J.P. Devadhar, J.
1. In these three references relating to financial years 1983-84, 1984-85 and 1985-86, the Maharashtra Sales Tax Appellate Tribunal, Mumbai, has referred common questions of law for the decision of this Court under Section 61 of the Bombay Sales Tax Act, 1959 ('the BST Act', for short).
2. Since the issues raised in all these references are common, they are heard together and are disposed of by this common judgment.
3. The common questions of law referred by the Tribunal under Section 61(1) of the Bombay Sales Tax Act in all these references are as follows :
Sales Tax Reference Nos. 2, 3 and 4 of 1999
1. Whether the Tribunal is justified in holding that the sales of 'pathological diagnostics reagents' are covered by the residuary entry 102 of Part II of Schedule C to the Act and not covered by purview of entry 24 of Part I of Schedule 'C' ?
2. That whether the Tribunal is justified in discarding all the evidence placed on record by the applicant ?
4. It was the contention of the applicant before the adjudicating authority that the diagnostic reagents manufactured and sold by them during the financial years 1983-1984, 1984-1985 and 1985-1986 were covered under the entry 24 of Schedule C, Part I appended to the BST Act relating to medicines and sales tax payable thereon was at four per cent. However, as a precautionary measure, the applicant had collected ten per cent sales tax from the customers on the footing that the goods are classifiable under the residuary entry (C-II-102) and paid the same into the Government treasury from time to time along with the periodical returns. After the scrutiny of the record, the assessing sales tax officer by assessment orders dated July 4, 1986, August 24, 1987 and August 30, 1988 respectively held that the product manufactured by the applicant were medicines falling under entry C-I-24 and taxed the same at four per cent. As a result, the applicant became entitled to the refund of tax paid in excess of four per cent amounting to Rs. 1,42,964, Rs. 1,81,013 and Rs. 2,64,544 respectively. The applicant was informed that the refund would be granted only if the applicant produces evidence to show that the excess tax collected has been refunded to the customers. Accordingly, refund was granted to the extent the applicant could produce evidence to show that the excess tax has been refunded to the respective customers. Wherever the applicant could not trace the customer, the excess tax refundable to such customers was forfeited by the Government.
5. After a couple of years, the Assistant Commissioner of Sales Tax (ACST) issued notice in form 40 proposing to revise the assessment orders for the years 1983-84 to 1985-86. According to the ACST, the assessing officer was in error in classifying the sale of diagnostic reagents under entry C-I-24. After hearing the applicant, the Assistant Commissioner of Sales Tax by his order dated April 27, 1989 held that the diagnostic reagents manufactured and distributed by the applicant during the years 1983-84 to 1985-86 were classifiable under the residuary entry C-II-102 and not under entry C-I-24 and accordingly, the tax payable on sale of the goods manufactured by the applicant in the relevant years was at 10 per cent and not at four per cent. By the said order, the applicant was called upon to pay the differential amount of six per cent tax with interest. The first appeal as well as the second appeal filed by the applicant against the said order have been dismissed by the respective appellate authority. Hence, at the instance of the applicant, the Sales Tax Tribunal has referred the aforesaid questions for the decision of this Court.
6. The Schedule entries in the BST Act at the relevant time read as follows :
1-7-1981 to C-I-24 Medicines (other than those specified in 4%31-3-1984 (1) any other entries in this Schedule or inany other Schedule) of the followingdescription:Any medicinal formulation or preparation readyfor use, internally or externally, for treatmentor mitigation or prevention of diseases in humanbeings or animals.1-4-1984 to C-I-24 Medicines (other than tooth-powder or 4%10-8-1988 (1) tooth paste, cosmetics, toilet articles andsoaps whether used as medicines or otherwise, andalso other than the medicated goods specified inany other entries in this Schedule or any otherSchedule) of the following descriptions :Any medicinal formulation or preparationready for use, internally or externally, fortreatment or mitigation orprevention of diseases in humanbeings or animals.
7. Mr. P.C. Joshi, learned counsel appearing on behalf of the applicant broadly submitted as follows :
(a) Diagnosis is a part of the treatment. Therefore, the diagnostic reagents which are medicinal preparations/formulations for use in the treatment of human beings are covered under entry C-I-24 of the BST Act and accordingly, the tax payable thereon is at four per cent.
(b) The fact that during the relevant years the entry C-I-24 did not contain the words 'for diagnosis' does not in any way affect the case of the applicant, because, the diagnostic reagents are medicinal formulations/preparations for use in the treatment of human being and thus squarely fall under entry C-I-24.
(c) The Tribunal was in error in ignoring the expert opinion given by the persons in the trade such as doctors, reputed pathological laboratories, patients, etc., to the effect that diagnostic reagents manufactured by the applicant are used for the treatment of the ailment in human beings.
(d) Having made the applicant to refund to the customers the amount of sales tax collected in excess of 4 per cent, during the relevant years, it is not now open to the revenue to seek to recover tax at six per cent with interest from the applicant. Such an action amounts to double jeopardy which is prohibited by the Constitution.
8. To substantiate his arguments, Mr. Joshi submitted that diagnosis is nothing but an essential part of the treatment given to the ailing human beings. He submitted that diagnosis has always been considered by the Legislature and the Government as a part of the treatment and, therefore, the word 'diagnosis' was always coupled with the word 'treatment'. The role of the clinical laboratory is to assist the clinicians in (i) confirming or rejecting the diagnosis, (ii) providing guidelines in patient management, (iii) in establishing a disease, (iv) detecting the disease, and (v) monitoring the follow-up therapy up to the satisfaction of the persons concerned. In support of his contention Mr. Joshi relied upon the following materials :
(a) Dr. John Bernard Henry in his book titled 'clinical diagnosis and management by laboratory methods' has stated thus :
'By definition, a laboratory is a facility for the .............examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention or treatment of any of the disease or impairment of, or the assessment of the health of, human beings.'(b) Dr. Ramnik Sood in his book 'Medical Laboratory Technology Methods and Interpretation' (5th Edition) states as follows :
'Only the diagnostic reports help in differentiating functional from organic, and idiopathic from non-idiopathic. In short, a medical diagnostic laboratory is more than the backbone of a treating person. It is the very soul of diagnosis making. Better diagnosis does mean better patient care.'(c) As per Stedman's Medical Dictionary the word pathology means 'the medical science, and specially practice, that deals with all aspects of disease, but with special reference to the essential nature, the causes, and development of abnormal conditions, as well as structural and functional changes that result from the disease processes'.
(d) In the same book the term 'in vitro' and 'in vivo' are described as follows :
'in vitro--in the test tube : referring to chemical reactions fermentations, etc., occurring therein, usually in cell-f extracts.'
'in vivo--in the living body : referring vital chemical processes, etc., as distinguished from those occurring in the test tube (in vitro).'
(e) In the New Encyclopaedia Britannica--Macropaedia--Vol. 5, it is stated as follows :
'Diagnosis is ordinarily the forerunner of treatment, and treatment must be based on an understanding of diagnosis and of prognosis ;..................Treatment is then undertaken, with or without modification of the original diagnosis.'(f) As per the 'guidance for F.D.A. Staff--issued by the U.S. Department of Health and Human Services, F.D.A. for Regulating In Vitro Diagnostic Device (IVD) studies, the term 'in vitro' ro diagnostic' is defined as follows :
'In Vitro diagnostics :
IVD's are reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat or prevent disease or its sequelae.'
(g) As per Dorland's illustrated 'Medical Dictionary' (26th Edition), the word 'medicine' means (1) any drug or remedy (2) the art and science of the diagnosis and treatment of disease and the maintenance of health.
(h) According to Oxford and IBH new medical dictionary, the term 'medicine' means, (1) any drug or remedy (2) the art and science of prevention of diseases, promotion of health and curing diseases. Under the same dictionary the term 'in vitro' means 'within a test tube and in an artificial environment, a method of treating infertility'.
(i) As per Saunders 'Dictionary and Encyclopaedia of Laboratory Medicine and Technology' by James L. Bennington the term 'medicine' means, (1) 'any drug or remedy, (2) the art and science of the diagnosis and treatment of disease and the maintenance of health.'
In the light of the aforesaid Medical Literature and Dictionary meaning, Mr. Joshi submitted that it is amply clear that diagnosis is part and parcel of the treatment and, therefore, even though, during the relevant period the word 'for diagnosis' was not to be found in the entry C-I-24, the diagnostic reagents would still be covered under that entry because they are medicinal preparations/formulations for use in the treatment of human beings.
9. Mr. Joshi referred to the entries relating to the drugs and medicines under the BST Act for the period prior to 1-7-1981, i.e., from 1-1-1960 to 30-6-1981. For ready reference, we reproduce the said entries hereinbelow :
Relevant entries
PeriodEntryDescriptionRate of tax
1-1-1960 to
31-3-1961C-13 (1) Drugs and medicines (other than those specified in entry 69 in this Schedule)
3%1-1-1960 to
30-6-1981C-69Spirituous medical preparations30%1-4-1961 to
31-3-1964E22Residuary entry3 + 2%1-4-1964 to
13-8-1965Entry 38 in S. 41 NotificationSales of drugs (other than those specified in entry 69 in Schedule C to the Bombay Sales Tax Act, 1959)
Explanation. - For the purpose of this entry 'drug' includes 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 disease in human beings or animals.
3%14-8-1965 to
10-7-1973Entry 38 in S.41 NotificationSales of medicines used or intended to be used (whether internally or externally) for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals (other than those specified in entry 69 in Schedule C to the Act)
11-7-1973 to
30-6-1981C-71Medicines (other than those specified in any other entries in this Schedule or in any other Schedule) of the following description :
Patent or proprietary or pharmacopoeia medicinal formulations or preparations made up ready for use, internally or externally for the diagnosis, treatment, mitigation or prevention, of disease in human being or animal.
Mr. Joshi submitted that from the aforesaid entries in the Schedule, it can be clearly seen that the medicinal formulations for diagnosis and treatment have always been considered together by the Legislature. In other words, according to Mr. Joshi, even the Legislature has always considered the diagnosis as part and parcel of the treatment. Even while the treatment is on, the diagnostic tests are required to be carried out to ascertain as to whether the treatment should be continued, suspended or modified. The entire procedure, right from the moment the ailing person visits the doctor till the person is completely cured are so integrated that without carrying out relevant diagnostic tests, the treatment cannot be commenced nor could it be continued.
10. Mr. Joshi further submitted that the entries in the Schedule C to the BST Act related to the products dealt with by the medical science and, therefore, the phraseology used therein have to be construed with the help of relevant enactment like the Drugs and Cosmetics Act, 1940, Drugs (Price Control) Order, 1987 and 1995 and the Rules framed thereunder as well as the Indian Medical Council Act. In all these enactments and the orders passed thereunder, the word 'medicine' or 'drug' has been defined to include the products manufactured by the applicant. It was submitted that the entry C-I-24, if read appropriately and correctly would reveal that the product should have the following ingredients :
(i) it should be medicinal formulation/preparation, (ii) it should be ready for use internally or externally,
(iii) it should be ready for treatment or medication or should be such which can prevent the disease in human beings or animals.
11. Mr. Joshi submitted that since the term 'medicine' has not been defined under the BST Act, it is necessary to refer to the definition of the term 'drugs' under the Drugs and Cosmetics Act which includes all medicines for internal or external use of human beings. Similarly, the word 'formulation' has not been defined under the BST Act and, therefore, the definition under Section 2(h) of the Drugs (Price Control) Order would prevail for finding out whether a particular item is a medicinal formulation or not. Mr. Joshi submitted that some of the products manufactured by the applicant were used inside the human body and the Tribunal failed to take cognisance of that fact while deciding the classification.
12. Mr. Joshi further submitted that the Food and Drugs Administration has certified the products of the applicants to be drugs and each of the products were manufactured by the applicant as per the formula mentioned in the pharmacopoeia or other authoritative text books. Accordingly, it was submitted that the diagnostic reagents being drugs/medicinal formulation for treatment in the human beings would be specifically covered under entry C-I-24 and not under the residuary entry.
13. Mr. Joshi further submitted that the Tribunal was in error in ignoring several expert opinions given by those who were dealing with the product manufactured by the applicant. It was submitted that the common parlance evidence produced by the applicant in accordance with the law laid down by the Supreme Court have not been considered to be appropriate and the Tribunal rejected the same on the ground that they do not have any evidentiary value. Relying upon the decision of the apex Court in the case of BPL Pharmaceuticals [1997] 104 STC 164, Mr. Joshi submitted that opinion of the persons involved in the trade and the persons who have been using the product such as doctors, reputed pathological laboratories and patients have evidentiary value. It was submitted that without adducing any material contrary to the material produced by the applicant, the Tribunal could not have disregarded the certificates produced by the applicant and brushed aside the same as of no evidentiary value. In this connection, Mr. Joshi referred to the judgment of the apex Court in the case of G.S. Auto International Ltd. v. Collector of Central Excise, Chandigarh : 2003(152)ELT3(SC) , wherein it is held that the goods are to be classified on the basis as to how they are referred to in the market by those who deal with them. The following decisions were also cited by Mr. Joshi in support of his above submission :
(1) Commissioner of Central Excise v. Pandit D.P. Sharma (2003) 4 JT (SC) 353 .
(2) Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 49 STC 433 CSC.
(3) State of Goa v. Leukoplast (India) Ltd. : 1997(2)ELT19(SC) .
(4) Deputy Commissioner (Law) v. M.R.F. Ltd. [2001] 121 STC 274 (SC).
(5) Hindustan Ferodo Ltd. v. Collector of Central Excise [1997] 106 STC 214 (SC).
14. Mr. Joshi further submitted that in the present case the applicant had as a matter of abundant caution collected 10 per cent tax from the customers and paid the same into the Government treasury. However, on assessment it was held that the diagnostic reagents manufactured by the applicant for the relevant years were classifiable under entry C-I-24 at 4 per cent and the applicant was called upon to refund the tax collected in excess of 4 per cent to the customers. Accordingly, the refund was granted to the applicant only on production of the documents to establish that the excess tax collected from the customers has been refunded to them. Under the circumstances it was submitted that having compelled the applicant to refund the tax in excess of 4 per cent to the respective customers it is not now open to the respondents to reclassify the products under entry C-II-102 at 10 per cent and seek to recover the balance tax of 6 per cent with interest. It was submitted that having refunded the amount of tax to the customers, it will be impossible for the applicant to recover the same from the customers and the applicant will have to bear the entire tax burden for no fault on their part. Under the circumstances, it was submitted that in the facts and circumstances of the present case, recovery of differential tax of 6 per cent with interest from the applicant is wholly unjustified.
15. Mrs. M. Kejle, learned Additional Government Pleader, ably assisted by Shri R.A. Harpale, Assistant Commissioner of Sales Tax, made submissions on behalf of the respondents. It was sought to be contended that the diagnostic reagents are not medicinal formulations. However, such a contention was neither raised before the Tribunal nor is there any finding recorded by the Tribunal to that effect. An issue which is not raised and not decided by the Tribunal cannot be agitated for the first time in a reference before the High Court. In the present case, in fact, both the parties proceeded on the footing that the diagnostic reagents are medicinal formulations and the only dispute was whether these medicinal formulations can be said to be used in the treatment of human beings. In these circumstances, we have not permitted the respondents to contend that the diagnostic reagents are not medicinal formulations.
16. It was further submitted on behalf of respondents that to fall under entry C-I-24, the medicinal formulations must be (i) ready to be used in the human body or animal, either externally or internally and (ii) ready for use without any pressing or material change and is capable of being administered directly to the human body for the purpose of treatment, mitigation or prevention of disease. It was submitted that diagnostic reagents do not satisfy any of the aforesaid conditions and, therefore, it cannot be said that the diagnostic reagents are covered under entry C-I-24.
17. It was submitted that 'diagnosis' can be said to be an act or process of identifying the disease ; whereas 'treatment' is for relieving the body of the disease. It was submitted that 'treatment' has a direct impact on the disease ; whereas 'diagnosis' is done before the commencement of the treatment. The process of 'diagnosis' is to ascertain the actual ailment in the human beings and the 'treatment' connotes the medicine actually administered for eradication of the disease. Accordingly, it was submitted that the substances which are used in the pathological laboratories for diagnosing the ailments in human beings cannot be said to be the medicinal formulations which are used for treatment, mitigation or prevention of disease of human beings.
18. It was submitted that the word 'for diagnosis' has been specifically excluded from the entry C-I-24 from July 1, 1981. Merely, because the Legislature in its wisdom has sought to reintroduce the said word in the year 1996, it cannot be said that irrespective of the exclusion, the diagnostic reagents used for diagnosis would still be covered under entry C-I-24.
19. It was submitted that the object of classifying the goods under any particular entry is for deciding the rate of tax thereof and it is solely at the wisdom of the Legislature to prescribe a particular rate of tax for a particular goods. The wisdom of the Legislature in this regard cannot be challenged. It was submitted that where the words in the entry are very clear and unambiguous, there is no scope to travel beyond the plain and grammatical words used by the Legislature. It was submitted that when the Legislature has deliberately excluded from the entry the medicinal preparations/formulations for diagnosis of the ailment in the human beings, it cannot be impliedly presumed or the entry cannot be read in such a manner so as to give a go bye to the express intention of the Legislature.
20. It was submitted that the scope of the entry in the Schedule to the BST Act has to be understood on the basis of the words used by the Legislature. Nothing can be added and nothing can be substituted or deleted from the existing entry.
21. It was further submitted that in case of diagnostic reagents the words 'internally or externally' are not used. The word 'in vitro' is used to distinguish the same from the Reagents, which are used in 'in vivo' in human body either externally or internally. In the medicine, which are used for curing the diseases, the phrase 'not for external use' is frequently used to distinguish the other medicines, which can be safely used internally in the sense of consumption through mouth or intravenous. So if at all the meaning of the word 'external' is to be construed, it must be in the sense used in relation to medicines and not diagnostic reagents.
22. It was submitted that the word 'for diagnosis' is deleted by a conscious act of an amendment by the Legislature. It is the exclusive prerogative of the Legislature to either expand or narrow down the scope of any entry. The wisdom of the Legislature in that respect cannot be the subject-matter of challenge. To give effect to the legislative amendment, the goods which are used for diagnosis stand excluded from the purview of the entry, lest it may amount to ignoring the legislative exercise of amendment. It was submitted that the diagnosis is not synonymous to treatment and even if during the treatment, diagnostic tests are required to be carried out, the goods used for diagnosis cannot be said to be goods, used for treatment. Accordingly, it was submitted that the pathological diagnostic reagents used for diagnosis or not for treatment, mitigation or prevention of any disease and, therefore, cannot be said to be covered by entry No. C-I-24.
23. Reliance was placed by the respondents on the decision of the apex Court in the case of the Commissioner of Wealth-tax, Andhra Pradesh v. Officer-in-Charge (Court of Wards) Paigah : [1976]10ITR133(SC) . In that case, it was held by the apex Court that it is not correct to give as wide a meaning as possible to the terms used in a statute simply because the statute does not define an expression. It was further held that the correct rule is that Courts have to endeavour to find out the exact sense in which the words have been used in a particular context. It was also held that the Courts are entitled to look at the statute as a whole and give an interpretation in consonance with the purposes of the statute and what logically follows from the terms used.
24. We have carefully considered the rival submissions. The short point which requires to be considered in these references are, whether the diagnostic reagents manufactured by the applicant at the relevant time were taxable under the specific entry C-I-24 or under the residuary entry C-II-102. The fact that the diagnostic reagents are medicinal formulations/preparations was not disputed before the authorities below. Therefore, the narrow question to be considered in these references is, whether in spite of the exclusion of the words 'for diagnosis' from the entry C-I-24, the diagnostic reagents used in the diagnosis of the disease in the human beings can be said to be covered under entry C-I-24 of the BST Act.
25. Entry C-I-24 at the relevant time pertained to medicines, including medicinal formulations/preparations. Medicinal formulations/preparations could be used for either diagnosing the ailment or for treatment, mitigation or prevention of disease in human beings. Prior to July 1, 1981, entry 71 in Schedule C to the BST Act covered medicinal formulations/preparations of both types, i.e., diagnostic reagents used for diagnosis as well as diagnostic reagents used for treatment of human beings. However, with effect from July 1, 1981 entry C-I-24 was restricted to only medicinal formulations/preparations ready for use, internally or externally for treatment or mitigation or prevention of disease in human beings or animals. Since the scope of the entry has been restricted from July 1, 1981 only to the medicinal formulations/preparations ready for use in treatment, it will have to be held that the medicinal preparations or formulations are outside the purview of entry C-I-24.
26. The contention of the applicant that in spite of the absence of the words 'for diagnosis' in entry C-I-24, the medicinal formulations/preparations used for diagnosis must be held to be covered within the meaning of medicinal formulations/preparations used in the treatment of human beings in entry C-I-24, cannot be accepted, because, although diagnosis and treatment go hand in hand and without the diagnosis the treatment to a patient cannot be started, it cannot be said that the word 'treatment' means 'diagnosis'. Neither in the text books relating to medicines nor in the medical dictionary referred to by the applicant, the word 'treatment' is understood to be synonymous to 'diagnosis'. A medical diagnostic laboratory may be the backbone of a treating person, but still, diagnosing the disease of a human being itself cannot be said to be a treatment for the disease. In the New Encyclopaedia Britannica, the word diagnosis is aptly held to be a fore runner for treatment. In Dorland's Illustrated Medical Dictionary (26th Edition), 'medicine' means the art and science of the diagnosis and treatment of disease and the maintenance of health. Thus, the diagnosis and the treatment no doubt go hand in hand, but still, the treatment commences after the diagnosis of the disease. In other words, on completion of diagnosis, the treatment to an ailing patient begins. It may be that in certain cases even during the treatment, diagnostic tests may be carried out to find out as to how far the treatment is effective. In the midst of a treatment, diagnostic tests may be carried out and on obtaining the diagnostic report, the treatment may be altered, abandoned or reduced as the case may be. But that does not make the diagnosis itself a treatment. Thus, diagnosis and treatment though carried out one after the other or simultaneously, those are two separate and distinct acts carried out for eradicating the diseases in a patient. In the present case, admittedly the medicinal formulations like diagnostic reagents manufactured by the applicant are exclusively used in the pathological laboratories for diagnosing the disease in human beings. Therefore, these diagnostic reagents cannot be said to be for use in the treatment of ailing human beings. The apex Court in the case of State of Maharashtra v. Dr. P.B. Desai : 2003CriLJ2033 has held that dictionary meaning is not be considered when plain reading of the provision brings out what is intended by the Legislature. In the present case, even the dictionary meaning do not support the case of applicant.
27. For the purpose of levy of sales tax, it is open to the State Legislature to tax the medicinal formulations/preparations used for diagnosis of the ailment in human beings either together or separately from the medicinal formulations used for treatment of ailing human beings. The fact that for some years the State had taxed the medicinal formulations for diagnosis as well as the medicinal formulations for treatment together under the head medicine, it does not mean that both types of medicinal formulations are inseparable and cannot be taxed separately. In other words, it is the prerogative of the State to tax two types of medicinal formulations together or separately as it deems fit. In the present case, up to July 1, 1981, both types of medicinal formulations were taxed together under the head 'medicine', but from July 1, 1981 till 1996 the entry relating to 'medicine' was restricted only to medicinal formulations which are used for treatment of the human beings or animals. From 1996 once again both types of medicinal formulations have been taxed together under the head medicine. Therefore, it is abundantly clear that during the period from January 17, 1981 till 1996 the entry relating to medicines in entry C-I-24 covered only medicinal formulations which are used for treatment of the ailing human beings and not the medicinal formulations which are used for diagnosing the ailment in human beings.
28. The contention of the applicant that the words 'for diagnosis' were excluded from the entry relating to medicines because the same was implicitly covered under the word 'treatment' is without any merit. If the word 'diagnosis' was covered under the word 'treatment' then during the period when the entry expressly used the words 'for diagnosis' would be rendered surplus and such a construction which renders the express words used in the entry surplus or superfluous is not permissible in law. Moreover, the reintroduction of the words 'for diagnosis' in the entry relating to medicine from the year 1996 completely demolishes the case sought to be put forth by the applicant. If the word 'diagnosis' was covered under the word 'treatment', then the word diagnosis would not have been introduced again in the year 1996. To overcome this difficulty, it was contended that to set at rest any controversy, the word 'diagnosis' was reintroduced in the entry in the year 1996. In our opinion, there is no merit in this contention. It is well-established in law that the words of the statute should be read as it is. All along, for the purposes of sales tax the statute has considered the word diagnosis and treatment separately. May be for long time, both types of medicinal formulations were taxed together under one entry. But during the period when only one type of medicinal formulation is included in the entry, the other type of medicinal formulation must be held to be excluded from that entry. The argument of the applicant is mutually contradictory. If the argument of the applicant that the word 'diagnosis' was deleted because it was covered under 'treatment' is accepted, then the reintroduction of the word 'diagnosis' in the entry relating to 'medicine' in 1996 becomes superfluous or redundant. If the other argument of the applicant that the word 'diagnosis' was reintroduced in the entry in the year 1996 was by way of clarification is accepted, then it would mean that the exclusion of the word 'diagnosis' from the entry in 1981 was erroneous or unwarranted. Thus, in either view of the matter the construction of the entry put forth by the applicant suffers from serious infirmity and cannot be accepted.
29. It was contended that the products manufactured by the applicant were certified by the food and drug administration authorities to be 'drugs' under the Drugs and Cosmetics Act, 1940. It was further contended that since the word 'medicine' has not been defined under the BST Act, it is necessary to refer to the definition of the 'drugs' under the Drugs and Cosmetics Act which includes all medicines for internal or external use of human beings. We are unable to subscribe to this argument because the entry C-I-24 specifically provides as to the type of medicinal formulations covered under that entry. As stated hereinabove, whether one or both kinds of medicinal formulations should be included under the entry relating to medicines is the exclusive prerogative of the State and during the period when one category is excluded from the purview of the entry, then it is not open to import the provisions of the Drugs and Cosmetics Act, 1940 so as to enlarge the scope of the entry under the BST Act. In our opinion, the words used in the entry are clear and unambiguous and there is no need to refer to the meaning of the words used under the Drugs and Cosmetics Act, 1940,
30. The evidence in the form of certificates of the doctors, pathological laboratories and patients produced by the applicant to the effect that the diagnosis is integral part of the treatment have no bearing on the issue raised herein. As stated hereinabove, the diagnosis and treatment to an ailing patient may go hand in hand and they may be interconnected like two sides of a coin. Even then, it is open to the Legislature to tax the two separately. Since 1960, the relevant entries relating to 'medicine' specifically and distinctly covered two types of medicinal formulations which are used for diagnosis as well as for 'treatment'. When the entry on July 1, 1981 specifically included only one type of medicinal formulations, the other must be held to be excluded from the entry. In other words, during the relevant years since the entry C-I-24 specifically included only for the medicinal formulations for treatment of diseases in human beings, it will have to be held that the medicinal formulations for use in the diagnosis of the diseases in human beings were excluded from the purview of entry C-I-24. It is not in dispute that the diagnostic reagents manufactured by the applicant if not classifiable under entry C-I-24 will fall under the residuary entry C-II-102.
31. Accordingly, for all aforesaid reasons, we answer both the questions in the affirmative and in favour of the revenue and against the applicant.
32. It is not disputed that on passing the original assessment orders and taxing the sale of diagnostic reagents at 4 per cent the applicant was called to refund the excess tax of 6 per cent to the respective customers. The revenue has granted refund to the applicant only on production of evidence to show that the excess tax has been returned to the customers and wherever the evidence was not produced the refund amount has been forfeited. In these circumstances, the amount forfeited by the Government cannot be claimed from the applicant. The grievance of the applicant that once the tax collected has been returned to the customers at the instance of the State, the said amount cannot be recovered from the applicant subsequently seems to be justified. However, in a reference application, the exercise of the powers of this Court is restricted to answering the question raised in the application. Therefore, no directions can be given in that behalf. However, if the applicant makes an application for waiver of tax and interest, within 2 weeks from today, then the respondents may consider and dispose of the same in accordance with law.
33. All the three reference applications are disposed of in the above terms with no order as to costs. Parties may be provided with the authenticated copy.