Case: S Sakti Oushadhalaya Dacca Private Limited Vs. Adhyaksha Mathur Babu' Union of India

that any action on the lines suggested by the Committee was taken by the Government of India. In these circumstances we have on the one side the three standard Ayurvedic text books according to which these preparations are prepared; we have also the affidavits of a large number of Ayurvedic practitioners of obvious repute to the effect that these preparations are medicinal preparations which are used to alleviate human suffering in certain conditions. On the other hand, there is no affidavit from an Ayurvedic expert on behalf of the respondents. We may however in this connection refer to an affidavit of the Assistant Chemical Examiner to the Government of West Bengal who is experienced in examining and analysing alcoholic liquors. According to him, the chief basis of these three preparations is molasses and gur, which is a fact as we have already pointed out from the recipe in the Ayurvedic text books. He further says that in these three preparations there are several steam volatile products, namely, furfural, aldohydes, ketones and acids but the presence of the same does not destroy or minimise the effect of alcoholic intoxication of these preparations. He further says that the taste or smell of these preparations does not make them unfit for drinking in a large dose and they can be used as an alcoholic beverage. Even this affidavit does not say that these are not medicinal preparations. All that it says is that these preparations contain about 42 per centum of alcohol and can be used as ordinary alcoholic beverages. So if these preparations are medicinal preparations but are also capable of being used as ordinary alcoholic beverages, they will fall under the Act and will be liable to duty under Item No. 1 of the Schedule at the rate of Rs. 17.50 np per gallon of the strength of London proof spirit. On a consideration of the material that has been placed before us, therefore, the only conclusion to which we can come is that these preparations are medicinal preparations according to the standard Ayurvedic text books referred to already, though they are also capable of being used as ordinary alcoholic beverages. They will therefore clearly fall within the definition of "medicinal preparation" and would be liable to duty under Item 1 of the Schedule to the Act. So far as the decision of the Standing Committee is concerned which resulted in the omission of these three preparations from the list attached to the Rules, that is not conclusive on the question whether these are medicinal preparations or not. Further the fact that these preparations are omitted from the list attached to the Rules would make no difference to their being medicinal preparations within the meaning of the Act, liable to duty under Item 1 of the Schedule, if they are in fact medicinal preparations as we hold them to be. They will therefore be liable to duty under Item 1 of the Schedule to the Act as they undoubtedly fall under that item and are capable of being consumed as ordinary alcoholic beverages. They cannot however be taxed under the various Excise Acts in force in the concerned States in view of their being medicinal preparations which are governed by the Act. 10. Lastly, it was urged on behalf of the respondents that these preparations are not prepared according to the formulae in the Ayurvedic text books referred to above. That is a question of fact which it is not possible for us to decide on the materials placed before us. The averment in this connection on behalf of the respondents is also not categorical; for example, it has been stated on behalf of the Union of India that it is not admitted that these preparations are prepared according to the specifications by utilising the proper ingredients and are manufactured according to the recipe and direction given in the Ayurvedic text books referred to above. Nothing has been brought on the record to show that these preparations were analysed and the analysis showed that the ingredients mentioned in the Ayurvedic text books were not present in the preparations. Besides, as it appears from the West Bengal Rules (ref. West Bengal Excise Compilation, Pt. 2) which we have quoted above, these preparations are prepared in bond and there are various restrictions before the issue of the preparations by the manufacturer. Nothing has been said to show that these preparations are not in fact made in accordance with the direction contained in the Ayurvedic text books. If this was not so, the excise staff would be there to check their preparation. As a matter of fact the first rule with respect to the manufacture of these preparations in the West Bengal Excise Compilation lays down that they will be prepared according to the recipe and direction in Arka Prakash, Ayurved Sangraha and Bhaisajya-Ratnabali; and if that rule is being disobeyed we should have expected some one to swear that though the rule says that the preparations should be made according to the directions in these text books, they are in fact not so made. Further if the rule is being contravened, there must be power in the State Government to take action against those who contravene the rule. But nothing has been brought to our notice to show that any action has been taken. In these circumstances we are not prepared to hold that these preparations are not prepared according to the Ayurvedic text books; and in any case our decision holding these three preparations as medicinal preparations is based on these preparations being made in accordance with the directions contained in the Ayurvedic text books and also in accordance with the Rules in the West Bengal Excise Compilation. We presume that the same must be the state of affairs in other States where these preparations are manufactured, though it appears that the petitioners in the present case are mostly from Calcutta and the manufacture in these cases must be going on Calcutta.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Therefore, the Excise Acts of the various States when they impose duty of excise on medicinal and toilet preparations had two purposes, namely, (i) to raise revenue and (ii) to reduce consumption of liquor, and therefore the Excise Acts of the various States cannot be said to be corresponding law which has been repealed by the Act which has only one purpose namely raising of revenue. We have not however been able to understand how any purpose behind a fiscal measure can have any relevance on the question of correspondence. Various Excise Acts of the States in so far as they impose duties on medicinal and toilet preparations containing alcohol are fiscal statutes for taxing these preparations. Now, the Act is a fiscal statute for taxing these preparations enacted by Parliament under Entry 84 of List I of the Seventh Schedule to the Constitution, and therefore the Excise Acts which were the corresponding taxing statutes for these preparations must be held to be repealed so far as taxation on these preparations is concerned. There can therefore be no doubt that there is correspondence between the Act and the various Excise Acts of the various States in so far as levy of duty on medicinal and toilet preparations is concerned and Section 21 of the Act repeals all the Excise Acts of the States so far as such levy is concerned. There can thus be no question of medicinal and toilet preparations being liable to duty under the Act as well as the various Excise Acts in force in the States. This contention is hereby rejectedThere seems no reason therefore not to accept the affidavits filed on behalf of the petitioners from qualified Ayurvedic practitioners : series F to F16. These Ayurvedic practitioners are not connected with the petitioners and what they say in their affidavits is in accordance with the use to which these preparations can be put as medicines according to the three Ayurvedic text books already referred to. In these circumstances it would in our opinion be impossible to say that these preparations are not remedies prepared for internal use of human beings and are not intended to be used for or in the treatment, mitigation or prevention of disease in human beings. If therefore they are a remedy prepared for internal use of human beings and are intended to be used for or in the treatment, mitigation and prevention of disease in human beings, they would clearly be medicinal preparations within the meaning of Section 2(g) of the Act; and if so, they would be liable to be taxed under the Schedule to the Act and not under the various Excise Acts of the different States concerned. It is only necessary to add that the definition of "medicinal preparation" contained in Section 2(g) of the Act, does not depart from the meaning of that expression when it occurs in Item 84 of List I, and hence on the Act coming into force, the States lost the power to levy excise duty on these preparationsOn a consideration of the material that has been placed before us, therefore, the only conclusion to which we can come is that these preparations are medicinal preparations according to the standard Ayurvedic text books referred to already, though they are also capable of being used as ordinary alcoholic beverages. They will therefore clearly fall within the definition of "medicinal preparation" and would be liable to duty under Item 1 of the Schedule to the Act. So far as the decision of the Standing Committee is concerned which resulted in the omission of these three preparations from the list attached to the Rules, that is not conclusive on the question whether these are medicinal preparations or not. Further the fact that these preparations are omitted from the list attached to the Rules would make no difference to their being medicinal preparations within the meaning of the Act, liable to duty under Item 1 of the Schedule, if they are in fact medicinal preparations as we hold them to be. They will therefore be liable to duty under Item 1 of the Schedule to the Act as they undoubtedly fall under that item and are capable of being consumed as ordinary alcoholic beverages. They cannot however be taxed under the various Excise Acts in force in the concerned States in view of their being medicinal preparations which are governed by the ActNothing has been brought on the record to show that these preparations were analysed and the analysis showed that the ingredients mentioned in the Ayurvedic text books were not present in the preparations. Besides, as it appears from the West Bengal Rules (ref. West Bengal Excise Compilation, Pt. 2) which we have quoted above, these preparations are prepared in bond and there are various restrictions before the issue of the preparations by the manufacturer. Nothing has been said to show that these preparations are not in fact made in accordance with the direction contained in the Ayurvedic text books. If this was not so, the excise staff would be there to check their preparation. As a matter of fact the first rule with respect to the manufacture of these preparations in the West Bengal Excise Compilation lays down that they will be prepared according to the recipe and direction in Arka Prakash, Ayurved Sangraha and; and if that rule is being disobeyed we should have expected some one to swear that though the rule says that the preparations should be made according to the directions in these text books, they are in fact not so made. Further if the rule is being contravened, there must be power in the State Government to take action against those who contravene the rule. But nothing has been brought to our notice to show that any action has been taken. In these circumstances we are not prepared to hold that these preparations are not prepared according to the Ayurvedic text books; and in any case our decision holding these three preparations as medicinal preparations is based on these preparations being made in accordance with the directions contained in the Ayurvedic text books and also in accordance with the Rules in the West Bengal Excise Compilation. We presume that the same must be the state of affairs in other States where these preparations are manufactured, though it appears that the petitioners in the present case are mostly from Calcutta and the manufacture in these cases must be going on Calcutta.