GENTLE, J. - (1.) THIS is a reference by the Board of Revenue, Bengal, under section 21, sub-section (1), of the Bengal Finance (Sales Tax) Act, 1941. The applicants are the North Bengal Stores, Ltd., who are dealers in patent medicines and medical sundries; they are also dispensing chemists and as such they make up and dispense prescriptions, written by medical practitioners for their patients.
(2.) BY sub-section (1) of Section 4 of the Act, every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum, specified in sub-section (5) of the same section, shall be liable to pay tax on all sales effected after the notified date. By sub-section (5), taxable, quantum, so far as material for the present reference, means :- Clause (a) in relation to any dealer who himself manufactures or produces any goods for sale, 10,000 rupees; Clause (c) in relation to any other dealer, 50,000 rupees. It is common ground that, during the year preceding the commencement of the Act, the applicants' turnover was less than Rs. 50,000 and they are not liable to taxation under clause (c). The Commercial Tax Officer, however, assessed the applicants on the grounds that dispensing chemists are manufacturers and, since the applicants' turnover during the year before the commencement of the Act exceeded Rs. 10,000, they are liable to assessment pursuant to clause (a).
(3.) THE Commissioner of Commercial Taxes, Bengal, and the Board of Revenue, to whom respectively an appeal and a petition for revision were preferred by the applicants, upheld the assessment. The Commissioner expressed the opinion that mixing different medicinal ingredients into an ultimate mixture suitable for use by particular classes of patient consumers according to the manner prescribed by medical men is the manufacture of medicines. The view stated by the Board was that the applicants' business of compounding preparations for use by individual customers is manufacture or production of any entity, different essentially from its ingredients.;