AYURVEDA PHARMACY & ANR. versus STATE OF TAMIL NADU

Citation: [1989] 2 S.C.R. 37 · Decided: 15-03-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A YURVEDA PHARMACY & ANR. 
A 
v. 
STAIB OF TAMIL NADU 
MARCH 15, 1989 
~·· 
[R.S. PATHAK, CJ AND RANGANATH MISRA, J.] 
B 
Tamil Nadu General Sales Tax Act, 1959-Validity of Notifica-
tion dated 4.3.1974 and Tamil Nadu Act No. 23 of 1974 imposing a 
higher levy on two Ayurvedic medicinal preparations-Arishtams and 
Asavas-While all other medicinal preparations under different systems 
of medicines enjoyed a /myer levy. 
c 
i 
Arishtams and Asavas are Ayurvedic preparations which were 
originally subject to a uniform levy applicable to all medicinal prepara-
tions belonging to the different systems of medicine under the Tamil 
Nadu General Sales Tax Act, 1959. Firstly by a notification dated 
4.3.1974, and later, by the Tamil Nadu Act, No. 23 of 1974, the State 
D 
Government singled out Arishtams and Asavas for e higher rate of levy 
of 30% while all other medicinal preparations were subjected to a levy 
of 7%, with a view to curb the abuse of Arishtams and Asavas for their 
+-
alcoholic content hy drink addicts and to eliminate the mushroom 
growth of Ayurvedic pharmacies preparing sub-standard Arishtams 
and Asavas for purposes other than medicinal use. The appellants filed 
E 
writ petitions contending that Arishtams and Asavas manufactured by 
them are essentially Ayurvedic medicines, that the object of controlling 
consumption of liquor is being served by several other existing statutes, 
that there are over 130 Allopathic medicines containing alcohol which 
~ 
are potable, and that therefore, the levy of tax at 30% on Arishtams and 
·~ 
Asavas alone while other medicinal preparations are subjected to tax at 
F 
7% results in an invidious discrimination against the manufacturers of 
those Ayurvedic preparations. The High Court dismissed the petitions. 
Allowing the appeals, 
~-
HELD: The two preparations, Arishtams and Asavas, are medi· 
G 
cinal preparations, and even though they contain a high alcohol con-
tent, so long as they continue to be identified as medicinal preparations 
they must be treated, for the purposes of the Sales Tax Law, in like 
manner as medicinal preparations generally, including those containing 
a lower percentage of alcohol. The appellants are entitled to a refund of 
the ei<cess paid as sales tax. [41H; 42A, CJ 
H 
37 
A 
B 
c 
D 
E 
F 
G 
H 
38 
SUPREME < 'OURT REPORTS 
[19891 2 S.C.R. 
There is no reason why Arisbtams and Asavas should be treated 
differently from the general class of Ayurvedic medicines. It is open to 
the Legislature, or the State Government if it is authorised in that 
behalf by the Legislature. to select different rates of tax for different 
commodities. But where the commodities belong to the same class or 
category, there must be a rational basis for discriminating between one 
commodity and another for the purpose of imposing tax. It is commonly 
known that considerations of economic policy constitute a basis for 
levying different rates of sales tax. For instance, the object may be to 
encourage a certain trade or industry in the context of the State policy 
for economic growth, and a lower rate would be considered justified in 
the case of such a commodity. There may be several such considerations 
bearing directly on the choice of the rate of sales tax, and so long as 
there is good reason for making the distinction from other commodities 
no complaint can be made. What the actual rate should be is not a 
matter for the courts to determine generally, but where a distinction is 
made between commodities falling in the same category a question 
arises at once before a Court whether there is justification for the 
discrimination. In the present case, we are not satisfied that the reason 
behind the rate of 30% on the turnover of Arishtams and Asavas consti-
tutes good ground for taking those two preparations out from the 
general class of medicinal preparations to which a lower rate has been 
applied. [40F-H; 41A-C] 
--!-
Adhyaksha Mathur Babu's Sakti Oushadhalaya Dacca (P) Ltd. 
and others v. Union of India, [196313 SCR 957, relied on. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1868 
of 1974. 
From the Judgment and order dated 2.9.1974 of the Madras High 
Court in Writ Petition No. 2729/1974. 
F.S. Nariman, C.S. Vaidyanathan and K.R. Nambiar for the 
Appellants. 
T.S. Krishnamoorthy Iyer, A.V. Rangam and T.V. Ratnam for 
the Respondent. 
S. Balakrishnan (not present) for the Intervener. 
The Judgment of the Court was delivered by 
AYURVEDAPHARMACYv.STATE

Excerpt shown. Read the full judgment & AI analysis in Lexace.