STATE OF GOA AND OTHERS versus LEUKOPLAST (INDIA) LTD. ETC.

Citation: [1997] 2 S.C.R. 516 · Decided: 27-02-1997 · Supreme Court of India · Bench: S.C. SEN · Disposal: Case Allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
STATE OF GOA AND OTHERS 
v. 
LEUKOPLAST (INDIA) LTD. ETC. 
FEBRliARY 27, 1997 
B 
[SUHAS C. SEN AND SUJATA V. MANOHAR, JJ.] 
Central Sales Tax Act, J95(r-Section 8(2-A)-Goa Local Sales Tax 
-
Act-Section JO and schedule II, Entry 77--Goa Governn:ient Notification 
c 
No. 14/41/81-FIN (R & C) dated 28.8.1981-Notification No. 515/1987 (R 
' 
and C)S-Whether products manufactured by Assessee under licence from 
Drng Controller are "drngs anc medicines" within the purview of notification 
No. 14/41/81 FIN (R&C) and No. 515/87 (Rand C)-8 and as such assessee 
entitled to refund sought-Held : Drngs and medicines not defined either in 
Central Sales Tax Act or Goa Local Sales Tax Act-Issuance of licence by 
D Drng Controller not decisive of the question-To be ascertained on the basis 
of medicinal content-Curative effect-Ordinary Commercial sense of the 
products-Basically questions of fact-Can be decided only by statutory 
authority-Not by High Court in Writ petition under Article 226 of Constitu-
tion-Assessee can not bypass statutory authorities for challenging assess-
E ment-Decision of High Court holding products to be 'drngs and medicines' 
set aside-With liberty to assessee to agitate before proper statutory authority 
within the specified period of time-<:onstitution of India, Art. 226. 
The assessee company had been manufacturing different kinds of 
plasters, dressings and bandages under a licence granted by the Drug 
F 
Controller under Drugs and Cosmetics Act, 1940. The goods were liable to 
local sales tax at the rate of six percent and Central Sales Tax at the rate 
of four percent prior to 1.11.1981. By notification No. 14/41/81--flN (Rand 
C) dated 28.8.1981, drugs and medicines were exempted from the levy of 
local sales tax in excess of three percent. By another notification No: 5/5/87 
G 
(Rand C)-8, the goods were totally exempted from levy of local Sales Tax. 
The assessee company had been paying Central Sales Tax at the rate of 
four percent and local sales tax at the rate of six percent from 1.11.1981 
I 
to 1.4.1987. They made representations to the Assistant Sales Tax Officer 
praying for refund of the excess tax paid on their goods which fall under 
"drugs and medicines" as "drugs and medicines" were liable to local and 
H central Sales Tax at the rate of three percent on the from 1.11.1981 to 
516 
-
STATE v. LEUKOPLAST(I)LTD. 
517 
1.4.1987. They also filed revised Sales Tax returns for the disputed period. A 
The Assistant Sales Tax Officer rejected their claim for refund vide his 
order dated 24.12.1987 and also made order~ of assessment for the period 
from 1.1.1983 to 31.12.1983 without giving any exemption. The assessee 
company filed two writ petitions in the High Court for setting aside the 
assessment orders and also claiming refund on the ground that it was B 
entitled for the refund of the tax paid under mistake of law and collected 
by the State withoqt thr authority of law. The High Court allowed both the 
petitions holding the products of the company to be drugs and medicines 
and therefore the assessee was entitled for the refund claimed. The State 
filed the present appeal against the judgment of the High Court. 
Dismissing the appeal, this Court 
HELD : 1.1. The question whether the products manufactured by the 
assessee can be treated as "drugs and medicines" cannot be answered 
straightway. There is no statutory definition given in the local Sales Tax 
c 
Act or in the Central Sales Tax Act of these terms. It has to be found out D 
how these products are understood and treated in the market. The 
medicinal content of the products, it any, has to be ascertained. Its curative 
function has to be found out. In order to ascertain the same, the questions 
to be decided are, whether the products can be called medicament, whether 
these are used to cure or alleviate or to prevent disease or to restore health E 
or to reserve health or whether these products are treated as 'drugs and 
medicines' in common parlance. These are basically questions of fact, and 
can not be decided by reference to any definition of the Drugs and cosmetic 
Act, 1940 or the product control licence issued by the Drug Controller to 
the assessee under the Act. These can be decided only by the statutory 
appellate authority. [522-C-D] 
F 
Customs and Excise Commissioners v. Beecham Foods Ltd., (1972) 
W.L.R. 241 (H.L.), referred to. 
1.2. The assessee company should not have been allowed to bypass 
the statutor

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