WANCHOO - (1.) THE following Judgment of the court was delivered by
(2.) THESE six petitions under Art. 32 of theconstitution raise a common point and will be dealt withtogether. The main question raised in all these petitionsis whether the State-Governments are entitled to tax the'three Ayurvedic preparations, namely Mirtasanjibani,Mritasanjibani Sudha and Mritasanjibani Sura, which aremanufactured by these petitioners, under the various ExciseAct in force in the respective States. Further points wereraised in the petitions as regards the validity of therestrictions imposed in the matter of the import, export,Possession and sale of these three Ayurvedic preparations.But the learned counsel for the petitioners stated before usthat he was not pressing any other point except one viz.,whether the various State-Governments could tax these threeAyurvedic preparations under the various Excise Acts inforce in the States concerned. We propose therefore to dealwith this point only in the present cases. The case of the petitioners is briefly this. They carry onbusiness as manufacturers of medicinal preparationsaccording to the Ayurvedic system of medicines and among theAyurvedic medicines manufactured by them are these threepreparations. These Ayurvedic preparations are manufacturedby the process of fermentation and distillation inaccordance with the Ayurvedic system of medicinefollowing the formula in standard books known as AyurvedSangraha, Bhaisajya Ratnabali and Arka Prakash. Thesebooks, according to the petitioners, contain extracts fromall authoritative ancient Ayurvedic treatises acceptedthroughout India and are in vogue as Ayurvedicpharmacopoeias in the various States. Though the threepreparations have three different names they are in realityonly one medicine and are prepared according to a singleformula in these books. The petitioners aver that thesethree preparations are manufactured in accordance with thestandard Ayurvedic pharmacopoeias in vogue, in variousStates and are efficacious amongst others in the followingdiseases: -(a) in typhoid fever (Sannipatik Jwara)during collapsed condition;(b) in cholera;(c) in case of loss of appetite to increasepower of digestion;(d) In rheumatism, sciatica etc., and(e) to remove weakness, impart strength andvigour and also as a general tonic andrestorative for convalescent patients. Before the Constitution came into force, all these threepreparations were liable to Provincial excise duty underitem 40 of List II of the Seventh Schedule to the governmentof India Act, 1935. The Constitution however made a changein the three legislative Lists with respect to excise andunder item 51 of List II of the Seventh Schedule the Stateshave the power to levy excise duty on alcoholic liquor forhuman consumption and on opium, Indian hemp, and othernarcotic drugs and narcotics but not including medicinal andtoilet preparations containing alcohol or any substance likeopium etc. Further, under item 84 of List I of theSeventh schedule the Union has the power to impose duties of'excise on tobacco and other goods manufactured or producedin India except (i) alcoholic liquors for human consumptionand (ii) opium, Indian hemp and other narcotic drugs andnarcotics, but including medicinal and toilet preparationscontaining alcohol or any substance like opium etc. Thusthe Constitution took away the power of the States to imposeduties of excise on medicinal and toilet preparationscontaining alcohol or any substance like opium etc and givethat power to the Union. However, Art. 277 of theConstitution provided that `any taxes, duties, cesses orfees which, immediately before the commencement of thisConstitution were being lawfully levied by the government ofany State or by any municipality or other local authority orbody for the purposes of the State, municipality, districtor 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 purposesuntil provision to the contrary is made by Parliament bylaw`. In view' of this Article, the State governmentscontinued to levy excise duties on medicinal and toiletpreparations containing alcohol, opium, etc., till 1957 asParliament bad made no law to the contrary till then. In1955, however Parliament passed the Medicinal and ToiletPreparations (Excise Duties) Act, No. 16 of 1955,hereinafter referred to as the Act) which was brought intoforce from 1/04/1957. We are in the present caseconcerned only with medicinal preparations and a `medicinalpreparation` is defined in s. 2(g) of the Act as including`all drugs which are a remedy or prescription prepared forinternal or external use of human beings or animals and allsubstances intended to be used for or in the treatmentmitigation or prevention of disease in human being oranimals.' Section 3 provides for levy of duties of excise atthe rates specified in the Schedule, on all dutiable goodsmanufactured in India. Section 19 gives power to theCentral. government to make rules to carry out the purposeof the Act and in particular s. 19(2) (xx) gives power tonotify in the official gazette lists of the names anddescriptions of preparations which would fall for assessmentunder any particular item of the Schedule or for regulatingtheir manufacture, transport and distribution`. TheSchedule (omitting the Explanations which are immaterial forpresent purposes) prescribing the duty is in these terms :- JUDGEMENT_622_AIR(SC)_1963Html1.htm The central government framed Rules under the Act in1956 and the administration of the Act and the Rules wasentrusted to State-Governments. A list of medicinalpreparations, which were capable of being used as ordinaryalcoholic beverages, was also published along with the Rulesand r. 65 provides that `until a standard AyurvedicPharmacopoeia has been evolved by the central government,the pharmacopoeias that are in vogue in the various statesshall be recognised as standard Ayurvedic pharmacopoeias`.The contention of the petitioners is that these threeAyurvedic preparations conform to the definition ofmedicinal preparations given in s. 2 (g) of the Act.Further, in the Schedule to the Rules, Mritasanjibani Surawas listed as a medicinal preparation in 1957. Further in1958, Mritasanjibani and Mritansanjibani Sudha were alsoadded under the head `medicinal preparations in the Scheduleto the Rules as the three are really one and the samemedicine. The Act and the Rules came into force from 1/04/1957 in accordance with the provision of a. 1 (3) of theAct, which gives power to the central government to enforcethe Act on such date as it may, by notification in theofficial gazette, appoint. The petitioners case is thatthereafter they began to pay duties of excise on these threemedicines under item I inthe Schedule to the Act at the rate of Rs. 17.50 nP pergallon of the strength of London proof spirit, as thesepreparations were considered medicinal preparationscontaining alocohol which were prepared by distillation orto which alcohol was added and which capable of being usedasordinary alcoholicbeverages. This continued till August1960 when the central government purporting to act under s.19 of the Act amended the Rules and omitted from theSchedule to the Rules two of the three preparations, namely,Mritasanjibani and Mritasanjibani Sudha. Further inDecember, 1960, the central government again amended theRules and omitted from the Schedule to the Rules the thirdpreparation (namely, Mritasanjibani Sura). Consequently,various State governments began demanding duties of exciseon these there preparations at rates which are much higherthan the rate of Rs. 17.50 nP prescribed in the Schedule tothe Act. The contention of the petitioners is that on thecoming into force of the Act, the levy of excise duties onthese medicinal preparations fell within item 84 of List I,with the result that thereafter it is not open to State-Governments to levy duties of excise on these preparation inaccordance with the various Excise Acts in force in theStates. It is further contended that if these preparationsin fact come within the definition of `medicinalpreparation` in s. 2 (g) of the Act and are covered by theSchedule to the Act, the omission of these threepreparations from the list attached to the Rules would makeno difference and would not give power to the State-Governments to tax them under the various Excise Acts inforce in the States concerned.
(3.) THE petitioners further say that though r. 68 of the Rulesprovides for a Standing Committee to advise the centralGovt. on all matters connected with the technical aspects ofthe administration of theAct and the Rules, and in particular, on the questionwhether (i) a particular preparation is entitled to betreated, or to continue to be treated, as a genuinemedicinal or toilet preparation for the purposes of the Act,and (ii) if so, whether it should be treated, or continue tobe treated, as a restricted or an unrestricted preparations,it was not open to the said Committee even if it wasconsulted in this matter to advise the government that thesethree preparations were not medicinal preparations, if infact they are medicinal preparations as defined in s. 2 (g).It is therefore urged that even if the central governmentacted on the advice of the Standing Committee when itomitted these three preparations from the list appended tothe Rules, it had no power to do so if these three prepara-tions are in fact medicinal preparations within the meaningof s. 2 (g) of the Act. The petitioners therefore pray foran appropriate writ, direction or order directing theCentral government not to give effect to the notificationsof August and December 1960, removing these threepreparations from the list appended to the Rules and alsofor a direction to the State-Governments not to levy duty onthese preparations under the respective Excise Acts in forcein the various States and prohibiting the State-Governmentsfrom collecting duties of excise on the said medicinalpreparations in excess of the rates fixed by the Act and torefund the amounts of duty already collected in excess ofthat rate. The petitions have been opposed by the central governmentand by the various State-Governments concerned. The maincounter-affidavit has been filed on behalf of the centralGovernment and the various State governments have adoptedthat counter-affidavit with some additions. The maincontention on behalf of the respondents is that these threepreparations are not admitted to be `medicinal preparationscontaining alcohol` withinentry 84 of List I, by reason of these preparations notbeing mentioned in any recognised Ayurvedic Pharmacopoeia.It is also not admitted that they are prepared according tothe prescribed specifications referred to by the petitionersby utilising the proper ingredients and manufacturedaccording to the recipes or directions given in the threeAyurvedic text books relied upon by the petitioners.Farther, it is denied that these three preparations conformto the definition of s. 2 (g) of the Act. It is also notadmitted that they are remedies, muchness efficaciousremedies for any human ailment. It is further urged thatthe central Government has been empowered to decide on theadvice of the Standing Committee whether any preparationshould be treated or continue to be treated as a genuinemedicinal and toilet preparation for the purpose of the Actor whether it should be treated or continue to be treated asa restricted or unrestricted preparation. Further, theCentral government can according to the advice of theStanding Committee, amend the Schedule of the medicinal andtoilet preparations of restricted category from time to timeby notifications and if a particular preparation is found tofall out-side the scope of the Act the State-Governmentswould be competent to levy duties of excise on it under theExcise Acts in force in the various States. It is contendedthat the action of the central government in omitting thesethere preparations from the list to the Rules framed underthe Act was based on the advice of the Standing Committeewhich was of the opinion that these were not genuinemedicinal preparations. Consequently, they were omittedfrom the list appended to the Rules under the Act and theAct did not apply to them with the result that the StateGovernments were free to subject them to duties of exciseunder the various Excise Acts in force in the variousStates.;