JUDGMENT M.C. Desai, C.J.
1. At the instance of the assessee the Judge (Revisions) has referred to this Court a statement of the case giving rise to the following question of law :-
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-3504/X dated 10th May, 1956, and whether the applicant was assessable to tax on the turnover of the medicines so dispensed.
2. The assessee is a practising doctor and dispensing chemist. His patients get medicines according to the prescriptions issued by him and dispensed by him ; he thus sells medicines required by patients according to their prescriptions. He has been assessed to sales tax on the turnover of these sales. He claimed that he was exempted from the liability to pay sales tax because he could not be said to be a manufacturer of medicines. His contention was rejected by the Sales Tax Officer and the Judge (Appeals and Revisions).
3. Under Section 3 of the Sales Tax Act every dealer is liable to pay in each assessment year a tax at a certain rate on the turnover (in this case) of the assessment year. Section 3-A is to the effect that "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." under Section 4 no tax is to be payable on the sale of any goods which the State Government may exempt. The State Government issued a notification under Section 4 exempting medicines and pharmaceutical preparations from payment of the sales tax, but subsequently they revoked the exemption and issued notification No. ST-3504/X, dated 10th May, 1956, under Section 3-A laying down that with effect from 8th May, 1956, medicines and pharmaceutical preparations manufactured in Uttar Pradesh shall not be liable to be taxed except when sold by the manufacturer. The result of this notification was twofold : one was to remove the exemption and thereby make the turnover of medicines assessable under Section 3 and the other was that in respect of medicines manufactured in Uttar Pradesh the turnover in the hands of the manufacturer alone was liable to tax. This was the state of law in 1957-58 but it was not correctly understood, not only by the assessee but also by the Sales Tax Officer, the Judge (Appeals) Sales Tax, the Judge (Revisions) Sales Tax and even the Commissioner, Sales Tax. They all laboured under the impression that turnover on the sale of medicines was not assessable at all except in the case of sale by the manufacturer and consequently, concentrated all their attention in the instant case on the question whether the assessee was a manufacturer of the medicines sold by him to his patients. The Sales Tax Officer etc. held that he was a manufacturer and consequently liable to pay sales tax. They held him liable under the notification and did not consider his liability under Section 3 itself. They knew about the notification exempting turnover on sale of medicines from the liability but presumably did not learn about the notification cancelling the exemption and thereby restoring the liability under Section 3.
4. I have no doubt that the assessee cannot be said to be a manufacturer of the medicines. "Manufacture" has been interpreted in a wide sense by a Bench of this Court of which I was a member in Badri Prasad Prabha Shanker v. Sales Tax Commissioner, U.P., [1963] 14 S.T.C. 208 However wide a meaning may be given to the word, I do not think it includes preparation of mixtures in accordance with prescriptions to be used solely by the named patients. A notification under Section 3-A is meant for an article which is expected to be sold more than once. Under Section 3 every dealer who sells it is liable to pay a sales tax on its turnover and power has been conferred by Section 3-A upon the Government to declare that in respect of it only one of the dealers will be liable to pay sales tax and not every dealer who successively sells it. When sales tax is payable on an article the burden ultimately falls on the consumer and, if an article passes through several dealers, each of whom adds to the price the sales tax paid by him, the consumer would ultimately have to pay a very heavy price for the article. The Legislature was anxious that in respect of articles of common use the burden upon the consumer should not be so great and, therefore, conferred power upon the Government to declare that in respect of them only one dealer will pay the tax and not others. This necessity could not arise in respect of an article which was incapable of being sold by more than one dealer and was not expected to be sold except directly to the consumer. In the case of an article that could be sold only once there could not arise any question of the State Government's laying down that it shall be liable to pay tax at only one point. Medicines prepared according to prescriptions are meant to be sold only to particular patients and in respect of them there cannot be more than one point of sale and the State Government could not have intended that the notification issued by them under Section 3-A could cover them. In other words, preparing medicines according to the prescriptions could not have been intended by the State Government to come within the word "manufacture" as used in the notification.
5. There cannot be a manufacture unless the resulting produce is a commercially different article. When the assessee mixes together the ingredients mentioned in a prescription and supplies the mixture to the patient he does not produce an article commercially different from the ingredients from which it is produced. The resultant article has no name other than "mixture" and a "mixture" cannot be said to be an article commercially different from the ingredients that are mixed. The ingredients are only added together and the resultant is not at all different in form, nature, effect etc. from the ingredients. Every different prescription results in a different mixture; the assessee prepares as many mixtures as there are prescriptions. For every prescription he prepares just one mixture. In the circumstances it is difficult to say that he manufactures every time he dispenses a prescription. In North Bengal Stores, Ltd. v. Member, Board of Revenue, Bengal, [1946] 1 S.T.C. 157 a dispensing chemist was held to come within the definition of a dealer because the word was defined in the relevant statute to mean a person who manufactures or produces any goods. If the chemist was held to be a dealer because he produces goods the decision is of no help in this case. But Das, J., held him to be a dealer also on the ground that he manufactures goods. The word "manufacture" cannot be given the same meaning in every statute regardless of context and I do not think that the word used in the notification can be given the same meaning as the word used in the statute dealt with in that case. I would answer the first limb of the question in the negative.
6. Coming to the second limb of the question regarding assessability of the turnover to tax, though it is not made expressly dependent upon the answer to the first limb of the question, I may concede that that was the underlying idea. I do not understand why the Judge (Revisions) referred the second limb of the question if all that was argued before him was whether dispensing prescriptions amounted to manufacturing medicines. It would have sufficed for the purpose only to refer the first limb of the question because if this Court answered it in the negative he would have to set aside the assessment order according to the (erroneous) view of the state of the law that he took. He thought that the assessee was liable to sales tax only if he was a manufacturer and did not consider that he was liable otherwise under Section 3. But he has referred the second limb of the question and it cannot be said that it does not arise because every order under Section 10 deals with the assessability of the assessee to tax. That is the ultimate question to be decided in every case. That question comprehends all questions that arise in the case. It, therefore, cannot be said that it does not arise out of the order passed by the Judge (Revisions) and that we should refuse to answer it. The question has two aspects. One is whether the assessee was assessable on the ground of his being a manufacturer and that was the aspect considered by the Judge (Revisions). The other aspect is whether he was liable under Section 3 as a dealer. Though that aspect was not considered by the Judge (Revisions) because of the error into which he and others had fallen, it cannot be said that it cannot be considered by this Court in answering the second limb of the question. This Court cannot possibly answer the second limb in.the negative if the assessee is under the law assessable to tax on the turnover of sale of the medicines ; it cannot give an incorrect answer to it. Even if the aspect was not considered, if it is involved in the question, it must be considered by this Court and its answer must be correct according to law.
7. It was for the assessee to challenge his assessability on two grounds. If he was not liable under Section 3 at all on the ground that he was not a dealer or on the ground that, there was no sale and, therefore, no turnover, he should have taken these pleas before the Sales Tax Officer and the two Judges. But he never challenged his assessability on either of these grounds. He challenged his assessability on the irrelevant ground that he was not a manufacturer. The notification did not apply to him when he himself claimed that he was not a manufacturer. When the notification did not apply to him there was no question of his taking any plea based upon it. Section 3 could apply to him and if he was not liable under it also, it was for him to take this plea. But he never challenged his liability under Section 3 and it must be held that he could not challenge it on any ground. He cannot contend that he cannot be held liable under Section 3 because he has not been so far held liable under that provision. He does not get immunity from the liability under Section 3 just because he has not been held liable under it so far. There is no question of his not being heard in respect of this liability because he had every opportunity of contending that he was not liable before the Sales Tax Authorities.
8. From the facts stated in the statement I find that the assessee has sold medicines and has done so in the course of his business. He is, therefore, a dealer liable to pay tax on the turnover of the medicines sold by him under Section 3.
9. There is no substance whatsoever in the contention vehemently advanced by Sri Jagadish Swarup that by virtue of the notification issued under Section 3-A he is not liable because he is not a manufacturer; the reason is that he is not made liable under the notification and the notification does not exempt him from the liability under Section 3. The notification applies only to a manufacturer of medicines and, since he is not one, it does not apply to him and the only effect of its not applying to him is that the Rule that the turnover is assessable only in the hands of the manufacturer does not apply in his case. The effect of the notification is not that no turnover on the sale of medicines is assessable except when they are sold by the manufacturer. After the restoration of the assessability of the turnover of medicines it cannot be said that the turnover is exempt except in a case governed by the notification. Nothing turns upon the word "shall not be liable to be taxed except"occurring in the notification ; they are to be read only with medicines manufactured in Uttar Pradesh and not with all medicines. The notification is that only certain medicines, e.g. "medicines...manufactured in Uttar Pradesh shall not be liable to be taxed except" and not that (all) "medicines shall not be liable to be taxed except". It is this distinction between the two sets of words that was lost sight of by Sri Jagadish Swarup when he advanced the contention. The notification applies only to medicines manufactured in Uttar Pradesh and not to others which are left to be governed by Section 3. The medicines sold by the assessee not being medicines manufactured are not governed by the notification and must, therefore, be governed by Section 3. The second limb of the question must, therefore, be answered in the affirmative.
10. Copies of this judgment should be sent to the Judge (Revisions), Sales Tax, Uttar Pradesh, and the Commissioner, Sales Tax, Uttar Pradesh, under the seal of the Court and the signature of the Registrar as required by Section 11(6) of the U. P. Sales Tax Act. The costs of the reference should be borne by the parties, but counsel's fee may be assessed at Rs. 100.
K.B. Asthana, J.
11. I agree and have nothing to add.