U.L. Bhat, C.J.
The following question of law has been referred to the High Court by (he Appellate Tribunal at the instance of the Revenue u/s 44 (1) of the M. P. General Sales Tax Act. 1958 (for short. the Act):
Whether under the facts and circumstances of the case, the Board of Revenue was justified in holding B. H. C.50% W. D. P. as medicine and holding In making then liable for exemption under rule 24 of the M.P. General Sales Tax Rules on the Strength of certificate issued by the Director of Health Services. M. P.
The assesses in an undertaking which manufactures and sells pesticides and insecticides. The period of assessment is 1.4.1980 to 31.3.81. The Assessing Officer treated benzene hexachloride 50% W. D. P. insecticide and declined to treat it as medicine (or purposes of Item No. 16 of Part IV. Schedule II of the Act read with Rule 24 of the Rule framed under the Act. The Appellate Authority confirmed the order, hut the Tribunal, in further appeal, held the article to be medicine and since the Joint Director. Health Services has certified that consignments of the article were purchased by the Govt. for bona fide used in eradicating malaria under the National Malaria Eradication Programme, the sales were exempt from payment of sales tax under Rule 24 of the Rules. At the instance of the Revenue, the Appellate Tribunal has made this reference.
There is no dispute that benzene hexaehloride 50% W. D. P. is used in eradication of malaria by spraying it in marshy places and water logged places evidently for contorlling or destroying lilies which carry malaria germs. It is nobody''s case that benzene hexaehloride 50% W. D. P. is either consumed internally or applied externally on the body of human beings or animals for any meidcinal purpose or for prevention or cure of malaria. Section 6 of the Act declares inter alia that tax payable by a dealer under the Act shall be levied on the taxable turnover relating to goods specified in schedule II at the rate mentioned in the corresponding entry in column (3) of the said Schedule. Schedule II is in several parts. Entries lb and 18 of Part IV read thus :
16. Drugs and medicines.........5%
Insecticides and...........5%
pesticides.
Rule 24 deals with deduction from turnover. In determining the taxable turnover the turnover in respect of sales specified in various clauses of the rule shall be deducted. Clause (8) (ii) of the rule read as follows :
Sales of medicines medical surgical veterinary instruments or equipment to :
(a) Any officer of the State Government or Central Government;
(b) The Chief Executive Officer by whatever name called of a local body:
(c) the Indian Red Gross Society or any branch thereof :
provided that in respect of every such sale the officer of the State Government or Central Government, the Chief Executive Officer of the local body, the Secretary of the Indian Red Cross Society or any branch thereof, as the case may be. certifies that the medicines, the medical. surgical or vetarinary instruments or equipment are intended for bona fide use in any hospital or dispensary including a veterinary hospital or dispensary located within the State in his jurisdiction or for free distribution in connection with the scheme for the prevention, control or treatment of disease." A colse examination of the rule indicates that in order to claim exemption under clause (8) the following conditions must be satisfied;
(i) the sales must be of medicines, medical, surgical, veterinary instruments or equipment:
(ii) the sales must be to any officer of the State or Central Govt. Chief Executive Officer of a local body or Indian Red Cross Society: and (iii) the officers referred to above or the Secretary of the Society shall certify that the medicines and equipments:
(a) are intended for bona fide use in any hospital or dispensary in the State in his jurisdiction: or
(b) the medicines or equipments are intended for free distribution in connection with the scheme for prevention, control or treatment of the disease.
The Joint Director Health Services has certified that the purchases of B. H C. 50% W. D.P were made to the assessee and the same is used bona fide to eradicate malaria under the National Malaria Eradication Programme and the sales are exempt from payment of sales lax under rule 24. The certificate nowhere states that B. H. C. 5% W. D. P. is a medicine. The Appellate Tribunal has held that the article is medicine, since it is used to eradicate malaria. The conclusion is controverted by the Revenue according to which B. H. C. 50% W. D. P. is an isnesticide coming under the provisions of the Insectisides Act. 1968 and is not medicine coming under rule 24 (ii) (a), or Drugs and Cosmetics Act. 1940 or the Medicine and Toilet Preparations (Excise Duties) Act, 1955. (No. Id of 1955). It has to be noticed that the expression "madicine" or ''insecticide'' have not been defined in the Act or the Rules. Drugs and Cosmetics Act 1940 is a Central Art which also does not define "medicine." but defines "drugs" as follows, in section 3 (b):
"drug" includes -
(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or discorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes:
(ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the official Gazette.
The Durgs (Prices Control) Order, 1987 defines "drugs" in the same way. First Schedule contains list of hulk drugs required for the National Health Programme Items relating to National Filaria Eradication Programme mentions drugs as chloroquine. emodinqunine. quinine, primethemin and sullemothopyrezine. Second Sehedule also contains list of hulk drugs including benzathine henzylpencillin. eloxacillin. but not hen/end hexachloride.
The Medicinal and Toilet Preparations (Excise Duties) Act, 1955 defines medicinal preparation "and"'' toilet preparation". Medicinal Preparation is defined this in section 2 (g):
2 (g).''medicinal preparation" includes all drugs which are a remedy or prescription prapered for interal or external use of human beings or animals and all substances intended to he used for or in the treatment, mitigation or prevention of disease in human beings or animals Section 2 (k) defines toilet preparation'' thus;
2 (k) toilet preparation'' means any preparation which is intended for use in the toilet of the human body or in perfuming asperal of any description, or any substance intended 10 cleanse. improve or after the complexion, skin, heir or teath. and includes deodorants and perfumes.
Our attention is invited to the decision of the Rajasthan High Court in Murari Brothers vs. Asstt. Commercial Taxation Officer, 1981 48 S.T.C. 286 under the provisions of the Rajasthan Sales Tax Act. 1954. It was held that kejal meant for daily use as a cleansing agent, falls within item 59 of the schedule to the notification issued under the Act relating to ''perfumery, cosmetic and toilet articles'' and cannot he considered as medicine.
The Court referred to the repeated observetions of the Supreme Court that when the words employed in a taxing statute are words of every day use, thay must be construed not in any technical or scientific sense, but they must be understood as used in perlance and in commercial language."
The Insecticides Act 1968 is intended to regulate activities in connection with Insecticides. Section 3 (e) defines insecticide as :
(c) insecticide" means
(i) Any substance specified in the schedule'' or
(ii) such other substances (including fungicides and weedicides) as the Central Government may. after consultation with the Board, by notification in the Official Gazette include in the Schedule fom link-to time or
(iii) any preparation containing any one or more of such substances.
The Schedule lakes in B. H. C. (Benzene Hexachloride) (1.2. 3. 4. 5. 6 -hexachlorobenzine). -
We have indicated that the General Sales Tax Act or the Rules do not define'' Medicine'' or "insecticide". The definitions or expressions in other statutes cannot always he applied in dealing with the case governed by statute which does ncot ontain definition. Learned counsel for the assessee Shri Nema referred to the observations of the Allahabad High Court in Rashtra Deep Laboratory vs. Commissioner of Sales Tax, U. P. (1983)53 S.T.C. 419 to the effect that the concept of medicine is not static. It is a changing concept linked with the advancing human knowledge and its endeavour be alleviate human suffering. It is also changing with the change in social thinking of a community with a view to solve its problems. The Court observed that the term "medicine" cannot be confined within the traditional concept of an article which itself is enough to cure human ailment. The Court referred with approval to the observations of the leanred Single Judge of Allahabad High Court in Commissioner, Sales Tax U. P. Luck now vs. Rederal Chemical Works Ltd. In the case, it was held that tartaric acid which could also be regarded as pertaining to chemistry, is a medicine. This was on the basis of the fact that tartaric acid or its derivatives are used in the preparation of purgatives which undoubtedly would be medicine.
11 In
In determining the meaning or connotation of words and expressions describing an article or commedity the turnover of which is taxed in a sales lax enactment, it 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.
It is. therefore, the duly of the statutory Authority as well as the Court is to construe the word ''medicine as it is commonly understood in the market by the dealer and the consumer and not necessarily according to the definition in any other statute. The definition of drug in the Drugs and Cosmalies Act. 1940 is in two Parts. In the first part, it is said to be medicine for internal or external use and all substances intended to be used for in the diagnosis, treatment mitigation or prevention of any disease or disorder in human beings or animals. In the second part, it means such substances intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals as may be specified from time to time by the Central Government by notification in the official gazette. It is not brought to our notice that the article in question has been specified by the Government.
It is significant to note that the second part of the definition does not use the word ''medicine'' which word is used in the first part of the definition of ''drugs''. The definition of ''medicinal preparation'' in the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 includes only durgs which are remidies or prescriptions prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or preparation of disease in human beings or animals, which is almost identical to the first part of the definition of ''drug'' in the Drugs and Cosmetics Act, 1940.
It is common case that benzene hexachloride is used to spray marshy places and water logged places for the purpose of containing and destroying malaria carrying germs. It is not to be consumed internally by any human being or animal or applied externally. Several insecticides are used for destruction of germs mainly, if not only, for prevention or spread of diseases i.e. benzene hexachloride, tik-20.red poison, D. D. T. etc. If a person wants to prevent, being afflicted by malaria or treatment for malaria and goes to a medical shop and asks for medicine. It is inconceivable that he would be given any quantity of benzene hexachloride which is assentially an insecticide. The popular or commercial concept of medicine is necessarily something consumed internal or applied externally on human body and insecticide which is used to kill or contain malaria germs is not in common parlance, be regarded as medicine.
The above view is in accord with that the authors of English Dictionaries have also indicated. Following are the meanings given to the expression ''medicine'' in Dorland''s Illustrated Medical Distionary, Twenty-sixth Edition, page 785
Medicine : - 1. Any durg or remedy.
The art and science of the diagnosis and treatment of disease and the maintenance of health.
The treatment of disease by non-surgical means. The expression ''medicine'' has been defined as follow in Webster''s New Twentieth Century Dictionary, Second Edition, Page 1118:
Medicine : - 1. The science and art of diagnosing, treating, curing and preventing disease, relieving pain and improving and preserving health. 2. The branch of this science and art. that makes use of drugs, diet, etc. as distinguished especially from surgery and obstetrics.
(a) Any durgs or oilier substance used in treating disease, healing or relieving pain.
(b) A durg or other substance as potion purposes.
The expression ''medicine'' has been explained as follows at page 507 of the Oxford Large Pring Dictionary :
Medicine : - 1. The scientific study of the prevention and cure of disease and disorders of the body.
This, as distinct from surgery.
A substance used to treat a disease etc. especially one taken by mouth.
In the light of the above materials, the only reasonable conclusion could be that by ''medicine'' is meant some substance which is to be taken internally in applied externally for preventing mitigating or treating a disease of the body or mind. It follows that benzene hexaehloride which can be used only to kill malaria germs, cannot be regarded as medicine.
The Hoard of Revenue was impressed by the certificate issued by the Joint Director Health Services that benzene hexaehloride is entitled to exemption. The Board indicated that in technical matter, the opinion of a technical expert should guide it. We have indicated that certificate nowhere stales that the Joint Director was of the view that benzene hexaehloride is a medicine. He only indicated that it was purchased for eradication of malaria under a scheme and. therefore, exempt from payment of sales tax. The opinion expressed is not an expert opinion on something connected with medicine, but as expert opinion on the interpretation of law. The view taken by the. Joint Director Health Services cannot certainly be of any value in interpreting the provision of law. It is relevant only to show that the consignments of benzene hexaehloride were sold to an office of the Government for use in eradicating malaria under a National Scheme. Rule 24 is not applicable in this case.
In the result, the quest ton is answered in the negative i.e. in favour of the Revenue and against the assessee. There will be no direction as to costs.
The reference is answered accordingly.
A copy of this Judgment under the signature of the Registrar and seal of the High Court be forwarded to the Appellate Authority.
