Case: Adhyaksha Mathur Babu'S Sakti Oushadhalaya Dacca (P) Ltd.A Vs. Union Of India

3. Before the Constitution came into force, all these three preparations were liable to provincial excise duty under item 40 of List II of the Seventh Schedule to the Government of India Act, 1935. The Constitution, however, made a change in the three legislative Lists with respectand under item 51 of List II of the Seventh Schedule the States have the power to levy excise duty on alcoholic liquor tor human consumption and on opium, Indian hemp and other narcotic drugs and narcotics but not including medicinal and toilet preparations containing alcohol or any substance like opium etc. Further, under item 84 of List I of the Seventh Schedule the Union has the power to impose duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquors for human consumption and (ii) opium, Indian hemp and other narcotic drugs and narcotics but including medicinal and toilet preparations containing alcohol or any substance like opium etc. Thus the Constitution took away the power of the States to impose duties of excise on medicinal and toilet preparations containing alcohol or any substance like opium etc., and gave that power to the Union. However Art. 27 7 of the Constitution providedtaxes, duties cesses or fees which immediately before the commencement of this Constitution were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament byview of this Article, the State Governments continued to levy excise duties on medicinal and toilet preparations containing alcohol, opium, etc., till 1957 as Parliament had made no law to the contrary till then. In 1955, however, Parliament passed the Medicinal and Toilet Preparations (Excise Duties) Act, No. 16 of 1955, (hereinafter referred to as the Act) which was brought into force from April 1,1957. We are in the present case concerned only with medicinal preparations and a "medicinal preparation" is defined in Section 2(g) of the Act asdrugs which are a remedy or prescription prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or3 provides for levy of duties of excise at the rates specified in the Schedule, on all dutiable goods manufactured in India. Section 19 gives power to the Central Government to make rules to carry out the purposes of the Act and in particular Section 19 (2) (xx) gives powerin the official gazette lists of the names and descriptions of preparations which would fall for assessment under any particular item of the Schedule or for regulating their manufacture, transport andSchedule (omitting the Explanations which are immaterial for present purposes) prescribing the duty is in these termsDescription of dutiable goods No. Rate of duty1. Medicinal and toilet preparations, containing alcohol, which are prepared by distilation or to which alcohol has been added, and which are capable of being consumed as ordinary alcoholic beverages. Rupees seventeen and annas eight per gallon of the strength of London proof spirit.2. Medicinal and toilet preparations not otherwise specified containing alcohol.(i) Ayurvedic preparations containingalcohol, which are not capable of being consumed as ordinary alcoholic beverages Nil(ii) Ayurvedic preparations containingalcohol, which are capable of being consumed as ordinary alcoholic beverages. Rupees three per gallon.(iii) All others Rupees five per gallon of the strength of London proof spirit.3. Medicinal and toilet preparations, not containing alcohol, but containing opium. Indian hemp, or other narcotic drug or norcotic Nil.The Central Government framed Rules under the Act in 1956 and the administration of the Act and the Rules was entrusted to State Governments. A list of medicinal preparations, which were capable of being used as ordinary alcoholic beverages, was also published along with the Rules, and Rule 65 providesa standard Ayurvedic pharmacopoeia has been evolved by the Central Government, the pharmacopoeias that are in vogue in the various States shall be recognised as standard Ayurvedic pharmacopoeias."

Court's reasoning:
Further in 1958, Mritasanjibani and Mritasanjibani Sudha were also added under the head "medicinal preparations" in the Schedule to the Rules as the three are really one and the same medicine. The Act and the. Rules came into force from April l, 1957 in accordance with the provision of Section 1(3) of the Act, which gives power to the Central Government to enforce the Act on such date as it may, by notification in the official gazette, appoint. The petitioners case is that thereafter they began to pay duties of excise on these three medicines under item 1 in the Schedule to the Act at the rate of Rs. 17.50 nP. per gallon of the strength of London proof spirit, as these preparations were considered medicinal preparations containing alcohol which were prepared by distillation or to which alcohol was added and which were capable of being used as ordinary alcoholic beverages. This continued till August 1960 when the Central Government purporting to act under Section 19 of the Act amended the Rules and omitted from the Schedule to the Rules two of the three preparations, namely, Mritasanjibani and Mritasanjibani Sudha. Further in December, 1960 the Central Government again amended the Rules and omitted from the Schedule to the Rules the third preparation (namely, Mritasanjibani Sura). Consequently, variousbegan demanding duties of excise on these three preparations at rates which are much higher than the rate of Rs.1750 Np. prescribed in the Schedule to the Act. The contention of the petitioners is that on the coming into force of the Act, the levy of excise duties on these medicinal preparations fell within item 84 of List I, with the result that thereafter it is not open toto levy duties of excise on these preparation in accordance with the various Excise Acts in force in the States. It is further contended that if these preparations in fact come within the definition of "medicinal preparation" in S. 2(g) of the Act and are covered by the Schedule to the Act the omission of these three preparations from the list attached to the Rules would make no difference and would not give power to theto tax them under the various Excise Acts in force in the Statethey are medicinal preparations as defined therein they will be governed by the Act, and the omission of these preparations from the list appended to the Rules will not make any difference to their being medicinal preparations within the meaning of the Act. Before, however, we deal with this main question, we may dispose of a contention raised on behalf of the State of Bihar that even if the three preparations are medicinal preparations they will be liable to duty both under the Act as well as under the various Excise Acts, in force in the various States. We have already pointed out that under the Government of India Act, 1935, medicinal and toilet preparations were liable to duties of excise under Entry 40 of List II of the Seventh Schedule to that Act. Correspondingly under Item 45 of List I ibid which provides for duties of excise on tobacco and other goods manufactured or produced in India, medicinal and toilet preparations were excepted from that entry. Therefore, till the Constitution came into force thehad power to levy duties of excise on medicinal and toilet preparations. We have further pointed out that the Constitution has made a change, and medicinal and toilet preparations were excepted from Entry 51 of List II of the Seventh Schedule to the Constitution relating to duties of excise leviable by States and were put in Entry 84 of List I ibid which provides for duties of excise leviable by the Union. However, Art. 277 provides that any taxes or duties etc., which immediately before the commencement of the Constitution, were being lawfully levied by the Government of any State, etc., may notwithstanding that those taxes, duties etc., are mentioned in. the Union List, continue to be levied and to be applied to the same purpose until provision to the contrary is made by Parliament by law.Therefore, so long as Parliament did not make any law relating to medicinal and toilet preparations, the position under the Government of India Act would continue and the States would have the power to continue levying duties of excise on medicinal and toilet preparations to the same extent to which they were levying them immediately before the commencement of the Constitution. In 1955, Parliament passed the Act for levy of duties of excise on medicinal and toilet preparations. This Act was brought into force from April 1, 1957, and the consequence of this enactment was that the power of the State to levy duties any further on medicinal and toilet preparations came to an end in view of Art. 277 of the Constitution. There can in our opinion be no doubt that Art. 277 which saved the power of the States to levy duties of excise etc., which came in the Union List on the passing of the Constitution is no longer applicable as soon as Parliament makes a provision to the contrary. Once therefore a provision to the contrary is made, the saving provided in Art. 277 comes to an end and thereafter thecannot continue to levy any duty which they might have been levying by virtue of Art. 277 till provision to the Contrary was made. Further, this conclusion which follows from Art. 277 is made perfectly clear by Section 21 of the Act. which providesimmediately before the commencement of the Act there is in force in any State any law corresponding to this Act, that law is herebyto the West Bengal Excise Rules, which deal with the manufacture of these three preparations, it appears that the preparations are to be made according to the recipe and direction laid down in Arka Prakash, Ayurved Sangraha, and Bhaisajya Ratanabali, and have to be manufactured only in bond by a qualified Kabiraj or by a Kabirji frim having a qualified Kabiraj for supervision of the manufacturing operations. Further, the alcoholic content of the preparations must be below 42 per centum. According to the recipe found in these Ayuuvedic books, the basic ingredient out of which these preparations are manufactured is gur; besides gur there are 42 other ingredients which have to be mixed. These ingredients are medicinal drugs according to Ayurveda. In addition to these ingredients, water is also mixed and the whole mixture is kept sealed for 20 days, presumably for the purpose of fermentation and thereafter the preparation is obtained by distillation and as already stated contains about 42 per centum of alcohol, further according to these books the preparation is used as a tonic to build body and physique to increase strength and appetite and to make appearance healthy and bright. It is also used in Sannipat Jwara (typhoid fever) in critical stages. It is also prescribed for cholera in frequent doses and finally is used in all conditions of collapse. Thefiled on behalf of the Union and the States which are opposing these petitions do not definitely state that these preparations are not medicinal preparations. For example, in the affidavit of the State of West Bengal, it is stated that it is not admitted that these preparations are exclusively for medicinal purposes. It is also stated that these alcoholic preparations are capable of being used as ordinary alcoholic beverages. Similarly, in the affidavit of the Union, it is stated that it is not admitted that the preparations are efficacious remedies for any human ailment on the other hand a number of affidavits have been filed on behalf of the petitioners from registered Kabirajas to show that these preparations art manufactured according to the three Ayurvedic books already mentioned and are used for certain diseases including cholera. The respondents, however rely on the advice of the Standing Committee consisting of the Drugs Controller of the Government of India, and the Chief Chemist, Central Revenues Control Laboratory, which was of opinion after examining the formulae and the analytical data and the claims given on the label of the preparations and also after carrying out tasting test, that these three preparations should be considered straightforward beverages and not as medicinal preparations. It was in consequence of this decision that these three preparations were taken out of the list attached to the Rules framed under the Act. The two members of the Standing Committee do not appear to be experts in Ayurvedic medicines and no affidavit has been filed of any Ayurvedic expert on behalf of the respondents. There seems no reason therefore not to accept the affidavits filed on behalf of the petitioners from qualified Ayurvedic practitioners: series F to F 16. 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 preparaed for internal use of human being and are intended to be used for or in treatment, mitigation and prevention of disease in human beings, they would clearly be medicinal preparations within the meaning of S 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 S.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 State lost the power to levy excise duty on thesehas been sworn by an Excise Inspector of the Excise and Intelligence Bureau of the State of Uttar Pradesh. It is not clear however from the counter affidavit what qualifications the deponent has to make such a statement; nor are we able to understand which laws of biochemistry are contravened by the mode of preparation prescribed in the three Ayurvedic text books already referred to. As against this, we may refer to the report of the Chopra Committee on indigenous Drugs of India. In para 265, the Committee says that in different parts of India, as many as 900 indigenous drugs (vegetable, mineral and metallic) and over 1000 preparations made from these drugs are used by the Ayurvedic physicians,seems to be little doubt that out of the large number of drugs used by the Hindu physicians for centuries past and still in use there are some that deserve the reputation they have earned aspara 266 the Committee point out the difficulties in the way of assessment of the proper value of indigenous drugs. These difficulties are of two kinds; firstly the modern scientists are not acquainted with the exact connotation of terms of Indian pharmacology, and secondly, whereas western medicine tries to explain the action of a drug in terms of its chemical components, such as alkaloids, glucosides, essential oils, antibiotics, hormones etc., Indian medicine takes into account the action of the drug in its entirety, as they hold that the action of the whole drug is often different from that of any one of its constituents considered separately. The Committee further says that there is a good deal of truth in this assertion. In para 268, dealing with compound preparations, the Committee mentions another difficulty that usually confronts pharmacologists in the problem of investigating the value of compound medicines which are more frequently used than single drugs. It further points out that "the investigation of the pharmacological properties and therapeutic value is considered to be more in the particular combination than that of any one of the drug taken separately." They therefore urge on the need for an investigation into the combination as a whole. But for this no modern methods are yetaverment 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 these 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 mater 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 andand if that rule is being disobeyed we should have expectedto swear that though the rule says that the preparations should be made according to the directions in these text book 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 had 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 the 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 case must be going on in Calcutta.