JUDGMENT Pradeep Kant, J.
1. This is a bunch of writ petitions filed by different firms and companies who deal in the manufacturing of medicines, viz., life saving drugs. The message of the Commissioner, Sales Tax (which is now known as "Trade Tax") issued in the year 1992 wherein it has been clarified that exemption in sales tax would only be available to those life saving drugs which are being sold with the same very names which find mention in the notification dated March 31, 1992 and not to those drugs which are being sold in their own "brand name", is under challenge in these writ petitions.
2. The petitioners who are manufacturers of life saving drugs in their factories situate at different parts of the country and are carrying on their business within territorial jurisdiction of the State of U.P. have put their claims for exemption of sales tax placing reliance upon the notification issued by the State Government. The Notification No. S.T.-2-1217 dated March 31, 1992 has been issued by the State Government in exercise of powers under clause (a) of Section 4 of the U.P. Sales Tax Act, 1948 by the Governor granting exemption from sales tax on the life saving drugs. This exemption was allowed for a limited period for specified assessment years only. The Schedule mentioned in the notification at item No. 4 gives the heading life saving drugs followed by the words, "that is to say" and thereafter the names of 33 life saving drugs have been mentioned which are entitled for the exemption from sales tax.
3. The controversy in nut shell before the court is that although 33 drugs have been mentioned under the heading life saving drugs but whether the life saving drugs which are known in the market by a particular brand name although they are the same drugs which are mentioned in the said notification should be treated to be exempted under aforesaid notification or because of their brand name the exemption of sales tax would not be available to them.
4. We have heard Sri Bharatji Agarwal, Senior Advocate, Sri S.M.K. Chaudhary, Pradeep Agarwal, Sri Mahesh Chandra on behalf of the petitioners and Sri Rakesh Bajpai, Standing Counsel, on behalf of the State.
5. From the arguments raised by the learned counsel for the parties, the following questions raised for consideration in the present bunch of petitions :
(a) Whether the life saving drugs which are in their respective brand name of manufacturer stand excluded from the exemption notification as they are not sold in those very names which find mention in the notification dated March 31, 1992, although the ingredients and components of the life saving drugs which are sold in the brand name is the same to which exemption has been granted.
(b) Whether in view of the object of the exemption that life saving drugs should be available to the consumers at cheaper rate, the same could be refused to those very life saving drugs which have the same contents as mentioned in the drugs shown in the notification with the same therapeutic value, but are known in the market, in their own "brand name".
(c) Whether the Commissioner, Sales Tax, was competent to issue any message, instruction, guidelines or suggestion expressing his view that the exemption from sales tax only be available to those life saving drugs whose names appear in the notification and not to those drugs which are sold in their brand names.
6. Learned counsel for the petitioners emphasised that the list and the names shown in the list in the Schedule under the heading "Life saving drugs" would mean that whatever be the brand name of the drugs but if the ingredients and components of the drugs are one and the same as provided in the said notification and may be that such drugs are known with different brand name, cannot be taken out from the exemption notification and are liable to be exempted from sales tax.
In support of their contention, the learned counsel for the petitioners have, for example, drawn our attention to the brand names of various drugs indicating that these drugs contain only that component which is exempted under the notification from sales tax. It has been stated that tetracycline hydrochloride is exempted from the trade tax when sold in the same name. The petitioners, namely, Mercury Laboratories Pvt. Ltd., manufacture the same drug have given it, the brand name of Linemett-500 and Linemett-333. Likewise Dey's Medical Store manufacture tetracycline hydrochloride. It is one of the drug exempted from the notification but market name is Subamycin Caplets-500. Ampicillin which again is an exempted drug under the notification is being manufactured by different companies but the same is being sold and marketed with their respective brand names. These drugs have not been given exemption by the sales tax authorities.
7. A comparative chart was handed over to us by the learned counsel for the parties indicating the components of the drugs which is found in the drugs sold in the brand name and the name of the drugs which is exempted under the notification.
8. There is no dispute in substance regarding the fact that the very same drugs which have been notified by the Government for exemption from sales tax are being sold by different companies in their own brand name. The controversy has arisen because of the instructions or guidelines or message which have been communicated to the sales tax authorities by the Commissioner, Sales Tax, that the exemption would only be available with respect to those drugs which were sold in the very same name which find mention in the notification and would not be available to the drugs which are being sold in a particular brand name although they may contain the same drugs.
9. Some controversy has been raised by the State Government that certain drugs which are being sold in the brand name do not contain the same drug exclusively which have been notified for exemption but even then the exemption is being claimed by the petitioners for such drugs also. The learned State counsel has indicated by way of example that Ampicillin is the drug which finds mention in the notification and is exempted as a life saving drug and therefore, Diplin drops manufactured by Dey's Medical Store, which contains ampicillin trihydrate and likewise ampicillin injection cannot be treated to be a drug for the purposes of exemption as no such name find place in the said notification.
10. Learned counsel for the petitioners have drawn our attention to Pharmacopoeia of India, Volume I, Third Edition, which came into force from June 1, 1986, to canvass their arguments that once ampicillin has been notified as an exempted drug the ampicillin capsules, ampicillin in oral suspension and injection are to be treated as exempted as they fall within the same genus and family and they contain the same contents of ampicillin which is exempted.
11. It has been pointed out by the learned counsel for the petitioners that the standard which has been defined for ampicillin are the same as what has been defined for ampicillin trihydrate. Ampicillin trihydrate is trihydrate of (6R) (alfa phenyl-D-glycylamino) which contains not less than 95 per cent 16HN3O4S4 calculated with reference to anhydrous substance. Likewise the ampicillin as oral suspension, the standard has been fixed in the Pharmacopoeia of India as ampicillin for oral suspension which says that it is a mixture of ampicillin or ampicillin trihydrate with one or more suitable colouring, flavouring, sweetening, buffering and suspending agents, preservatives. When reconstituted as directed, it contains not less than 90 per cent and not more than 120.00 per cent of the stated amount of ampicillin, C16H19N304S.
12. The learned counsel has also drawn our attention towards ampicillin injection and ampicillin products emphasising that all these products are ampicillin in one form or the other with varying strength so as to make a life saving drug as effective as need would be. According to the learned counsel for the petitioner such ampicillin which contains the same very ingredients found in the ampicillin itself and there is no change in therapeutic value of ampicillin and if such a drug is made consumable by the patient it cannot be treated as a separate drug, not covered by the notification or exemption. In furtherance of this argument the learned counsel for the petitioner further argued that ampicillin oral suspension is meant for children who are not in a position to take crude ampicillin because of its taste and size. For children, the same is made sweet and as in the tablet form it cannot be swallowed by children, therefore, it is prepared in the form of liquid. Likewise ampicillin injections are made for the patient who requires immediate action of the drug. It has further been submitted that no strength has been prescribed in the notification of ampicillin drug which clears itself for exemption. Since the various forms of ampicillin which are sold in different brand names contains ampicillin as their component but in fact their strength varies looking to the seriousness of the disease and the age of the patient who are required to be administered the medicine, the same cannot be taken out of the exemption notification, on the basis of their form, viz., tablets, capsules, oral suspension or injection or on the basis of the strength of the drug, so long the ingredients remain the same as are mentioned in the exemption notification.
13. Under Section 4(a) of the Act the State can grant exemption to any goods or articles, by issuing of a notification in that regard :
"4. Exemption from tax.--No tax under this Act shall be payable on--
(a) the sale or purchase of water, milk, salt excluding processed and branded salt, newspapers, or any other goods which the State Government may, by notification, exempt ; or
(b)..............
(c)...............
Explanation.--In this section, the expression--
(a) 'water' does not include mineral water, aerated water, tonic water, distilled water or scented water or manufactured or processed water sold in container sealed with a cork or otherwise or in capsule ;
(b) 'milk' does not include condensed milk, milk powder or baby milk."
14. The learned counsel for the petitioner also relied upon Section 8-A(2)(a) to indicate that no person who is not a dealer registered under this Act, shall in respect of any sale or purchase made by or through him, realise from any person any amount by way of sales tax or trade tax on sale or purchase of goods or any amount in lieu of trade tax on sale or purchase of goods by giving it a different name or colour, and no dealer registered under this Act, shall, in respect of any sale or purchase made by or through him, realise from any person, other than a person to whom goods are sold by him, any amount by way of trade tax on sale or purchase of goods or any amount in lieu of trade tax on sale or purchase of goods, by giving it a different name or colour.
15. The argument is that there is a complete embargo for realising sales tax on sale and purchase of any goods by giving it a different name or colour. Thus if the same very drugs are manufactured and are being sold by petitioners, no sales tax can be realised from the customers in such a sale simply because they are coloured and sweetened or different name has been given. Thus if the same very life saving drug which are notified in the notification are being manufactured or sold in the respective brand names by the companies and simply some colouring and sweetening is done for the purposes of making it consumable by the patient, they would not fall outside the scope of exemption on this very ground alone.
16. The learned counsel for the petitioners also urged that the name of the drug or the medicines which is known in common parlance has to be taken into consideration while considering the question of exemption. Further contention is that even a chemical when sold as a medicine would qualify for a lower tax.
17. The term "life saving drugs" has not been defined anywhere in the Act or in the notification.
18. In support of his contention, the learned counsel for the petitioners has relied upon in a case reported in [1983] 53 STC 419 (All.) [Rashtra Deep Laboratory v. Commissioner of Sales Tax (All.)], wherein it has been held that the concept of medicine is not static. It is a changing concept linking with the advancing human knowledge and it is the endeavour to alleviate human suffering. It is also changing with the change in social thinking of a community with a view to solve its problems. Thus viewed, the term "medicine" cannot be confined within the traditional concept of an article which, by itself, is enough to cure a human ailment.
19. This Court has accepted departure from the traditional concept of medicine for purposes of the U.P. Sales Tax Act when it held that tartaric acid which in the broader sense, is a chemical, is medicine, in re : Commissioner of Sales Tax, U.P. v. Fadral Chemical Works Ltd. [1983] 53 STC 425 (All.) [App] ; 1980 UPTC 552 and is taxable as a medicine and not as a chemical.
20. The High Court in this case relied upon a judgment of the apex Court pronounced in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256 (SC) ; AIR 1980 SC 1552 wherein it was ruled that :
" '.........in determining the meaning or connotation of words and expressions describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well-settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted. As sales tax, the liability falls on the seller, who in his turn passes it on to the consumer. As purchase tax, the liability falls directly on the purchaser. A long train of authorities supports that view, and we need refer only to the recent judgment of this Court in Porritts and Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433 (SC) ; AIR 1979 SC 300, in which reference has been made to some of them'. Likewise, in Indo International Industries v. Commissioner of Sales Tax, U.P. [1981] 47 STC 359 (SC) ; 1981 UPTC 481 (SC), the Supreme Court observed :
'It is well-settled that in interpreting items in statutes like the Excise Tax Act or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted..........Having regard to the aforesaid well-settled test the question is whether clinical syringes could be regarded as "glassware" falling within entry 39 of the First Schedule to the Act ? It is true that the dictionary meaning of the expression "glassware" is "articles made of glass" (see Webster's New World Dictionary). However, in commercial sense glassware would never comprise articles like clinical syringes, thermometers, lactometers and the like which have specialised significance and utility. In popular or commercial parlance a general merchant dealing in "glassware" does not ordinarily deal in articles like clinical syringes, thermometers, lactometers, etc., which articles though made of glass, are normally available in medical stores or with the manufacturers thereof like the assessee. It is equally unlikely that a consumer would ask for such articles from a glassware shop. In popular sense when one talks of glassware such specialised articles like clinical syringes, thermometers, lactometers and the like do not come up to one's mind. Applying the aforesaid test...which the assessee manufactures and sells cannot be considered as "glassware".....' "
21. The next case which has been relied upon, is the case reported in [1979] 44 STC 270 (All.) (Commissioner of Sales Tax, U.P., Lucknow v. Gramodyog Karyalaya) which lays down that the word "medicine" has not been statutorily defined and as such, the meaning given in common parlance has to be attributed to it. A medicine is a substance or preparation used in the treatment of diseases and must have curative power so as to make it effective for treatment of ailments. It need not be used in the very form in which it naturally occurs. It will retain its character as a medicine even though some processing is required before it becomes fit for use by human beings or other living creatures.
22. In the case of Porritts and Spencer (Asia) Ltd. v. State of Haryana [1978} 42 STC 433 ; AIR 1979 SC 300, the apex Court considered the question and interpreted the word "textiles" for the purposes of trade tax. The apex Court found that now the word "textiles" as used is not defined in the Act, but it is well-settled as a result of several decisions of this Court of which we may mention only a few, namely, Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286 (SC) ; AIR 1961 SC 1325, Motipur Zamindary Co. (Private) Ltd. v. State of Bihar [1962] 13 STC 1 (SC) ; AIR 1962 SC 660, and State of West Bengal v. Washi Ahmad [1979] 39 STC 378 (SC) that in a taxing statute words of every day use must be construed not in their scientific or technical sense but as understood in common parlance.
Their Lordship further held as follows :
"We do not think that the word 'textiles' has any narrower meaning in common parlance other than the ordinary meaning given in the dictionary, namely, a woven fabric. There may be wide ranging varieties of woven fabric and they may go on multiplying and proliferating with new developments in science and technology and inventions of new methods, materials and techniques, but none the less they would all be textiles......The character of a fabric or material as textile does not depend upon the use to which it may be put. The uses of textiles in a fast developing economy are manifold and it is quite common now to find 'textiles' being used even for industrial purposes."
23. In the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Pio Food Packers [1980] 46 STC 63, the honourable Supreme Court held as follows :
"Section 5A(1)(a) of the Kerala General Sales Tax Act envisages the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be the manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity.
..........
In the present case, there is no essential difference between pineapple fruit and the canned pineapple slices. The dealer and the consumer regard both as pineapple. The only difference is that the sliced pineapple is a presentation of fruit in a more convenient form and by reason of being canned it is capable of storage without spoiling. The additional sweetness in the canned pineapple arises from the sugar added as a preservative. On a total impression, it seems to us, the pineapple slices must be held to possess the same identity as the original pineapple fruit."
24. In the case of Industrial Gases Ltd. v. Commissioner, Sales Tax, U.P., Lucknow [1968] 21 STC 124, the Allahabad High Court found, the question, however, is as to what is a chemical? Now when the word "chemical" is used in a taxing statute with which commercial men have to deal with, it may not always be right to give the technical or dictionary meaning thereof. The meaning of such words requires to be such as is commonly understood by commercial men who use such articles. If strictly technical meaning is given to the word "chemicals" then perhaps many substances such as coal, sugar, salt, saltpetre, etc., would satisfy the meaning and be assessable at single point and not under the general classification. Unfortunately, in the present case there is no evidence as to what meaning commercial men attribute to the word "chemicals". Therefore, there is no alternative but to go to the dictionary meaning of the word. In Shorter Oxford English Dictionary, Vol. 1, the word chemical means "relating or belonging to chemistry ; obtained by chemistry. A substance obtained or used in chemical operations". In Webster's Third New International Dictionary, the meaning given is "relating to applications of chemistry ; as acting or operated by chemical means or synthesized from chemicals : suitable for use in or used for operations in chemistry : having reference to or relating to the science of chemistry."
25. The learned counsel for the petitioners further argued that the list of drugs which has been notified cannot be limited to the specified drugs which are to be sold in the same name but would embrace such life saving drugs also which are being sold in the brand name containing the same ingredients. In all such cases the assessing authority has to decide as to whether the life saving drugs which are being sold in the brand name are a mixture or combination of some more drugs or some more ingredients, which change the therapeutic value of the drug or that all the ingredients, do not fall in the exemption notification, or the life saving drugs contains, that drug also, which is not exempted under the notification.
The notification reads as the "Life saving drugs, that is to say......."
26. The words "that is to say" has been defined in the Stroud's Judicial Dictionary of Words and Phrases, Fourth Edition, Volume 5 ; That is to say (1) "That is to say" is the commencement of an ancillary clause which explains the meaning of principal clause. It has the following properties ;
(1) it must not be contrary to the principal clause ;
(2) it must neither increase nor diminish it ;
(3) but where the principal clause is general in terms it may restrict it ;
27. The learned counsel also drew our attention to the examples given in the dictionary where in the case of "Dean v. Gibson L.R. 3 Eq. 713, it was found by Wood, V.C. that the wide generality of "my personal property" was not cut down by being immediately followed by "consisting of money and clothes".
28. The argument in this regard is that the word "that is to say", no doubt gives the thought that the drugs which have been exempted are named life saving drugs. However, it is not known as to whether the notified drugs embrace all the life saving drugs available in.the State or there are some more life saving drugs but its effect cannot be confined to those drugs alone having the same name and not to those drugs which are the same but are marketed and sold by the company in their own brand names.
29. The last submission made by the learned counsel for the petitioners is that the Commissioner, Sales Tax, was having no authority to issue a command, directions, instructions, guidelines or even the message to the assessing authority or its subordinate authority giving an interpretation to the notification issued by the State Government, confining the grant of exemption to only those "life saving drugs" which are sold in the same very name which finds mention in the notification, and disentitling such exemption to all other "life saving drugs" although they are the same drugs but are sold with a particular brand name. The contention of the learned counsel for the petitioners is that it was a matter to be considered by assessing authority, as to whether the "life saving drugs" which are being sold in the particular brand name entitles itself for exemption under notification or not. By issuing a direction the Commissioner, Sales Tax has snatched away the judicial discretion and the authority of judicial review of the competent authority under the Act. The judicial discretion and judicial wisdom of the assessing authority has been totally taken away and they have been directed not to give exemption without even considering the case of the assessee on merits.
30. In support of its contention the learned counsel relied upon a case reported in [1978] 41 STC 147 (All.) ; 1977 UPTC 81 (Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh). In this case it has been held that the Commissioner cannot issue such a direction or administrative orders which have the effect of overriding the notification.
31. The learned counsel for the State laid emphasis on the fact that only life saving drugs which have been notified are entitled for exemption as the head life saving drugs is followed by words "that is to say". The emphasis is that by using the words "that is to say" the benefit has been limited to specified drugs and the petitioners who also sell the life saving drugs, are not entitled to exemption as their names do not find place in the notified drugs. However, it has not been disputed by the learned counsel for the State and rather it has been admitted by the State in the counter-affidavit which has been taken to be a counter-affidavit in all writ petitions that the therapeutic value of the drugs do not change by putting the brand name or otherwise as has also been urged by the petitioners.
32. The learned counsel for the State relied upon the definition given in the Drugs and Cosmetics Act. In Section 3(b) the drug has been defined and under Section 3(h) it has been said that all those drugs which have not been mentioned in the Pharmacopoeia of India, are patent and proprietary medicines and therefore, the names of those life saving drugs which do not find place in Pharmacopoeia of India or in the list appended to the notification would be deemed to be patent or proprietary drugs and would not be entitled to any exemption.
33. The learned counsel for the State relied upon a decision reported in [1993] 91 STC 408 (SO ; 1994 Suppl. (1) SCC 413 (Rajasthan Roller Flour Mills Association v. State of Rajasthan). Paragraph 16 of the said judgment is being quoted below (page 417 of STC) :
"The learned counsel for the States also appear to be justified in emphasising the meaning and significance of the phrase 'that is to say' occurring in clause (i) of Section 14. The clause reads : '(i) cereals, that is to say,--(i) paddy, (ii) rice, (iii) wheat...' The meaning and purport of the words 'that is to say' is explained by a four-Judge Bench of this Court in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319. Beg, J., speaking for the Bench first quoted the meaning of the words 'that is to say' assigned in Stroud's Judicial Dictionary (Fourth Edition), Volume 5 at page 2753 to the following effect :
'That is to say.--(1) "That is to say" is the commencement of an ancillary clause which explains the meaning of the principal clause. It has the following properties : (1) it must not be contrary to the principal clause ; (2) it must neither increase nor diminish it ; (3) but where the principal clause is general in terms it may restrict it : see this explained with many examples, Stukeley v. Butler (1614) Hob. 171 : 80 ER 316.' "
34. The argument advanced is that the words "that is to say" would exclude any other life saving drugs which is not notified in the notification. To strengthen this argument, the learned counsel for the State argued that "ampicillin" trihydrate, cannot be treated to be the same drug as ampicillin, and therefore, the contention of the petitioners that "ampicillin" trihydrate contains ampicillin only more hydrate compound that is water would not entitle it for exemption. Likewise he argued with respect to other preparation of ampicillin in the form of ampicillin oral suspension, capsules, injection, etc.
35. In [1987] 61 Comp Cas 663 (SC) ; (1987) 1 SCC 424 (Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd.), it has been held that:
"33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and every thing is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the court construed the expression 'prize chit' in Srinivasa and we find no reason to depart from the court's construction."
36. The argument is that the statute should be construed after ascertaining legislative intention and in the context and scheme of the Act.
37. The case reported in [1996] 101 STC 1 (SC) ; (1996) 1 SCC 108 (State Level Committee v. Morgardshammar India Ltd.). It has been brought to the notice by the learned counsel for the purposes of establishing that the taxing statute and the exemption provisions should be strictly construed. The question in this case was that the respondent's unit qualifies as a "new unit" within the meaning of Explanation (i) to Sub-section (2) of Section 4A of the U.P. Sales Tax Act. Their Lordships of the Supreme Court after considering the case of Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh [1981] 48 STC 411 (SC) ; (1981) 3 SCC 578 held that, "the notification should hot only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context. This Court reiterated that the expression should be construed in a manner in which similar expressions have been employed by those who framed relevant notification. The court emphasised the need to derive the intent from a contextual scheme". The apex Court agree with the above submission.
38. Further reliance was placed by the learned counsel for the State in the case, Calcutta Jute Manufacturing Co. v. Commercial Tax Officer reported in [1997] 106 STC 433 (SC) ; (1997) 6 SCC 262. In this case the question raised was as to whether the society is liable to pay sales tax under Section 10A of the Bengal Finance (Sales Tax) Act, on the turnover of the tax payable thereon under Section 6-B of the Bengal Finance (Sales Tax) Act the High Court on admission granted interim relief by injuncting West Bengal Government from collecting such tax on the turnover but ultimately dismissed the writ petitions. Against this order the appeals were filed. The apex Court dismissed all the appeals after considering the view taken by the West Bengal Taxation Tribunal. The learned counsel for the State relied on paragraphs 10 to 15 of the said judgment wherein the Supreme Court explained the ratio of constitution Bench in J.K. Synthetics Ltd. v. Commercial Tax Officer [1994] 94 STC 422 ; (1994) 4 SCC 276 and held that the provision in the taxing statute providing for levy of interest on failure of the dealer to pay tax due under the particular Act should not be strictly construed but should be so construed so as to effectuate and not defeat the object and purpose of the Act.
39. Their Lordships also held that the State is empowered by the Legislature to raise revenue through the mode prescribed in the Act so the State should not be sufferer on account of the delay caused by the tax payer in payment of the tax due. The provision for charging interest would have been introduced in order to compensate the State (or the Revenue) for the loss occasioned due to delay in paying the tax and after taking into consideration, the judgment of Supreme Court passed in the case of Commissioner of Income-tax, A.P. v. M. Chandra Sekhar [1985] 151 ITR 433(SC) and Central Provinces Manganese Ore Co. Ltd. v. Commissioner of Income-tax [1986] 160 ITR 961 (SC), their Lordships of the apex Court held that while interpreting such provision in the taxing statute a construction which would preserve the purpose of the provisions must be adopted.
40. It is well-settled that in interpreting a taxing statute normally, there is no scope for consideration of principles of equity. It was so said by Rowlatt, J., in Cape Brandhy Syndicate v. Commissioner of Inland Revenue (1921) 1 KB 64.
"In a taxing statutes one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
41. So far the question of issuing a direction, instruction, guidelines, or message by the Commissioner of Sales Tax in the instant case apprising the assessing authority that the exemption of sales tax would not be available to those "life saving drugs" whose names do not find place in the notification and are sold by brand names, the learned counsel for the State argued that this was neither an order, direction or a guideline or instructions but simply an article published in a departmental magazine. This view has been expressed by the Commissioner, Sales Tax, himself.
42. On the strength of the authorities cited from both sides we proceed to decide the controversy in the following manner :
After giving anxious consideration to the arguments raised by the learned counsel for the parties we find that the Commissioner, Sales Tax, had no authority to either issue a directions, instructions, guide-lines or message or even suggestion to the Assessing Authority or the subordinate authority who has to deal with the matter of assessment, impressing upon them in any manner that the "life saving drugs" which have been notified if are being sold in the brand name of the respective companies would not be entitled for exemption.
43. We have yet to see, a assessing authority which is subordinate to the Commissioner, Sales Tax would have courage to go beyond the wishes of Commissioner, Sales Tax, because that may not only make him liable for adverse remarks or some punitive action but would also make him open for submitting explanation as to why he has caused loss to the State revenue by granting such exemption when the things were made clear in this regard, therefore, the contention of the learned State Counsel that the aforesaid guide-lines were not binding on subordinate authorities and was only a view expressed by the Commissioner, Sales Tax, in the magazine does not stand to reason.
44. Besides this in the case of Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh reported in [1977] 41 STC 147 (All.) ; 1977 UPTC 81, it has clearly been held that the Commissioner cannot issue such direction or instructions or guidelines which have an overriding effect on the notification.
45. The matter was to.be considered by the assessing authority and it on the strength of the evidence which may be brought by the assessee before the assessing authority, it is established that life saving drug so being sold under the brand name is entitled for exemption, under the notification, the exemption could have been granted. But in case the assessing authority finds that it is not the same life saving drugs which is being sold in the brand name the assessing authority could refuse the exemption. The message or guidelines issued by the Commissioner undoubtedly interferes in the judicial discretion and the judicial action of the assessing authority which cannot be protected under law.
46. The Commissioner, even otherwise was having no occasion to interpret the notification as he was not dealing with any such dispute, either in his appellate capacity or otherwise. The Commissioner had no authority, otherwise, to guide the subordinate authorities, by his own personal view, in the matter of taxation or exemption, under the notification.
47. So far the arguments raised by the learned counsel for the petitioner, that the object and purpose of the notification is to be seen we find that it is admitted case of the petitioners as well as the State that the object and purpose of the said notification granting exemption under Section 4(a) of the Sales Tax Act is to provide life saving drugs at a cheaper rate to the patient/customers as by means of such an exemption the burden of sales tax is being removed from the sellers or the customers as the tax is to be collected from them.
48. In this light the arguments raised by the learned counsel for the State that the companies who are selling these life saving drugs in their brand name are selling them in the market at higher price and earning profits and therefore, they cannot be given exemption, as any such exemption would be contrary to the object and purpose of the notification, we find that the same runs counter to the object, for which exemptions have been granted, viz., to provide life saving drugs at cheaper rates to the consumers. In case the life saving drugs which are being sold in a particular brand name, on higher rates, the burden of sales tax, will further enhance its price, so far the consumer is concerned, which would defeat the very purpose of exemption.
49. It is also of common knowledge that a consumer who is prescribed a medicine in its "brand name" by a physician or doctor would purchase the very same medicine carrying the same brand name and will have to pay the tax.
50. If the argument of the learned counsel for the State is accepted that it is because of higher profit which is being earned by the companies by selling these very life saving drugs at higher rates and therefore, they are not entitled for exemption is taken to be correct, the effect of the same would be that instead of taking any action against such companies who are earning such profits the burden would be on the shoulders of the consumers and they would be punished by paying the sales tax which would be included as an additional cost of the same very drug having no fault of their own. It is common knowledge that whatever medicines or drugs are prescribed by a doctor or physician under whose treatment the patient is continuing, the whole endeavour of the person is always to have that very medicine, may be in the brand name or otherwise. The poor patient and the consumer thus would be adversely affected if such a faulty approach is taken by the Government and the purpose of granting exemption to life saving drugs would be defeated.
51. The contention of the learned counsel for the petitioners is that they are selling the very same drugs, i.e., "life saving drugs" which find mention in the Pharmacopoeia of India with the same ingredients which have been exempted under the notification but for adding some colouring and sweetening ingredient, for the purposes of making a drug consumable to the patient and for the strength which is required for a particular disease at a particular stage and therefore, simply because they are being sold in the brand name cannot be refused exemption. We are of the view that this matter shall require consideration by the assessing authority and in case the assessing authority comes to the conclusion that life saving drugs which have been notified are being sold in the brand name with no other additional drug or compound which is not the subject-matter of exemption under notification and sweetening and colouring does not change therapeutic value of drug or medicine then it would be possible for the assessing authority to consider it in the light of the exemption under the notification and grant exemption in case he is satisfied about the ingredients or the components of the drugs.
52. The notification itself says "life saving drugs" "that is to say", which means that the life saving drugs which have been enumerated in the list are exempted from tax, even if, the words that is to say are taken in restrictive meaning confining it to the drugs mentioned in the notification, we cannot hold that if those very drugs with the same ingredients are being sold in its brand name with no change in their therapeutic value, the same would come out of the exemption as provided in the said notification. It is also clear that it is settled law as indicated in the earlier part of the judgment that it is the name of the article which is used in common parlance, which is relevant for the purpose of taxation.
53. In Bhola Prasad's case reported in AIR 1942 FC 17, the occasion arose for interpretation of the word "that is to say". It was held that entry 31, List II, were explanatory or illustrative words and not words either of amplification or limitation. The same view was taken by the Privy Council in Megh Raj v. Allah Rakhia reported in [1947] FCR 77 where it was held that the words "land, that is to say..." in entry 21, List II, were not words of limitation but of explanation or illustration.
54. The argument of the learned counsel for the State is that the taxing statute must be construed strictly cannot be disputed. However, in view of various pronouncement made by the different High Courts as well as the Supreme Court, a reference to which has been made in the preceding paragraphs of the judgment. It is clear that while interpreting even the taxing statute the principle and the object of the Act has to be kept in mind and that it has to be seen in the light of the scheme of the Act and the context thereof.
55. Section 4(a) of the Act is a provision which gives exemption from trade tax to certain items articles or goods. The said provision gives power to the State to grant exemption by means of notification with respect to any other goods which are otherwise not entitled for exemption under Section 4-A or Section 4(a). The sale or purchase of water, milk (salt excluding processed and branded salt), newspapers have already been exempted under the said provision and thereafter the State Government has been vested with the power to grant exemption by issuing a notification with respect to any other goods.
56. From the scheme of the Act and various amendments which have taken place in Section 4(a) it is clear that, salt excludes processed or branded salt. This exclusion was introduced by means of amendment carried through U.P. Act No. 11 of 1997 by virtue of which the word "salt" was substituted by the present phraseography.
57. Likewise the words and figures "motor spirit, diesel oil, or alcohol" as defined in the United Provinces Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939 were omitted by U.P. Act No. 31 of 1995. The term water and milk used in this section namely Section 4(a) were also explained by means of explanation attached to the section, which meant that water does not include (mineral water, aerated water, tonic water, distilled water) scented water or manufactured or processed water, sold in container sealed with a cork or otherwise or in capsule and the milk does not include condensed milk, milk powder or baby milk.
58. If we interpret the aforesaid provision with the intention of the legislature it becomes crystal clear that exemption has been granted earlier to all kind of salt, but subsequently by means of amendment in 1997 this exemption was taken away from processed or branded salt. Likewise the explanation attached to the section also qualifies water and milk which are not entitled for exemption.
59. The power which has been given to the State to grant exemption with respect to any other goods, cannot be said to be qualified by earlier part of the provision. Section 4(a) on the one hand, itself expected certain articles and goods and on the other hand gives plenary power to the State Government to grant exemption to any other goods. Legislature was conscious of the said provision and therefore expressed its desire by excluding certain form of milk, salt and water from exemption clause by making the aforesaid amendment. Thus the Legislature excluded those products or goods which according to the legislature were not entitled for exemption. This has been done by means of amendment in the Act itself. Simply because processed and branded salt has been excluded from the exemption clause under Section 4(a) it would not mean that branded drug would also stand excluded. By reading the provisions of Section 4(a) it cannot be inferred or even imagined that the State Government cannot exempt any drug which is sold in the brand name. The powers of the State Government are plenary and this is for the State Government to decide as to which article or goods are to be exempted from the tax.
60. Doctrine of ejusdem generis is not applicable in the case. The words "on any other goods" in Section 4(a) are not dependent upon the words which preceded these words.
61. Thus we are of the view that the contention of the learned counsel for the State that since the processed and branded salt has been excluded from exemption notification, the drugs which are sold in the brand name automatically stand excluded from exemption notification cannot be accepted. The crux of the matter is that in case the life saving drugs are the same which have been specified in the exemption notification they cannot be excluded from the exemption notification simply because they are being sold in their own brand name by the respective manufacturers.
62. The arguments of the learned counsel for the petitioners also finds support in the light of the provisions of Section 8-A of the Act as it specifically prohibits that no dealer registered under this Act shall, in respect of any sale or purchase made by or through him, realise from any person any amount by way of (trade tax on sale or purchase of goods) or any amount in lieu of (trade tax on sale or purchase of goods) by giving it different name and colour and no dealer under this Act shall in respect of any sale or purchase made by him or through him realise from any person other than a person to whom goods are sold by him, any amount by way of (trade tax on sale or purchase of goods) or any amount in lieu of (trade tax on sale or purchase of goods) by giving it a different name or colour.
63. Equally fallacious is the argument of the learned counsel for the State that the term drug has been defined in Section 3(b) of the Act and drugs which do not find mention in the Pharmacopoeia of India should be treated to be under Section 3(h) and therefore, the exemption cannot be granted to them.
64. While advancing this argument, the learned counsel for the State could not satisfy the court as to why these life saving drugs which contain the same contents and ingredients which are the subject-matter of notification for exemption and the names which find place in the Pharmacopoeia of India which admittedly do not have any changed therapeutic value would stand excluded from the exemption so as to dis-entitle them the exemption of sales tax. The argument is wholly misconceived and does not fall from any definition which is being relied upon by the learned counsel for the State.
65. It is also not disputed that under the notification the strength of the drugs has not been mentioned. This clearly indicates that while issuing notification for exemption it was clearly in the mind that the drugs of different strength would be needed for different category of patients, e.g., for a child the life saving drugs should be of a lesser strength. It should not be in tablets or capsules which will create difficulty in swallowing the drug by a child, the taste and colour should be such so that the child can consume it happily. If oral suspension is made of such life saving drug which has been mentioned in the notification no exception can be taken and by making the life saving drug consumable for a child would not itself dis-entitle it from exemption. Likewise in acute and serious cases the same very drug may be required of higher strength for immediate action for which it can be administered through injection.
66. We, therefore, find after scrutinising the arguments and considering the judgments cited by both the side and also the situation emerging from the facts that the Commissioner, Sales Tax was not competent to issue such a direction, instruction, guidelines or message which would divest the subordinate authority its judicial discretion compelling the assessing authorities or subordinate authorities to the Commissioner to follow the suggestion made by him. This would amount to judicial interference in the matter of assessment which is to be done by the competent authority by applying his own judicial mind.
67. Besides this, the issuance of such a guide-lines, message, or instructions by whatever names it may be called was not at all proper as the Commissioner was not dealing with any such matter either in appeal or otherwise and was also having no material before him so as to arrive on such a conclusion and give his interpretation regarding notification of exemption. In this regard it is also clear that once such a message or directions has been communicated by the Commissioner to the assessing authority, there is no possibility of the assessing authority to take a different view.
68. It has been brought to our notice that in this bunch of writ petitions, many writ petitions have been filed against issuance of notice and in some cases the assessment have been made and appeals are pending. We find that the notices which have been issued to the assessee clearly indicates that since the drug in question which have been manufactured and sold by the petitioners in their names do not find place in the list, therefore, they are not entitled for exemption.
69. In this back ground the assessees were having no reasonable opportunity of defending their case by asserting that life saving drugs which are being sold in their brand names were also entitled for exemption. The assessment orders also suffers from the same very vice, as neither the assessing authority had any option which issued the notice nor the appellate authority was free to exercise its own judicial discretion or apply its mind to find out as to whether the life saving drugs, which may contain the same contents and ingredients, which are exempted under the notification, would also be entitled for exemption or not.
70. Thus the whole process of issuing, notice, making assessment and consideration of pending appeals is vitiated as none of the authorities had either applied their mind to the question as to whether the drugs which are being sold in their brand name would be entitled for exemption or not, neither they were in a position to determine this question in view of guide-lines, instructions or message conveyed by the Commissioner, sales tax, the authorities were not at liberty to find out as to whether the life saving drugs which are being sold in their brand names qualify for exemption in view of their ingredients and components which make the drugs.
71. For the reasons stated we were inclined to quash the notices issued to the petitioners but finding that the notices which have been issued may not be happily worded but certainly give a right to the assessees to file their reply and therefore, we provide that in response to the notices issued to the assessees they would be at liberty to submit before the assessing authority that they were entitled for exemption of sales tax in view of the fact that the life saving drugs which are being sold in their respective brand names are being manufactured out of the same components and contents and the ingredients which have been specifically exempted by the Government under exemption notification. On such a reply of the assessees the assessing authority shall irrespective of the wordings of the notice, shall consider the case of the assessees in the light of the observations made in the judgment and shall take independent decision as to whether the exemption which is being claimed by such assessees could be granted to them, by finding out on the basis of such evidence which may be required for the purpose as to whether the drug which is being sold in a particular brand name consists of those very ingredients or drugs which have been granted exemption under notification dated March 31, 1992. After considering as to whether such drug which has been sold in the brand name is entitled for exemption or not the authority shall pass orders in that regard. The assessing authority shall permit the assessee reasonable time, afresh for submitting the reply to the notices and thereafter proceed in the light of the observations made in this judgment. Since the matters are quite old, therefore we provide that the assessees shall submit their reply to the show cause notice within a period of six weeks from today. In case the petitioner fails to submit reply within the aforesaid period it would be open to the assessing authority to proceed with the case in accordance with law.
72. Since fresh opportunity is being given to the assessee for filing a reply the assessments orders made, the assessment orders passed, cannot legally stand and therefore, in all such cases where the assessments have already been made the same are hereby quashed. As a consequence of quashing of the assessment orders the appeal preferred against those orders become redundant and meaningless and as such the appellate authority is prohibited from proceedings with those appeals any further.
73. Before parting with the judgment, we would like to mention that the learned counsel for the State has brought to our notice that in Writ Petition Nos. 913, 912(MB) of 1993, 1727(MB) of 1993 and 1193 and 1194(MB) of 1996 have been filed by different companies and firms but in all these writ petitions the affidavit filed in support of the writ petition is of the clerk of the counsel who deposed himself as pairokar of the petitioners. In none of the affidavits the identity of the pairokar has been disclosed of being clerk of the counsel. The Rules of the court provide that any person who is conversant with the facts of the cases can file affidavit in support of the writ petition. It is wholly doubtful that in the matter like the present one where complicated questions of composition of drugs are involved, the clerk of the counsel who has no specialised knowledge of the drug can be well conversant with the facts of the case. If such facts are brought to the notice of the court the same cannot be left unnoticed. It is for maintaining the judicial discipline and keeping the trends of judicial system intact such an action should be deprecate.
74. We would have dismissed these writ petitions simply on the ground that the affidavits filed in support of the writ petition was not sworn by a person who can be said to be well conversant with the facts and an effort was made to mislead the court by not disclosing the basic status of the pairokar, viz., that he is the clerk of the counsel who filed writ petitions but at this juncture the learned counsel tendered unconditional apology for this mistake. But for the fact that the learned counsel tendered unconditional apology for mistake and also because in all the writ petitions, a common question is involved we have, therefore, refrained ourselves from passing any order against the interest of the petitioners of these writ petitions also.
The writ petitions are accordingly allowed. No order as to costs.