P/3) whereby the Commissioner, Commercial Taxes, Government of Chhattisgarh, has declined exemptidn to the petitioner on sale of Chloroquine Phosphate (Anti Malaria) (bulk drug) on the ground that the drug is not used as life saving drugs. W.P.No.3785 of 2006 : Challenge in this petition is to the order dated 7-7-2003 (Annexure - P/3) whereby the Commissioner, Commercial Taxes, Government of Chhattisgarh, has declined exemption to the petitioner on sale of Chloroquine Phosphate (bulk drug) brand name "Lriago - DS" on the ground that the drug is not used as life saving drugs, therefore, not exempted under notification No. F/10-10/2001/CT/V(4) dated 30th Mareh, 2001 (Annexure - P/1). The assessment order was passed on 25-2-2006 (Annexure-P/5) thereagainst, in clarification, the impugned order dated 7-7-2003 (Annexure - P/3) was passed. The indisputable facts in the both the writ petitions, as projected by the petitioner, are that the petitioner is a company registered under the Companies Act, 1956 having registered office at 48, Kandvali Industrial Estate, Mumbai. It is a drug manufacturing company and manufactures anti-malarial drug Chloroquine Phosphate, known by the brand name of "Lriago - DS". The company supplies Chloroquine Phosphate to other pharmaceuticals also in the form of powder or tablets and they sell in the form of tablets, liquid, capsutes and injections in their own brand names. The State Government of Chhattisgarh issued a notification dated 30-3-2001 granting exemption in whole to the life saving drugs from payment of taxes under the provisions of the Chhattisgarh Vanijyik Kar Adhiniyam, 1994 (forshort "the Adhiniyam, 1994"} forthe period from 1-4-2001 to 31-3-2002, which was extended time to time by subsequent .-*; .<*' % "t v. s'> notification No.33 dated 27-3-2002, notification No.15 dated 29-3-2003 and notification No.19 dated 23-2-2004 till 31-3-2005 notifying the following drugs, as life saving drugs: (1) Anti Malarials (i) Chloroquin Phosphate (ii) Inj. Quinine Dihydrochloride (iii) Inj. Quinine Hydrochloride (2) Carticasteroids (i) Dexamethosone (ii) Betamethosone (iii) Hidrocartisone (iv) Predinsolone (3) Plasma Expanders (i) Dextrose 5% (ii) Dextrose & Sodium Chloride (iii) Hemmacce], Saraccell (iv) Mannitol (v) Moral Lactate, Ringer Lactate (vi) Sodium Chloride (vii) Human Albumin (viii) Whole Human Blood (ix) Fresh Frozen Plasma (4) Drugs use in Cardiac Disorders (i) Digoxin, Procillaridium (ii) Dopamine (iii) Mephetermine, Mexiletine (5) Anti Coagulants & Antithrombotics (i) Lower Molecular Weight Heparins (ii) Fibrinolvities (iii) Urol Mase (iv) Streptokinase (v) Alteplase (6) Pain Killers used in Cancer/ Heart Disease (i) (ii) (iii) Pethidine Morphine Pentazocie (7) Drugs used in Shocks (i) Andrenaline (ii) Noradrenaline (iii) Methembarmin (iv) Dppanine (8) Anti-Diabetic (i) Insulin (9) Drugs used in Dysfunctional Uterine Bleeding (i) Medroxy Progrestorone (Provera) The petitioner, being manufacturer of Chloroquine Phosphate, under the notification dated 30-3-2001 at S.No.1 claims exemptions under the notifications (supra). The assessing authorities for the year 1-4- 2002 to 31-3-2003 assessed the petitioner for State Tax as well as Central Tax for supply of above stated drugs without granting exemption, as provided under the provisions of.the notification. The petitioner taking recourse to provisions of Section 68 of the Adhiniyam, 1994 made representation to the Secretary, Sales Taxes Department, Government of Chhattisgarh. The Secretary observed that the petitioner is not entitled to exemption as he produces Chloroquine Phosphate (bulk drug) the same is not sold in the open market but the same are raw materials. The petitioner also supplies the same to the medical stores. The medical stores do not further sell the same as bulk drug and, as such, the petitioner is not entitled to any exemption. Thus, this petition. Shri Shrivastava, learned senior counsel appearing on behalf ofthe petitioner, would submit that the finding of the Secretary that Chloroquine Phosphate is not exempted from payment of tax if sold in the generic form of powder and is exempted under notification dated 30-3-2001 only if it is sold in the form of a tablet is erroneous. The notification does not specify asto whether the tablets alone would be exempted or the drugs in any form i.e. tablets, powder, liquid or injunction are exempted. There is no condition or restriction on the specified drug for availing the exemption from payment of tax. Further the notification does not provide that the exemption is s? 8. 10. available only to the medical stores who sell the drugs in the form of tablets to the consumers. Per contra, Shri Bakshi, learned Govt. Advocate.appearing on behalf of the State, supported the order passed by the Secretary and the assessment order passed by the assessing authority. In addition, Shri Bakshi would submit that the life saving drugs are being sold through the medical stores and consumed by the patients and, as such, the petitioner company could not be termed as seller of life saving drugs and as such the petitioner is not entitled to claim any exemption. Shri Bakshi, would further submit that there is an efficacious alternative remedy available to go in appeal, which the petitioner has without any reason failed to avail and, assuch, the petitions deserve to be dismissed. 1 have heard learned counsel appearing for the parties, perused the pleadings and the documents appended thereto. It is evident that the Chloroquine Phosphate is used as Anti Malarial drug as specified in the notification as life saving drug. The notification no where provides for exemption from the sale if the same is sold in the form of tablet and not in any other form. The purpose of exemption to the life saving drugs is to reduce the cost of drugs. If the same is sold in bulk without exemption, that would defeat the very purpose of notification, as the cost of the tablets or any other form of drug would not be reduced as it seems to be purpose of the notification dated 30-3-2001. Admittedly, Chloroquine Phosphate is a specified drug in the notification. The authorities below have not at all appreciated the spirit of the notification and the language employed in the same. It is well settled principle of law that the goods involved in case of taxation or exemption from taxation must be understood in its popular name not in technical or scientific meaning. "Lriago - DS" is known as Anti Malarial drug by one and all. 11. In Mercury Laboratories Pvt. Ltd. vs. State of U.P. and Others where the exemption to life saving drugs was in consideration, Allahabad High Court observed that the notification cannot be limited to the specified drugs which are to be sold in the same name. 12. Chloroquine Phosphate Injection (Lariago) is a drug, as the same is used in the treatment of severe malaria, especially severe falciparum malaria when Plasmodium falciparum is sensitive to Chloroquine. 13. "Drog" has been defied in the Drugs and Cosmetics Act, 1940 (for short "the Act, 1940"). Section 3 (b) of the Act, 1940 reads as under: "(b) "drug" includes— (i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction or [vermin]or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette; (iii) all substances intended for use as components of a drug including empty gelatin capsules; and (iv) such devices intended for internal or external use in the diagnosis, ; treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central ' (2000)1193Tc 271 14. 15. 16. Government by notification in the Official Gazette, after consultation with the Board;" Thus, the drug, in any form, may be the powder, tablet, capsule, injunction or in any other form if used internally or externally for diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes, all substances intended for use as components of a drug including empty gelatin capsules and other such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Government by notification comes within the definition of drug. 'Drug' has a wide connotation. 'Drug', as defined in Section (b) (iii) of the Act, 1940 includes all substances intended for use as components, including empty gelatin capsules. Thus, even if the powder or liquid are used for manufacturing of tablets or capsules or injections, they come within the definition of drug and, as such, Chloroquine Phosphate (bulk drug) cannot be held as not a drug. The word 'medicine' has not been used in the notification, which may directly be consumed by the patients. The word 'medicine' is defined in Shorter Oxford English Dictionary (fifth edition - volume 1) as under: "medicine 1 The science or practice of the diagnosis and treatment of illness and injury and the preservation of health; spec. the science or practice of restoring and preserving health by drugs and the , regulation of diet, habits, etc., rather than by surgical methods. ME. 2 A substance or preparation used in the treatment of illness; a medicament, a drug; esp. one taken orally. Also, such Gowri substances generally. ME. b fig. A remedy, esp. one which is necessary but disagreeable or unwelcome, ME. 3 A drug used for other than remedial purposes, as a cosmetic, poison, potion, etc. LME-E17. 4 xxx xxx xxx 5 xxx xxx xxx" 17. The word 'medicine' is defined in Chambers 21 Century Dictionary (revision edition) as under: "medicine 1 a any substance used to treat or prevent disease or illness, especially one taken internally; b medicine bottle medicine cabinet. 2 the science or practice of treating or preventing illness, especially using prepared substances rather than surgery. 3 medical practice or the profession ofa physician....." 18. Medicine may be a system or a drug, which is used to treat or prevent disease orillness, especially one taken internally. 19. There is no dispute, as the notification dated 30-3-2001 specially specifies that Chloroquine Phosphate (Anti Malria) is a life saving drug. The form asto whether it should be tablet or capsule or injunction or liquid is not prescribed in the notification. Thus, the petitioner, who is manufacturing Chloroquine Phosphate in bulk, is entitled to exemption underthe notification dated 30-3-2001. 20. For the reasons mentioned hereinabove, the petitions are allowed. No order asto costs. Sd/- Satish K. Agnihotri Judge ; AF.^ HIGH COURT OF CHHATTISGARH: BILASPUR Writ Petition No. 3649 of 2003 IPCA Laboratories Ltd., Versus State of Chhattisgarh & Another And WritPetitionNo, 3785 of 2006 IPCA Laboratories Ltd., Versus State of Chhattisgarh & Others Post for pronouncement of the Judgment and Order on ^'-5-2009 Sd/- Satish K. Agnihotri Judge /