Bombay High Court
Procter & Gamble India Limited And Anr. vs The Municipal Corporation Of Greater ... on 27 September, 1993
Equivalent citations: 1994(3)BOMCR403
JUDGMENT A.V. Savant, J.
1. The first petitioner Procter & Gamble India Limited is a Company incorporated under the Companies Act, 1956. The second petitioner is its shareholder. By this petition, the petitioners seek to challenge the letter dated 16th November, 1988 - Exhibit "J" to the Petition, issued by the second respondent Additional Assessor & Collector (Octroi) of the first respondent Municipal Corporation of Greater Bombay. Under the said letter - Exhibit "J", the first petitioner Company was informed that its product "Chatpat Churanets" attracted octroi under Entry 8 of Schedule `H' to the Bombay Municipal Corporation Act, 1888. Schedule `H' deals with articles liable to payment of octroi. Class-I in the said Schedule `H' deals with the articles of food and drink. Entry 8 deals with edibles and excluding the specific items mentioned in Entry 8, the concluding portion, which is relevant in the present case, reads as under :-
" .... and all kinds of food or drink not specifically provided for ..."
2. The controversy in short is that whereas the first petitioner Company claims that "Chatpat Churanets" is an "ayurvedic medicine" manufactured by it under the Drugs Licence bearing No. AYU 1010 issued by the Commissioner, Food and Drug Administration, Maharashtra State, in accordance with the Drugs & Cosmetics Act, 1940, the respondents claim that the said "Chatpat Churanets" fall within the words ".... and all kinds of food or drink not specifically provided for .... ", quoted above from Entry 8 to Schedule `H' of the said B.M.C. Act. The ingredients of "Chatpat Churanets" are, indisputably, as under :-
"Ingredient Percentage W/W Jeera Powder 1.143 Sunthi Powder 0.257 Pippali Powder 0.171 Kali Marich Powder 0.428 Hing Powder 0.150 Samudra Lavan 1.818 Kala Namak 2.426 Nimbu Ka Set 1.818 Navsadar 0.306 Sugar Base 9.2."
There is a reference to some of the well-known Texts and authorities on Ayurveda which recommend the above ingredients for digestion. The said Text-books are as under :-
"(a) Sharangadhara Samhita published by Shri Baidyanath Ashram, Calcutta;
(b) Bhava Prakasha published by Chowkhamba Samskrita Samsthan, Varanasi;
(c) Rasaratna Samuchaya published by Chaukhamba Amarabharati Prakashan, Varanasi;
(d) Yoga Ratnakara published by Chowkhamba Sanskrit Series Office, Varanasi."
All the above said authoritative books on Ayurvedic system of medicine are specified in the Schedule to the Drugs & Cosmetics Act, 1940.
3. Section 3(a) of the Drugs & Cosmetics Act, 1940 defines ayurvedic, Siddha or Unani drug as under :-
"(a) Ayurvedic, Siddha or Unani drug "includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animal, and manufactured exclusively in accordance with the formulae described in, the authoritative books of Ayurvedic, Siddha and Unani Tiba System of medicine specified in the First Schedule."
"Drug" as defined in clause (b) of section 3 would, therefore, exclude Ayurvedic, Siddha or Unani drug as defined in clause (a) of section 3. A patent or proprietary medicine in relation to Ayurvedic, Siddha or Unani Tiba system of medicine has been defined in sub-clause (i) of clause (h) of section 3. A patent or proprietary medicine of other systems of medicine has been defined in sub-clause (ii) of clause (h) of section 3. There is no dispute that "Chatpat Churanets" is manufactured, sold and marketed by the first petitioner Company within the meaning of clause (h) of section 3 of the said act in as much as, each of the aforesaid ingredients are mentioned in the authoritative books of Ayurved specified in the First Schedule of the Drugs & Cosmetics Act, 1940. The first petitioner Company also displayed the list of the aforesaid ingredients on the lable/packet containing "Chatpat Churanets", as required by Clause 1 of Second Schedule to the said Act read with Rule 161 of the Drugs & Cosmetics Rules, 1945.
4. The documents annexed to the petition, particularly those annexed to the Affidavit-in-Rejoinder dated 8th September, 1993 set out the details of the endorsement on the application for manufacturing licence. The licence AYU 1010 is in force.
5. Apart from the above classification under the Drugs & Cosmetics Act, 1940, the petitioners' contention is that under the Central Excise and Salt Act, 1944 also, "Chatpat Churanets" has been classified as Ayurvedic Medicine and not as Confectionary. Whereas sugar confectionary attracts a higher rate of excise duty, ayurvedic medicine attract a nil rate of excise duty. However, the petitioners' product was sought to be subjected to octroi on its entry within the limits of Greater Bombay. The first petitioner entered into correspondence with the first respondent Corporation and contended that "Chatpat Churanets" was being manufactured as ayurvedic medicinal preparation which was a digestive drop and was, therefore, not liable to octroi duty. The first petitioner produced copies of its licence and other documents in support of its claim that "Chatpat Churanets" was an ayurvedic medicine classified as such under the Drugs & Cosmetics Act, 1940 and was, therefore, not liable to payment of octroi. However, on 15th November 1988 the first respondent Corporation informed the first petitioner that the said product attracted octroi under Entry 8 of Schedule `H' to the Bombay Municipal Corporation Act. This has led to the filing of the petition.
6. The petition was filed on 30th November, 1988 and an affidavit-in-reply was filed by J.A. Kamble of the first respondent to oppose the admission. The respondents contended that the product was falling within the words "... and all kinds of food or drink not specifically provided for ... " appearing in the concluding portion of Entry 8 of Schedule `H' and was, therefore, liable to octroi at the rates specified in the Schedule. A contention was also raised that the petitioners had an alternate remedy by way of an Appeal under section 217 of the Bombay Municipal Corporation Act, 1888 (for short, "B.M.C. Act"). Despite the above, however, Rule was issued on 13th December 1988 and interim stay was granted under which the petitioner Company was permitted to bring into Greater Bombay the consignments of "Chatpat Churanets" without payment of octroi.
7. Against this Order dated 13th December 1988 of issuance of Rule and granting interim stay, Appeal No. 142 of 1989 was preferred to the Division Bench. Apart from the merits, a specific contention was raised in Ground (e) of the Appeal Memo that the petition ought not to have been entertained since the petitioners had an alternate remedy of an Appeal under section 217 of the said Act. However, the Appeal Court refused to entertain the appeal and dismissed it summarily. All that was provided for was that the in the event of the petitioners' losing in the petition, they will pay the octroi duty at a reasonable rate of interest, to be determined at the hearing of the petition. Accordingly, the petitioners have filed the undertaking agreeing to pay the octroi duty with such interest as would be specified at the disposal of the petition.
8. This Writ Petition has been pending in this Court since 1988 and on 6th February 1991 a detailed affidavit has been filed by V.D. Tawade on behalf of the respondent Corporation. Tawade has reiterated the earlier stand taken by the Corporation that "Chatpat Churanets" would fall under Entry 8 of Schedule `H'. It is categorically stated that the mere fact that "Chatpat Churanets" contain the digestive ingredients would not change the nature of the product so as to call it a medicine and it would still be an item of `Food'. Reliance has been placed on factors such as :-
(i) the product being sold across the counter without a prescription from a medical practitioner;
(ii) it being sold in any shop not necessarily of a Chemist or a Pharmacist;
(iii) no dose being prescribed; and
(iv) not always being taken by an ailing person.
The ingredients of the product have been commented upon pointing out the medicinal properties of each of the ingredients. Finally, it is stated that the ingredients of Chatpat Churanets were almost similar to another digestive drug called "SWAD" and the advertisement of "SWAD" on television confirms that it could be used as a confectionary and not necessarily as a medicine under the prescription of a doctor.
9. A rejoinder has been filed by Ashok Chhabra on 8th September 1993 reiterating the contentions raised in the petition. The contentions sought to be raised by the respondent that "Chatpat Churanets" was being classified for sales tax by the State Government under the residuary item and was charged as well as taxed at the rate of 8% ad valorem was denied and it was pointed out that in fact Chatpat Churanets was classified as a medicine under the State Sales Tax Act and was charged to sales tax at the rate of 4% ad valorem.
10. On the above pleadings, my attention has been invited by both the learned Counsel to the scheme of the provisions of the Drugs & Cosmetics Act, 1940. Chapter IV deals with the manufacture, sale and distribution of the drugs and cosmetics. Under section 18 there is a prohibition for the manufacture and sale of certain drugs and cosmetics, except under and in accordance with the conditions of a licence issued for such purpose under the said Chapter. Section 33-A. which is the last section appearing in Chapter IV, says that nothing contained in the said Chapter shall apply to Ayurvedic, Siddha or Unani drugs. The Chapter which follows thereafter viz. Chapter IV-A deals with the provisions relating to Ayurvedic, Siddha and Unani drugs. Section 33-EX. C deals with the prohibition of manufacture and sale of Ayurvedic, Siddha and Unani drugs. Under clause (c) of section 33-EX. C, no person either by himself or by any other person can manufacture for sale or for distribution any Ayurvedic, Siddha or Unani Drug, except under and in accordance with the conditions of a licence issued for the said drug by the prescribed authority. Section 33-I prescribes the penalty for manufacture, sale etc. of Ayurvedic, Siddha or Unani drug in contravention of the provisions of Chapter IV-A. The First Schedule to the Act gives a list of the standard books on Ayurvedic and Siddha system. Those mentioned by the petitioners in support of their formula find a specific mention in the said Schedule.
11. My attention has then been invited to the Drugs and Cosmetics Rules, 1945. Part XVI deals with the manufacture for sale of Ayurvedic (including Siddha) or Unani drugs. Rule 154 deals with the form of licence to manufacture Ayurvedic (including Siddha) or Unani drugs. Sub-rule (2) of Rule 154 says that a licence under this rule shall be granted by the licensing authority after consulting such expert in Ayurvedic (including Siddha) or Unani systems of medicine as the case may be, which the State Government may approve in this behalf. Rule 156 deals with the duration of the licence. Rule 157 deals with the conditions of the grant or renewal of licence and Rule 159 empowers the licensing authority to suspend or cancel the licence if there is a breach to comply with the conditions of licence or the provisions of the Act or the rules. There is, thus, an elaborate machinery provided under the Drugs & Cosmetics Act, 1940 read with the Drugs & Cosmetics Rules, 1945 to investigate into the claim for issuance of a licence for the manufacture of an ayurvedic medicine. The formula of the medicine has to confirm to the standard drugs of the particular system of medicine. The experts in the field can be consulted before granting a licence. There is thus a strict control on the manufacture and sale of the drug or medicine. It is in the above background that the matter has been argued at length.
12. I have heard both the learned Counsel at length, Shri Hidayatullah for the petitioners and Shri Walavalkar for the respondents. Shri Hidayatullah has raised the following contentions;
(i) The commercial/trade understanding is that the goods are an "ayurvedic drug" since under the Drugs & Cosmetics Act the goods cannot be manufactured, sold or exhibited except as an "ayurvedic drug". In support of this, reliance is placed on a Division Bench decision of this Court in the case of Leukoplast (India) Limited v. State of Goa, reported in 1988c(36) E.L.T. 360A (Bom.). (for short, "Leukoplast case").
(ii) It is settled law that if the goods are licensed as a "drug" under the Drugs & Cosmetics Act, then they are "drugs" and the licence is conclusive of the question. Reliance is placed on a Divison Bench decision of the Madhya Pradesh High Court dealing with the product "Swad", to which a reference has been made in the affidavit filed on behalf of the respondents. The case is Panama Chemical Works v. Union of India, reported in 1992(62) E.L.T. 241 (M.P.). (for short, `Panama Chemical's case).
(iii) Once the competent authority under the Drugs and Cosmetics Act, which has elaborate machinery and experts appointed for determining the classification of goods as "drugs", has concluded that the goods are "Ayurvedic Drugs", the octroi authorities are bound by that determination. In support of this proposition, reliance has been placed on the decision of the Supreme Court in the case of M.G. Abrol, Additional Collector of Customs, Bombay and another v. M/s. Shantilal Chhotelal & Co., (for short `Shantilal Chhotelal's case). See also the decision of my learned brother M.L. Pendse, J., in the case of Bombay Chemical Works v. Union of India, 1982 E.L.T. 171.
(iv) The fact that the goods are sold without the prescription of a medical practitioner is irrelevant. Several "drugs" are sold over the counter but are nevertheless licensed as "drugs". "Drugs" need not be sold only by a pharmacy.
(v) The definition of "food" under the Prevention of Food Adulteration Act, 1954 is irrelevant as the goods have to be classified by their commercial understanding. In view of the commercial understanding based on the drugs licence that the goods are Ayurvedic Drugs, the question of regarding them as "food" or "confectionary" cannot arise. In support of this proposition, reliance is placed on a decision dated 1st September 1977, delivered by M.H. Kania., J. (as His Lordship then was) in the case of Cadbury-Fry (India) Pvt. Ltd. v. Union of India, in Misc. Petition No. 702 of 1971.
(vi) In any event, since section 2(v) of the Prevention of Food Adulteration Act excludes "drugs" from the definition of "food" in the Prevention of Food Adulteration Act, and the goods are admittedly "Ayurvedic Drugs" and licensed as such, they cannot be classified as "food" under Entry 8 of Schedule `H' of the BMC Act.
(vii) It is settled law that the end use of the goods as digestive tablets is irrelevant for purposes of classifying goods under Entry 8 wherein there is no reference to the end use. Reliance is placed on the observations of the Supreme Court in the case Dunlop India Ltd. v. Union of India and others, reported in A.I.R. 1977 Supreme Court, p. 597.
13. Before I deal with the contentions raised by Shri Hidayatullah and the authorities cited in support of the said contentions, I must mention the contentions raised by Shri Walawalkar on behalf of the respondents.
(i) Shri Walawalkar has raised an objection about the maintainability of the petition. He has contended that the petition involves disputed questions of facts and hence, should not be entertained under Article 226 of the Constitution, especially when there is a machinery provided under the Act to adjudicate upon the points in dispute. Reliance is sought to be placed on two decisions in support of this proposition:
(a) Union of India v. T.R. Varma, .
(b) Sales Tax Officer, Jodhpur and another v. Shiv Rttan G. Mohatta, .
(ii) An alternate and efficacious remedy is available by way of an appeal under section 217 of the B.M.C. Act to the Chief Judge of the Court of Small Causes and hence, the petition under Article 226 of the Constitution should not be entertained. Reliance is sought to be placed to the following decisions in support of this proposition :
a) Shivram Poddar v. The Income-tax Officer, Central Circle II, Calcutta and another, .
b) Thansingh Mathmal v.The Superintendent of Taxes, Dhubri and others, .
c) Titaghur Paper Mills Co. Ltd. and another v. State of Orissa and another, .
d) Wandleside National Conductors Ltd. v. Municipal Corporation for the City of Pune and others, 1989 Mh.L.J. 755.
e) Shyam Kishore and others v. Municipal Corporation of Delhi and another, .
14. After raising the above preliminary objections about the maintainability of the petition Shri Walawalkar realised that the appeal under section 217 would be barred by limitation since the period of limitation for filing such an appeal was only 15 days after the accrual of the cause of complaint, as provided in clause (a) sub-section (2) of section 217 of the B.M.C. Act. He, therefore, contended that the Chief Judge of the Court of Small Causes, Bombay, who hears appeals under section 217 of the Act is a 'Court' and not a 'Persona Designata' and hence, he has the power to condone the delay in filing the appeal. Reliance was also placed on the provisions of section 29 of the Limitation Act, 1963 to contend that unless sections 4 to 24 of the Limitation Act, 1963 were "expressly excluded" by the Special Law viz. the B.M.C. Act, the same would apply and by virtue of section 5 of the Limitation Act, 1963, the Chief Judge of the Court of Small Causes will have the power to condone the delay on sufficient cause being shown. In support of this contention, Counsel has placed reliance on the following decisions :-
a) Pravinkant Keshavlal Parikh v. The Bombay Municipal Corporation for Greater Bombay and another, .
b) A. Gupta Trust Estate Dibrugarh v. Commissioner of Wealth-Tax, Shillong, (1983)2 Gauhati Law Reports, 291.
c) Competent Authority, Tarana District, Ujjain (M.P.). v.Vijay Gupta and others, 1991 Supp. (2) S.C.C. 631.
d) The decision dated 23rd June 1993 delivered by my learned brother S.H. Kapadia, J., in Writ Petition No. 940 of 1989.
15. After raising these preliminary objections, Shri Walawalkar contended as under on merits:-
i) A licence under the Drugs and Cosmetics Act, 1940 is not conclusive of the nature of the articles as 'Ayurvedic Drugs'. At the most, it raises a presumption that the authorities under the Drugs and Cosmetics Act have complied with the provisions of the said Act before giving licence to the petitioner Company.
ii) The classification under one taxing statute is not relevant under another taxing statute. In support of this, reliance has been placed on a decision of my learned brother A.A. Desai, J., in the case of Vicco Laboratories v. The Municipal Commissioner, Bombay and another, reported in 1991(3) Bombay Cases Reporter p. 638.
iii) An ayurvedic drug has to be necessarily a medicine, as required by the definition under section 3(a) of the Drugs & Cosmetics Act. A medicine must be something which cures the disease. It may incidentally mitigate a disorder, but unless it has the quality of curing a disease, an article cannot be termed as a medicine merely because it mitigates a disorder.
16. Since Shri Walawalkar raised the preliminary objections, after the conclusion of the arguments advanced by Shri Hidayatullah, I called upon Shri Hidayatullah to deal with the preliminary objections raised by Shri Walavalkar, both on the ground of the availability of an alternate remedy, as also the incidental question of the delay in filing an Appeal under section 217 of the B.M.C. Act, capable of being condoned by the Court of Small Causes. In rejoinder, Shri Hidayatullah has, therefore, contended as under :-
i) It has been repeatedly held that after admission of a Writ Petition, which has been pending for several years, even if admittedly there is an express alternate remedy, the Court will not relegate the party to an alternate remedy to commence a new about of litigation which may deny relief for a considerably long period and result in multiplicity of proceedings. Reliance has been placed on a Division Bench decision (to which I am a party) of S.P. Kurdukar and A.V. Savant, JJ., in the case of Ceat Tyres of India Limited v. Union of India, reported in 1992(62) E.L.T. 517 (Bom.), Another Division Bench decision of M.L. Pendse and N.D. Vyas J.J., has been cited in support of this proposition viz. J.G. Glass Industries Ltd. v. Union of India, in 1992(62) E.L.T. 291 (Bom.).
ii) It is settled law that after admission of a petition where an alternate remedy exists, the Court will not, at the final hearing, after affidavits have been filed by both the sides and the appeal period has expired, relegate the petitioner to exhaust the alternate remedy assuming that there is a power to condone the delay in filing such an appeal. Reliance has been placed on two decisions :-
(a) L. Hirday Narain v. Income-Tax Officer, Bareilly, .
(b) M.R.F. Limited v. Union of India and others, 1985(22) E.L.T. 5 (Bom.).
iii) An alternate remedy which requires deposit of tax to be made is burdensome and hence, is not an equally efficaious remedy. Reliance is placed on two decisions :-
(a) Himatlal Harilal Mehta v. State of Madhya Pradesh and others, .
(b) M.G. Abrol, Additional Collector of Customs, Bombay and another v. M/s. Shantilal Chhotalal and Co., referred to above in Para 12(iii) as Shantilal Chhotalal's case.
iv) Dealing with the case of Wandleside National Conductors Ltd., 1989 Mh.L.J. 755 Shri Hidayatullah contended that in that case this Court was not able to decide the issue for want of evidence and it was necessary to have evidence of experts to decide the nature of the article which was subjected to octroi. On recording such a finding, this Court thought it proper to relegate the party to the alternate remedy of an appeal under section 406 of the Bombay Provincial Municipal Cororation Act, 1949. He, therefore, contended that the ratio of the decision in the Wandleside National Conductors' case is not applicable to the facts of the present case.
v) Similarly, in respect of the Supreme Court decision in the case of Shyam Kihore and others v. Municipal Corporation of Delhi and another . Shri Hidayatullah contended that the question raised was regarding the validity of the provisions of the taxing statute and on the provisions being upheld it was found that there was a power to condone delay in filing the appeal under the special statute and hence, in the facts of the case which arose out of the Full Bench decision of the Delhi High Court, the Supreme Court was of the view that the construction of the section, upheld by the Supreme Court, vested in the appellate authority a power to deal with the appeal otherwise than by way of final disposal even if the disputed tax was not paid and this interpretation would greatly ameliorate the genuine grievances of, and hardships faced by the assessee in the payment of tax as determined. It was in these facts that the Supreme Court relegated the party to the alternate remedy of an appeal under the Delhi Municipal Corporation Act, 1947. Counsel therefore, says that the ratio of the Supreme Court decision in the above case is clearly distinguishable.
vi) In dealing with the power to condone the delay, Shri Hidayatullah contends that the decisions on which reliance has been placed by Shri Walavalkar do not lay down the law correctly. He sought to place reliance on two Supreme Court decisions in support of his contention that "express exclusion" need not always be by express words, i.e. by express reference to the section under the Limitation Act. It could be exclusion as a result of the logical process of reasoning in analysing the scheme of the relevant provisions. He contended that if the scheme of the Special Law and the nature of the remedy provided therein amounted to a complete Code in itself, which alone is intended by the legislature to govern the matter provided in the Special Law, then the provisions of the Limitation Act must be held to be necessarily excluded even without express reference to the said provisions. Reliance is placed on two Supreme Court decisions :
(a) Hukumdev Narain Yadav v. Lalit Narain Mishra, ; and
(b) K. Venkataswara Rao and another v. Bekkam Narasimha Reddi and others, .
17. Having heard both the learned Counsel and considered the various authorities that have been cited, my conclusions are as under. In the first place, let me deal with the preliminary objections raised by Shri Walavalkar. It is no doubt true that though this Court has somewhat wide powers under Article 226 of the Constitution, when disputed questions of facts are raised and when there is an alternate machinery to adjudicate upon the said disputed questions of facts, it is proper that the litigant is relegated to adopt that alternate remedy. In the case of Union of India v. T.R. Varma, , on which Shri Walavalkar sought to place reliance, a government servant complained of wrongful dismissal under the Order dated September 16, 1954. He moved the High Court of Punjab by way of a Writ Petition to quash the order of dismissal. The High Court held that the government servant had been denied the opportunity, inter alia, to cross-examine the witnesses which amounted to denial of a reasonable opportunity and in the result, the order of dismissal was set aside directing reinstatement. On an appeal to the Supreme Court, the Supreme Court came to the conclusion that on the question as to whether there was denial of sufficient opportunity, there was a serious controversy and even if there was a defect in the inquiry, that was a matter which could be set right in the subsequent stages of the inquiry. However, dealing with the issues on which there were serious disputes which could not be decided satisfactorily without taking the evidence, the Supreme Couirt observed that as alternate remedy by way of a suit could have been adopted by the dismissed government servant. Since, however, limitation had expired, the Supreme Court went into the merits and allowed the appeal. In my view, the ratio of this decision can have no application to the facts of the present case.
18. Similarly, in the case of Sales Tax Officer, Jodhpur and another v. M/s. Shiv Ratan G. Mohatta, there was a disputed question of fact as to whether a sale was made in the course of import and was, therefore, exempt from tax. The case was under the Rajasthan Sales Tax Act and the Supreme Court came to the conclusion that the High Court should not have gone into the questions of facts, particularly when there was an alternate remedy available under the Sales Tax Act. In my view, the ratio of this Judgment also can have no application to the facts of the case before me.
19. In the case of Shivram Poddar v. The Income Tax Officer, Central Circle II, Calcutta and another, , the Supreme Court observed in Para 11 of the Judgment as under :-
"11. We may observe that we have proceeded to decide this case on the footing that the business of the firm was discontinued on dissolution of the firm. It is however necessary once more to observe, as we did in C.A. Abraham's case, that the Income-tax Act provides a complete machinery for assessment of tax, and for relief in respect of improper or erroneous orders made by the Revenue Authorities. It is for the Revenue Authorities to ascertain the facts applicable to a particular situation, and to grant appropriate relief in the matter of assessment of tax. Resort to High Court in exercise of its extraordinary jurisdiction conferred or recognised by the Constitution in matters relating to assessment levy and collection of Income-tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting to by-pass the provisions of the Income-tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the Revenue authorities, the party approaching the Court has often to ask the Court to make assumptions of facts which remain to be investigated by the Revenue Authorities."
In the present case, the facts are not at all disputed before me. Further, the grievance of the petitioners is that the taxing authorities have assumed the jurisdiction which they did not possess and this has resulted in infringement of their fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution.
20. In the case of Thansingh Nathmal v. The Suprintendent of Taxes, Dhubri and others, , the Supreme Court observed in Para 12 of the Judgment at page 1425 of the Report as under :-
"12. We accordingly decline to entertain the application to raise questions other than those raised by the certificate granted by the High Court, because the questions sought to be raised are questions of facts which were not canvassed at the appropriate stage before the taxing authorities and the machinery provided under the Act for determination of questions relating to liability to tax is attempted to be by passed."
It was in these peculiar facts that the Supreme Court had expressed an opinion that it was necessary for the parties to avail of the alternate remedy when disputed questions of facts were sought to be raised for the first time before the Supreme Court.
21. In the case of Ceat Tyres of India Ltd. v. Union of India, 1992(62) E.L.T. 517 (Bom. I had occasion to consider similar objections raised on behalf of the Union of India. Dealing with the praliminary objection about the availability of an alternate remedy, this is what is stated by the Division Bench in the said case in para 12 of the Judgment, at pages 521 & 522 of the Report :-
"12. It is necessary to deal with the preliminary objection first. In support of his preliminary objection that it may not be proper for this Court to entertain this Writ Petition, Shri Desai has invited our attention to the Judgments of the Supreme Court in the cases of -
(i) K.S. Rashid and Son v. Income-tax Investigation Commission and others, ;
(ii) Titaghur Paper Mills Co. Ltd. and another v. State of Orissa and another, ; and
(iii) Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others, .
In K.S. Rashid's case, it is no doubt true that the Supreme Court has observed that the remedy under Article 226 of the Constitution of India was a discretionary remedy and the High Court always has the discretion either to grant or refuse any writ. Similarly, in Titaghur Paper Mills' case, the Supreme Court carved out certain exceptions where the High Court could entertain a petition under Article 226 of the Constitution despite the availability of an alternate remedy. In Para 7 of the judgment at page 606 of the Report, the Supreme Court referred to the question of absence of jurisdiction and of a provision being ultra vires. Similarly, in the case of Dunlop India Ltd., the Supreme Court did say that Article 226 was not meant to short-circuit or circumvent the statutory procedure. However, it must be remembered that this petition was filed in 1982. Certain interim orders have been passed, under which the petitioners have availed substantial benefits. The petition has been pending in this Court for nearly 10 years. Both Counsel are agreed that the pendency of the Writ Petition in the Delhi High Court and any decision arrived at in the said Writ Petition has no bearing whatsoever on the questions of law raised in this Writ Pretition. Either on the question of grant of proforma credit under Rule 56A or on the question of exemption under the Notification, Exh. "F", the Counsel on either side are agreed that the Writ Petition pending in the Delhi High Court can have no bearing at all. On the questions of law, the parties have addressed us at length. There is hardly any disputed question of facts involved in the Petition. Hence, we are of the view that it would not be proper, at this stage, to drive the petitioenrs in this case to the alternate remedy of Appeals under the statute and further delay the proceedings. It must, however, be mentioned in this context that against the impugned communication, Exh. "U", the petitioners have already filed an Appeal under section 35 of the Central Excise and Salt Act which is pending. Since, however, we have heard both the counsel at length on the question of interpretation of the relevant Rules and the relevant Notification. Exh. "F", we do not think that in the facts of the present case, having regard to the pendency of the petition in this Court for the last 10 years, we should now direct the petitioners to pursue the remedy of an Appeal. The preliminary objection raised by Shri Desai is, therefore, overruled".
22. Similarly, in the case of J.G. Glass Industries Ltd. v. Union of India, 1992(62) E.L.T. 291 (Bom.). another Division Bench of Pendse & Vyas, JJ., rejected the preliminary objection by observing thus in Para 7 of the Judgment at Page 294 of the Report :-
"7. Mr. Desai submitted that the order of the Collector should not be disturbed in exercise of writ jurisdiction as the petitioners had an officacious alternate remedy of filing an appeal. We are not prepared to accede to the submission of Mr. Desai that the petitioners should be driven to commence a fresh bout of litigation for more than one reason. In the first instance, the present petition is pending in this Court for the last over seven years and it would be extremely harsh and unjust to compel the petitioners to adopt remedy of filing an appeal by incurring large expenses. Secondly, the decision of the Collector is entirely unsustainable on the facts and circumstances of the case and there is no dispute whatsoever about the facts on which the decision is to be resisted. In these circumstances, we decline to accede to the preliminary objection raised by Mr. Desai".
23. As mentioned earlier, the Writ Petition has been admitted in the year 1988. At the stage of admission, an affidavit was filed and the objection of availability of an alternate remedy was raised. Against the order of admission, appeal was preferred to the Division Bench, being Appeal No. 142 of 1989. Ground (a) in the Appeal Memo related specifically to the question of alternate remedy being available under section 217 of the B.M.c. Act. While dismissing the appeal, the question of the availability of an alternate remedy has not been kept open. All that is clarified is the petitioner's liability to pay interest in the event of the petition being dismissed. The matter is pending in this Court for nearly 5 years. No disputed questions of facts are raised before me. The octroi authorities have tried to assume jurisdiction which did not vest in them in the peculiar facts and circumstances of this case. This will be clear when I deal with the merits of the case. Apart from this, the Supreme Court has observed thus in Para 12 of its judgment in the case of L. Hirday Narain v. Income-Tax Officer, Bareilly, :
"12. An order under section 35 of the Income-tax Act is not appealable. It is true that a petition to revise the order could be moved before the Commissioner of Income-tax. But Hirday Narain moved a petition in the High Court of Allahabad and the High Court entertained that petition. If the High Court had not entertained his petition, Hirday Narain could have moved the Commissioner in revision, because at the date on which the petition was moved the period prescribed by section 33-A of the Act had not expired. We are unable to hold that because a revision application could have been moved for an order correcting the order of the Income-tax Officer under section 35, but was not moved, the High Court would be justified in dismissing as not maintainable the petition, whhich was entertained and was heard on the merits".
After arguments were advanced at length on merits, the Counsel for the respondents sought to raise the preliminary objection. In my view, it would be unfair to the petitioners to drive them to the alternate remedy at this stage in the facts and circumstances of the present case and to compel them to start a fresh bout of litigation. In view of the observations in Para 12 of the Judgment in the case of Ceat Tyres of India Ltd. (supra para 21), as also the observations in Para 12 of the Judgment in the case of J.G. Glass Industries Ltd. (supra page 22), I am of the view that the preliminary objection raised by the respondents cannot be upheld.
24. It is true that in the case of Titaghur Paper Mills co. Ltd. and another v. State of Orissa , the Supreme Court observed that where there is a hierarchy of appeals under the special statutes like the Orissa Sales Tax Act, it would be proper to direct the assessee to exhaust that remedy rather than maintaining a Petition under Article 226 of the Constitution of India. However, for the reasons indicated above in Para 21, in my view, the ratio of this Supreme Court decision can have no application to the facts of the case before me. I had also occasion to deal with this question in the case of Ceat Tyres of India Ltd. reported in 1992(62), E.L.T. 517. In Para 12 of the Judgment in the said case, I have dealt with the Supreme Court decision in the case of Titaghur Paper Mills Co. Ltd. The said Para 12 in the decision in Ceat Tyres' case is already reproduced above in Para 21 of this Judgment.
25. As far as reliance of Shri Walawalkar on the decision in the case of Wandleside National Conductors Ltd. v. Municipal Corporation for the City of Pune and others, 1989, Mh.L.J. 755 is concerned, the same is entirely misplaced. Para 10 of the Judgment at page 763 of the Report contains the following observations :-
"Even a cursory consideration of the rival contentions on the merits of the matter would justifiably lead to the conclusion that all the respective rival contentions are essentially based on facts which very much would require some evidence and a vast extent of material and which exercise can hardly be undertaken in this extraordinary and limited jurisdiction under Article 226 of the Constitution of India and the facts in the instant case are such that it may become difficult to effectively adjudicate on the issues involved and resolve the controversy in the absence of adequate date and merely on the basis of the affidavits and some certificates relied upon by both the parties".
Similarly, at page 767 of the Report in Para 14 of the Judgment, the Division Bench observed as under :-
"14. It is apparent that even without undermining the thrust of the rival contentions in this behalf also, still this would also require a detailed probe on evidence and even the Expert's evidence if need be which could be tested by cross-examination to arrive at a proper conclusion and the utter inadequacy of data in this proceeding creates much difficulty to decide that aspect even as regards this contention. These rival contentions in this field, therefore, would also require anxious consideration and for the same reason on the ground of inadequacy of data even that controversy cannot be concluded one way or the other in this proceeding".
It is clear from the above observations that this Court found it difficult to record a finding in the absence of sufficient material on record to Judge as to whether the article in question would fall under one particular Entry of Octroi or another. I do not think that the ratio of this decision can have any application to the facts of the present case.
26. The Supreme Court decision in the case of Shyam Kishore and others v. Municipal Corporation of Delhi and another, reported in A.I.R. 1982, S.C. 2279, would show that the main challenge was to the validity of the section. Having held that the section was valid, the Supreme Court observed, thus, in para 42 of the Judgment at page 2294 as under :-
"The construction of the section approved by us above vests in the appellate authority a power to deal with the appeal otherwise than by way of final disposal even if the disputed tax is not paid. It enables the authority to exercise a judicial discretion to allow the payment of the disputed tax even after the appeal is filed but, no doubt, before the appeal is taken up for actual hearing."
It was in these facts that the Supreme Court thought it fit to relegate the party to the alternate remedy of an appeal. The scheme of the provisions under the Delhi Act is not exactly identical with the scheme of the provisions of the B.M.C. Act. For instance, in Para 41 dealing with the amplitude of the words of section 170 of the Delhi Municipal Corporation Act, it has been observed at page 2293 of the Report as under :-
"41. It seems to us the words of section 170(b) are capable of a broder interpretation. A perusal of section 170 shows that the section uses three different expressions "heard or determined", "brought" and "admitted" in relation to an appeal and some significance is to be attached to the use of the expression "heard" and "determined".
In like situations, other statutes such as the one considered by this Court in Lakshmi Rattan Engineering Works Ltd. v. Assistant Commr. of Sales Tax, and those contained in certain other enactments like the Bombay and Calcutta Municipal Acts specifically prohibit the very entertainment of the appeal if the tax is not paid. When the BMC Act has carefully avoided the use of that word, we must give full effect to the differential wording. Also, the absence of a language in Cl. (b) of the proviso similar to that in Cl. (a) which indicates that an appeal filed beyond the period of limitation will not stand admitted unless the delay is condoned also warrants an inference that the payment of disputed tax is not a condition precedent to the entertainment or admission of the appeal. In the present statutory context, it sounds plausible to say that such an appeal can be admitted or entertained but only cannot be heard or disposed of without pre-deposit of the disputed tax. Such an interpretation will provide some much needed relief from the harshness of the provision."
27. Shri Walawalkar also tried to draw some support from the observations in the two Division Bench decisions of Pendse & Vyas, JJ., viz.
(i) Appeal No. 1027 of 1989 in Writ Petition No. 1105 of 1989, of the Municipal Corporation of Greater Bombay and others v. Brijwasi Radharaman Ramaswarup, Bombay and another) 28, decided on 10th & 11th June 1992.
(ii) Appeal No. 1224 of 1989 in Writ Petition No. 2422 of 1989, of the Municipal Corporation of Greater Bombay v. 1.M. Visvesvaraya Industrial Research and Development Centre, Bombay and another) 29, decided on 16th June 1992.
A perusal of these two Judgments would show that in the first case viz. Appeal No. 1027 of 1989 in the case of Brijwasi Radharaman Ramswarup, the learned Single Judge had entertained the Petition and directed the Court of Small Causes to hear the appeal without the tax-payer complying with the statutory provisions of making the deposit. This view of the learned Single Judge was not approved by the learned Judge of the Division Bench and hence the order of the Judge was set aside and the tax-payer was directed to deposit the tax so that his appeal could be heard on merits. In the other case, viz. Appeal No. 1224 of 1989 in the case of N. Visvasavarava Centre, an appeal was already filed to the Court of Small Causes and an exemption from making deposit was prayed for. The learned Single Judge had taken the view that determination of the ratable value was without giving the notice of hearing to the tax-payer and hence, had directed the Corporation to serve fresh notice. The Division Bench did not approve of this view and observed that there was proper compliance with the principles of natural justice and it was not correct to say that there was no proper service of notice on the tax-payer. The single Judge's view striking down the notice on account of the breach of the principles of natural justice was set aside. I do not think that the ratio of either of the two decisions can have any application to the facts of the present case.
28. On the question of the alternate remedy being available, my attention was also invited to a decision given by my learned brother Kapadia, J., in Writ Petition No. 940 of 1989 on 23rd June 1993. A perusal of Para 5 of the Judgment will show that the question of condonation of delay and extention of time-limit for making deposit was not even argued and hence, not considered in that case and some workable orders were passed. Therefore, I am of the view that there is nothing in the decision of Kapadia, J., which can be of any assistance to Shri Walawalkar.
29. There is one more reason why the preliminary objection of Shri Walawalkar cannot be sustained and that is my reservation as to whether the delay in filing the appeal under section 217 can be condoned. My attention has been invited to the scheme of section 217 of the B.M.C. Act. Under sub-section (2) an appeal cannot be entertained unless it is brought within 15 days of the accrual of the cause of complaint and in the case of appeal against tax, the amount of tax chargeable upto the date of the filing of the appeal is deposited by the appellant with the Commissioner. Under sub-section (3) of section 217 the appellant has to deposit the tax with the Commissioner within 30 days from the date of publication of the general notice by the Commissioner in that behalf. Under sub-section (4) of section 217 the Commissioner has to intimate the Chief Judge within 15 days from the expiry of the period of 30 days prescribed under sub-section (3) the names and other particulars of the appellants, who have either deposited with him the requisite amount within the prescribed time or have not so deposited. On the receipt of such information, the Chief Judge is obliged to summarily dismiss the appeal of any appellant who has not deposited the lawful requisite amount with the Commissioner during the prescribed period. From an analysis of the scheme of the provisions of section 217, two questions arise :-
(i) Can the delay in filing the appeal as required by clause (a) of sub-section (2) of section 217 be condoned?
(ii) Can the delay in asking the deposit of tax with the Commissioner as required by sub-section (3) of section 217 be condned?
30. Shri Walvalkar no doubt sought to place reliance on the following decisions in supprt of his contention that the delay at both the above stages can be condoned. For instance, in the case of Pravinkant Keshavlal Parikh . The Bombay Municipal Corporation for Greater Bombay and another, the Division Bench held that the Chief Judge of the Court of Small Causes was not a persona designata. Relying upon the Supreme Court decision in Thakur Das v. State of Madhya Pradesh, the Division Bench took the view that the Chief Judge was discharging the function of a Court. Referring to the scheme of section 504 of the B.M.C. Act, the Division Bench has in Para 5 of the Judgment said that in view of the provisions of section 29(2) of the Limitation Act, the provisions contained in sections 4 to 24 (both inclusive) shall apply in so far as and to the extent to which they were not expressly excluded by the B.M.C. Act. The Division Bench then referred to the fact that there was no express exclusion of the provisions of section 5 of the Limitation Act in any of the provisions of the B.M.C. Act and, therefore, prima facie, section 5 of the Limitation Act would apply to the application filed under section 504 of the B.M.C. Act. It is true that there are similar observations of the Division Bench of the Gauhati High Court in the case of A. Gupta Trust Estate Dibrugarh v. Commissioner of Wealth-Tax, Shillong, (1983)2 Gauhati Law Reports 291. It is also true that some observations of the Supreme Court in the case of Competent Authority, Tarana District, Ujjain (M.P.) v. Vijay Gupta and others, 1991 Supp. (2) Supreme Court Cases 631 also support Shri Walavalkar's contention. In para 3 of the Judgment of the Supreme Court, at page 633 of Report it has been observed as under :-
"3. A bare reading of the above provision goes to show that the provisions contained in sections 4 to 24 (inclusive) shall apply unless they are expressly excluded by any special or local law. There is no provision contained in section 11 or 44 or any other provision of the Act expressly excluding the provisions of section 5 of the Limitation Act from applying to any objections filed under section 11 of the Act. The Full Bench of the High Court has also taken the same view and we do not find any ground or justification to take a different view".
31. However, Shri Hidayatullah has invited my attention to two decisions of the Supreme Court, which have specifically considered the question of what is meant by the words "express exclusion". First, in the case of Hukumdev Narain Yadav v. Lalit Narain Mishra, , the Supreme Court was considering as to what amounts to "express exclusion" of the provisions of sections 4 to 24 of the Limitation Act, 1963 while dealing with the question arising under the Representation of People Act, 1951 where the Election Petition was filed belatedly. Para 17 of the Judgmednt at Page 489 reads as under :-
"17. Though Section 29(2) of the Limitation Act has been made applicable to appeals both under the Act as well as under the code of Criminal Procedure, no case has been brought to our notice where section 29(2) has been made applicable to an election petition filed under section 81 of the Act by virtue of which either section 4, 5 or 12 of the Limitation Act has been attracted. Even assuming that where a period of limitation has not been fixed for election petitions in the Schedule to the Limitation Act which is different from that fixed under section 81 of the Act, section 29(2) would be attracted, and what we have to determine is whether the provisions of this section are expressly excluded in the case of an election petition. It is contended before us that the words "expressly excluded" would mean that these must be on express reference made in the special on local law to the specific provisions of the Limitation Act of which the operation is to be excluded. As usual the meaning given in the dictionary has been relied upon, but what we have to see is whether the scheme of the special law, that is, in this case the Act, and the nature of the remedy provided therein are such that the Legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. In our view, even in a case where the special law does not exclude the provisions of sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the Court to examine whether and to what extent the nature of those provisions or the nature or the subject-matter and scheme of the special law exclude their operation".
Relying upon the above observations of the Supreme Court, Shri Hidayatullah contends that "express exclusion" does not necessarily mean exclusion by express words i.e. by express reference to the sections of the Limitation Act. If the scheme of the Special Law and the nature of the remedy provided therein amounts to a complete Code by itself, which alone is intended by the legislature to govern the matters provided in the Special Law, then this would result in exclusion by necessary implication and it need not be by express words with reference to sections 4 to 24 of the Limitation Act. In this behalf, he invited my attention to the scheme of section 217 referred to above and particularly, to sub-section (3) and sub-section (4) of section 217 of the Act. Secondly, my attention has also been invited to the Supreme Court decision in the case of K. Venkateswara Rao and another v. Bekkam Narasimha Reddi and others, . This was a case where the question arose as to whether the power under Order 6, Rule 17 of the Code of Civil Procedure could be exercised by permitting the petitioner to amend the Election Petition and joining the necessary party which was not joined within the limitation prescribed for filing the Election Petition. The Supreme Court negatived the contention and in Para 14 of the Judgment at page 877 it was observed as under :-
"14. It is well settled that amendments to a petition in a civil proceeding and the addition of parties to such a proceeding are generally possible subject to the law of limitation. But an election petition stands on a different footing. The trial of such a petition and the powers of the Court in respect thereof are all circumscribed by the Act. The Indian Limitation Act of 1963 is an Act to consolidate and amend the law of limitation of suits and other proceedings and for purposes connected therewith. The provisions of this Act will apply to all civil proceedings and some special criminal proceedings which can be taken in a Court of law unless the application thereof has been excluded by any enactment : the extent of such application is governed by section 29(2) of the Limitation Act. In our opinion however the Limitation Act cannot apply to proceedings like an election petition inasmuch as the Representation of the People Act is a complete and self-contained code which does not admit of the introduction of the principles of the provisions of law contained in the Indian Limitation Act".
The Supreme Court, therefore, concluded that despite the provisions of section 29(2) of the Limitation Act, the said Act cannot apply to the proceedings under the Election law in asmuch as the Representatin of People Act was a complete Code which did not admit the introduction of the principles of the provisions of law contained in the Indian Limitation Act.
32. In the view that I am taking, I need not express a final opinion on this question as to whether the Chief Judge of the Court of Small Causes has power to condone the delay (i) in the matter of filing of an appeal for which the period prescribs 15 days under clause (a) of sub-section (2) f section 217 and (ii) in the matter of deposit of the amount of tax as required by clause (d) of sub-section (2) of section 217 which has to be read in the light of sub-section (3) and sub-section (4) of section 217 of the B.M.C. Act. Had I been required to decide the first point contrary to the view taken by the Division Bench in Pravinkant Parikh's case , I would have normally been required to refer the matter to a larger bench. At any rate, Pravinkant Parikh's case does not decide the question of the power to condone delay in making the deposit. However, in the view that I am taking, it is not necessary for me to express any opinion on this question of the power to condone the delay in either filing the appeal or in making the deposit of the amount of tax.
33. As already held above in Para 23, Shri Walawalkar's preliminary objection that the petition should not be entertained because of the disputed questions of facts and the availability of an alternate remedy cannot be sustained for the reasons indicated above. As mentioned earlier, this objection was taken at the stage of admission of the petition, after which the matter was admitted and an Appeal was filed in which also this objection was raised. Though the Appeal has been dismissed, the point has not been specifically kept open. The matter has been pending for nearly 5 years and affidavits have been filed in details and it is after the matter was argued on merits that the objection was raised for the first time. There are no disputed questions of facts here. I am not inclined, therefore, to upheld the said preliminary objection. Hence, in my view, it is not necessary to decide the question of the powers of the Chief Judge of the Court of Small Causes to condone delay in either filing the appeal or in making the deposit as per section 217 of the B.M.C.Act. Thus, having rejected Shri Walawalkar's preliminary objection to the maintainability of this petition, I now proceed to deal with the merits of the matter.
34. Coming to the merits of the petition, I find merit in the contentions raised by Shri Hidayatullah. A perusal of the Division Bench Judgment in the case of Leukoplast (1988 (36), E.L.T. 369A (Bom) (supra) would show that the commercial understanding is that the goods are Ayurvedic Drugs since under the Drugs and Cosmetics Act the goods cannot be manufactured, exhibited or sold except as Ayurvedic Drugs. Laukplast (India) Limited was a case dealing with classification of products inter alia Zinc Oxide Adhesive Plaster B.P.C. (Leukoplast) ; Surgical Bound Dressing (Handyplast), Belladone Plaster B.P.C., Capsicum Plaster B.P.C. and Cotton Crepe Bandages B.P.C. (Laukoplast). The case arose under the Sales Tax Act and the question was whether the products enjoyed the exemption under the notification issued under the Sales Tax Act. The petitioner's contention was that the products were drugs and medicines and therefore, enjoyed exemption in view of the notification. It was held by the Division Bench that the trade understanding should be the understanding of those who are actually dealing with particular products or goods. In para 14 of the judgment at page 376 of the Report, the Division Bench observed as under :-
"14. We have already seen that the Supreme Court had laid down in Gujarat Wollen Felt Mills' case that the well known rule in interpreting fiscal statutes is that resort should be had not to the scientific or technical meaning attached to the goods but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. The same view had been taken earlier in the State of Mysore and another v. Pendakur Virupanna Setty and Sons and Another, and in Jaswant Singh Charan Singh's case . This Court naturally following the dicta of the Supreme Court, held the same view in Udaya Minerals' case. It is thus well settled that generally, while interpreting the fiscal statutes the scientific meaning of a product is not relevant but one has to consider its popular understanding or its understanding in the commerce or in the trade. But it is obvious that this trade understanding should be the understanding of those who are actually dealing with that particular product or goods. The arguments advanced by Mr. Hidayatullah cannot thus be brushed aside sumarily, and on the contrary,. deep consideration".
Thereafter in Para 15 of the Judgment at Page 376 and Page 377 of the Report, it has been observed as under:-
"In other words, the Drugs and Cosmetics Act makes it abundantly clear that only those drugs which are manufactured under a valid licence issued under the said Act and in compliance with its provisions can be lawfully sold, exhibited for sale or distributed. This also indicates that trade in respect of drugs is lawfully possible only when there is a compliance with the provisions of the said Act, but by the manufacturers and dealers. In Ashok Leyland's case (above), the Division Bench of this Court held that the relationship between the manufacturer and the dealer is not that of a principal and agent but that of a seller and a buyer. Applying the ratio of this decision to the case at hand, it seems to us obvious that the relationship that is established between the manufacturer and the dealer as regards the sale of the products manufactured by the petitioners is of a seller and a buyer and thus, the observation of the Supreme Court in Hindustan Sugar Mills' case (above) became most relevant. Their Lordships of the Supreme Court, dealing with the provisions of the Central Act regulating the sale and the price of cement vis-a-vis the clauses of the agreement entered into by the parties, indeed observed that the provisions of the Central Act regulating the sale and the price of cement and had an overriding effect and thus, if the said Control Order was stipulating that the freight was to be paid by the purchaser, such stiupulation had to prevail notwithstanding clauses to the contrary in the agreement. In the case at hand, considering the provisions of the Drugs and Cosmetics Act which minutely regulate the manufacture, sale and distribution of drugs and cosmetics, it appears to us that such provisions necessarily have an overriding effect and therefore, prevail and thus, the definition of `drug' given in the said Act is most relevant for determining its meaning in the trade. We are thus of the view that Mr. Hidayatullah is entirely right when he contends that the true and real meaning which a drug has in the trade or in commerce is the meaning given to it in the Drugs and Cosmetics Act. The provisions of section 18 are unquestionably motivated by public interest to protect and defend the health and lives of people. We are, therefore, of the view that the popular or the commercial meaning of a drug is synoymous to the one given in the Drugs and Cosmetics Act".
35. Similarly, I am in agreement with the view expressed by the Division Bench of the Madhya Pradesh High Court in the case of Panama Chemical Works v. Union of India, 1992(62) E.L.T. 241 (M.P.). The product there was "SWAD" which is more or less similar to the product in the present case. The Division Bench of the Madhya Pradesh High Court referred to the Bombay view in the case of Leuoplast (India) Limited in Para 28 at page 249 of the Report as under :-
"28. The Bombay High Court in the case of Leukoplast (India) Ltd. v. State of Goa, 1985(36) E.L.T. 369A, has held that although it is well settled that generally, while interpreting the fiscal statutes, the scientific meaning of a product is not relevant but one has to consider its popular understanding orits understanding in the commerce or in the trade. But it is obvious that this trade understanding should be understanding of those who are actually dealing with that particular product or goods. The Drugs and Cosmetics Act is a comprehensive piece of legislation which deals with drugs and provides not only for the standards for quality, misbranded and adulterated drugs and but also for the safeguards for the manufacture, sale and distribution of drugs as well as cosmetics. The Act makes it abundantly clear that only thse drugs which are manufactured under a valid licence issued under the Act and in compliance with its provisions can be lawfully sold, exhibited for sale or distributed. After considering the various aspects of the Act the Court was of the view that the definition of `drug' given in the said Act is most relevant for determining its meaning in the trade. Therefore, the true and real meaning which a drug has in the trade or in commerce is the meaning given to it in the Drugs and Cosmetics Act. In this case the Bombay High Court has also taken the view that the order of the Assessment Officer has to stand or fall on its own grounds and cannot be supplemented by affidavits".
In view of the above, it has been observed in Para 29 of the Judgment at page 250 as under:-
"29. Now, in the light of the aforesaid authorities it has to be seen as to how the medicine in question i.e. SWAD is known in the common parlance or in commercial use. There is not an iota of evidence to show that this product is sold as a confectionary and is commonly used as a confectionary by the consumers. In Tariff Entry 3003.30 the medicaments including those in Ayurvedic, Unani, Sidh and Homeopathy system have been maintained as the goods falling within that entry. Therefore, for ascertaining whether a product is an Ayurvedic product or not the facts on the record have to be perused and in the light of the decisions of the Supreme Court in Akbar Badruddin Jiwani's case (supra), the Leukoplast (India) Ltd's case (supra) and the case of (Ramesh Chemical Industries (supra), this Court has to look to the scientific and technical aspect of the product with the aid of the Cosmetics Act, 1940".
It would be, therefore, clear from the above decision of the Madhya Pradesh High Court that if the goods are licensed as drugs under the Drugs & Cosmetics Act, then they are drugs and the licence is conclusive of the question.
36. The above position of law is also clear from the observations of the Supreme Court in the case of M.G. Abrol, Additional Collector of Customs, Bombay and another v. M/s. Shantilal Chhotelal and Co., . This was a case of expert of steel-skull scrap and the Controller of Steel had certified the goods to be steel skull scrap fit for export. However, the Customs Authorities took the view that it was not skull scrap fit for export and seized the goods in exercise of their powers under the Customs Act. It was contended by the Customs Authorities that the export was unauthorised. When the action was challenged, the Division Bench of the Bombay High Court took the view that (i) since the satisfaction as to whether a particular consignment of scrap is capable of being used in India or not is to be, under the statement of export policy, that of the Iron an Steel Controller, the Customs Authorities were not entitled to consider afresh whether that scrap was or was not usable in India; (ii) the licence in question not having been granted by the Customs Collector, but by the Iron & Steel Controller, it was not open to the customs authorities to rely upon the provisions of the Imports and Exports Control Act, 1947, or the Exports Control Order, 1954, for the purpose of making inspection of the consignment which the petitioners were exporting; and (iii) if what was being exported was not Skull Scrap, but still was something the export of which was permitted by the Iron and Steel Controller in the ground that scrap was not usable in India, there was nothing which the Customs Authorities were entitled to do. When the matter was carried in appeal to the Supreme Court, the Supreme Court considered the question of a possible conflict between the two jurisdictions and observed, thus, at the end of Para 10 on pages 201 and 202 :-
"A combined reading of the relevant provisions of the Exports (Control) Order and the entries in the Statement of Export Licensing Policy leads to the following position: The Exprts (Control) Order recognizes scrap of iron and steel as one entity; it does not recognize different categories of scrap, such as skull scrap or nonskull scrap; it permits export of such scrap under a licence issued by the Iron and Steel Controller, as he is the officer who regulates the trade in scrap under the Iron and Steel Control Order; but under the Policy Statement a distinction is made between sheet cuttings and other ferrous scrap; in the case of the export of the former more stringent conditions are imposed than in the case of the latter; and in the case of the latter export is permitted if in the opinion of the Iron and Steel Controller the material is of no use in India. We are not concerned in this case with sheet cuttings, but only with other ferrous scrap. The Exports (Control) Order, the Schedule annexed there to and the Statement of Export Licensing Policy do not define skull scrapat all; skull scrap is what the officer thinks it is. The only restriction on the Controller giving a licence for export of scrap is that in his opinion it is not unable in India; his opinion is final. For the purpose of his opinion he may describe or categorize the scrap in the manner convenient to him; but that does not make it anytheless an exportable scrap. In the circumstances it must be held that the licence covers only the scrap not usable in India. The description of the scrap has no relevance to its export ability".
37. In view of the above three decisions referred to in Paras 34, 35 and 36, it is clear that once the Competent Authority under the Drugs & Cosmetics Act, which has an elaborate machinery, appointed for determining the classification of the goods, classified the petitioner's product as drugs and concluded that they were Ayurvedic Drugs, the octroi authorities are bound by the said classification and have no jurisdiction to enquire into the question as to whether it could fall under Entry 8 of Schedule 'H' to the B.M.C. Act. This view is also consistent with the scheme of the provisions of the Drugs & Cosmetics Act, 1940 and Drugs & Cosmetics Rules 1945 which I have disscussed in Paras 10 and 11 of this Judgment. It is unnecessary to repeat the said discussion here. This is also the view taken by this Court in the case of the Bombay Chemicals Pvt. Ltd. v. Union of India and 14 others, reported in 1982, E.L.T. 171 (Bom.). This was a case where the petitioners imported into India Pyrathrum Flowers and Pyrethrum Flowers Crushed. The Directorate General of Technical Development had certified the imports as chemicals, used exclusively for pyrethrum content which is used in the manufacture of insecticides. Under the relevant Entry, if they were chemicals, they were exempt from duty. If, however, they were held to be plants as contended by the Customs Department, they were liable to duty. Dealing with this contention, this Court observed in Para 17 of the Judgment, at Page 179 of the Report as under:-
"In my judgment, it was not open for the authorities below to ignore the certificate by placing reliance upon what was stated by the petitioners in their advertisement. The Customs authorities were bound to accept the certificate issued by the Directorate General and it is not permissible to go behind it merely because the Customs authorities feel that the contents of the certificate were disproved by some other material. There is a great danger in accepting the submission of the Department that the authorities can brush aside the certificate and determine whether the assessee is entitled to the exemption or not. In case, this principle is accepted, then it would open floodgates of false and frivolous claim by the assessees who have been denied the certificate by the Director General by claiming that Directorate General has ignored certain facts and the Customs authorities should independently consider whether the requirements of the conditions of the Notification are complied with".
38. The fact that the goods are sold without the prescription of a Medical Practitioner is, in my view, irrelevant. It is common knowledge that several drugs are sold in the market across the counter without the prescription of a medical pactitioner but are nevertheless drugs classified as such under the Drugs and Cosmetics Act, 1940. It is not necessary that every drug must always be sold by a Pharmacy.
39. There is also substance in the contention of Shri Hidayatullah that the definition of the word "Food" under the Prevention of Food Adulteration Act, 1954 is not relevant as the goods have to be classified by their commercial understanding. This is clear from the observations of M.H. Kania, J. (as His Lordship then was) in the case of Cabdury-Fry (India) Pvt. Ltd. v. Union of India, in Misc. Petition No. 702 of 1971, decided on 1st September, 1977 where it has been observed as under:-
"The first submission of Mr. Setalvad, the learned Counsel for the petitioners, is that the impugned order is bad in law, as in order to interpret a term used in one act it is not permissible to rely on the definition of that terms in a totally different Act, particularly when such a definition is an artificially partificially enlarged definition. It was urged by Mr. Setalvad that the definition of the term "food" contained in the Prevention of Food Adulteration Act, 1954, as it stood at the relevant time was for the purposes of that Act, the object of which was to prevent adulteration of any type or form of food, whereas the purpose of the Customs Act, read with the other relevant provisions, is to collect revenue by the levy of customs duties. It was pointed out by Mr. Setalvad that even apart from this, the definition of the term "food" contained in the Prevention of Food Adulteration Act, 1954, was an inclusive and enlarged definition and such a definition could not be utilised for the purpose of understanding the meaning of the term "food" used in Item 21(2) of the said Schedule. It was also pointed out by Mr. Setalvad that the opening part of section 2 of the said Food Adulteration Act, which is the definition section, shows that the definition of the word "food" given there in is only for the purpose of that Act and even there applicable unless the context otherwise requires".
Further, in view of the fact that since the definition of the word "Food" under section 2(v) of the Prevention of Food Adulteration Act, 1954 excludes "drugs" from its purview and since the product of the first petitioner is admittedly classified as a drug, it cannot be classified as "food" under Entry 8 of Schedule `H' to the B.M.C. Act.
40. I find merit in the contention of Shri Hidayatullah that the end use of the product as digestive tablets is irrelevant for the purpose of classifying the goods under Entry 8, where there is no reference to the end use. This is supported by the observations of the Supreme Court in the case of Dunlop India Ltd. v. Union of India and others, A.I.R. 1977 S.C. 597. In Para 42 of the said Judgment at Page 607 of the Report it has been observed as under :-
"42. We are clearly of opinion that in the state of the evidence before the revisional authority no reasonable person could come to the conclusion that V.P. Latex would not come under rubber raw. The basis of the reason with regard to the end-use of the article is absolutely irrelevant in the context of the entry where there is no reference to the use or adaptation of the article. The orders of the authority are, therefore, set aside. In the result the appeals are allowed with costs".
In this connection, Counsel invited my attention to the other Class in Schedule "H". Class I deals with articles of food and drink. Class II deals with animals. Class III deals with articles used for fuel, lighting and industrial use. Class IV deals with articles used in construction of buildings, roads and other structures and articles made of wood or cane. His contention is that in the articles falling in Class III or Class IV the end use may be a relevant factor. However, there is nothing in the heading of Class I or in Entry 8 of Schedule "H" to indicate that the item which is to be classified refers to its end use. I find substance in this contention.
41. As against the above, I must deal with the contention of Shri Walawalkar on merits. His contention is that the licence under the Drugs & Cosmetics Act is not conclusive of the nature of the article as having been "drug". I have already referred to the Scheme of the provisions of the Drugs & Cosmetics Act, 1940. The definition of `Ayurvedic Drug' under clause (a) of section 3 read with the definition of patent or proprietary medicine in relation to an Ayurvedic system of medicine as per section 3(h)(i) pre-supposes a product which has to conform to the standard prescribed in the said definitions. The First Schedule to the Act mentions the names of the Standard Books and, as stated earlier, the petitioners' product does conform to the Standard Books mentioned in the Schedule. For instance, there is a reference to Bhava Prakasha and Rasaratna Samuchaya in the manufacturing licence produced by the first petitioner. Ayurved Text Bhava Prakasha is mentioned at Sr. No. 11 in the First Schedule, whereas Rasaratna Samuchaya is mentioned at Sr. No. 20 in the First Schedule to the Drugs and Cosmetics Act, 1940. Section 18 prohibits manufacture and sale of certain drugs and cosmetics with which we are not concerned. But when we come to Chapter IV-A dealing with the provisions relating to Ayurvedic, Siddha and Unani Drugs, Section 33-C deals with Ayurvedic and Unani Technical Advisory Board which consist of experts in the field to advise the government. Section 33-EEC prohibits the manufacture for sale of certain Ayurvedic, Siddha and Unani Drugs except in accordance with the conditions of licence issued under the said Chapter. Section 33-I prescribes penalty for manufacture for sale or for distribution of an Ayurved Medicine in contravention of the provisins of the said Chapter.
42. When we come to the Drugs & Cosmetics Rules, 1945, Part XVI lays down stringent provisions with relation to the manufacture for sale of Ayurvedic Drugs. Rule 154(1) talks of issuance of licence in Form 25-D subject to certain conditions mentioned under Rule 157 being fulfilled. Under sub-rule (2) of Rule 154 licence under rule shall be granted by the licensing authority after consulting such experts in the Ayurvedic system of medicine which the State Government may approve in this behalf. The licence is not for an unlimited duration. It is for a fixed duration ending with the 31st December of the year, following the year in which it is granted and a renewal is contemplated subject to same conditions as are prescribed for the grant of licence. In the event of a breach of the conditions of licence, the licensing authority is empowered to suspend or cancel the licence. In the face of all these provisions, it is difficult to appreciate why the first petitioner would subject itself to the rigours of the provisions of the Drugs & Cosmetics Act, 1940 and the Drugs & Cosmetics Rules, 1945 if it were not manufacturing a drug or ayurvedic medicine within the meaning of the said provisions. This apart, in the light of the Judgmetns referred to above, in the cases of -
(i) Leuoplast (India) Limited - 1988(36 E.L.T. 369A (Bom.).
(ii) Panama Chemical Works - 1992(62) E.L.T. 241 (M.P.).;
(iii) M.G. Abrol v. M/s. Shantilal Chhotalal - ;
(iv) Bombay Chemicals Pvt. Ltd. - 1982 E.L.T. 171 (Bom.);
the question of jurisdiction on the part of the octroi authorities to re-examine whether a particular article which has been finally and conclusively decided by the Competent Authority under the Drugs & Cosmetics Act is shut out. In my view, there can be no investigation into the said issue by the octroi authorities of the B.M.C. The scope of jurisdiction of the octroi authorities is extremely limited in view of the ratio of the decisions of the above mentioned four cases viz. (i) Leukoplast (India) Limited, (ii) Panama Chemicals, (iii) M.G. Abrol v. M/s. Shantilal Chhotalal and (iv) Bombay Chemicals case. The licence under the Drugs & Cosmetics Act, 1940 has been held to be either final or conclusive or synonymous of the commercial parlance in the above four cases.
43. Similarly, the test of the enduse of the product was rejected by the Supreme Court in the case of Dunlop India Ltd. (supra). The advertisement has been held to be irrelevant in the Bombay Chemicals case (supra). Similar view has been taken by this Court in respect of the advertisement in 1985(20) E.L.T. p. 70 viz. the second case of Leukoplast (india) Ltd. v. Union of India. This case is also an authority for the proposition that if the Writ Petition was duly admitted and rule was issued and hearing on merits was fixed, the petition cannot be rejected on the ground of non-availing of the alternate remedy. Reliance is placed by this Court on the observations of the Supreme Court in the case of L. Nirday Harain v. Income Tax Officer, Barilly, . The relevant observations are to be found in Para 6 of the Judgment at page 75 of 1985(20) E.L.T. p. 70. I have already referred to the case of L. Hirday Marain in para 23 above.
44. Since Shri Walawalkar has placed strong reliance on the Judgment of my learned brother A.A. Desai, J., in the case of Vicco Laboratories, 1991(3) Bombay Cases Reporter 638 let me turn to that judgment now. The question which fell for consideration before the learned Judge was whether the products known as Vicco Vajradanti Toothpaste, Tooth powder and Vicco Turmeric vanishing cream were proprietary medicinal preparations or toilet requisites (scheduled item) for the purpose of levy of octroi as ennumerated in Item 32(a) of Schedule 'H' to the B.M.C. Act. The petitioners' contention before this Court was that the products were Ayurvedic medicinal preparations and reliance was placed on the licence issued under the Drugs & Cosmetics Act, 1940. The said question arose in a First Appeal from the decision of the Court of Small Causes under section 217 of the B.M.C. Act. This Court held that the use of the product was for cleaning teeth, which was a primary and everyday affair. The product was available in open market and in provisional stores. People in common parlance understood the use of the product for cleaning teeth. Ordinarily, toothpaste and tooth powder was not prescribed by Dentist for ailment of teeth". These findings have been recorded in Para 11 of the Judgment. On the basis of these findings the learned Judge came to the conclusion that the products were toilet requisites and that was the use understood by the people in ordinary sense and as such, they were held to be covered by the relevant entry in the Schedule.
45. Shri Hidayatullah has strongly criticised the Judgment in the case of Vicco Laboratories (supra) on the following grounds. He contended that in the first place, the law laid down by this Court in the cases of Leukoplast and Bombay Chemicals and the test laid down by the Supreme Court in the case of M/s. Shantilal Chhotalal regarding the scope of inquiry and the jurisdiction when the licence was issued under the special law like the Drugs & Cosmetics Act, was ignored by the learned Judge or, at any rate, the relevant decisions were not pointed out to the learned Judge. The reference to the enduse of the product, on which reliance has been placed, is wholly irrelevant, having regard to the law laid down by the Supreme Court in the case of Dunlop India Ltd. (supra). The impresion given by the manufacturer to the consumer through advertisement was equally irrelevant,as held by this Court in Bombay Chemicals case and in the second case of Leukoplast India Private Ltd. 1985(20) E.L.T. p. 70. He further contended that in Vicco Laboratories' case licence was first issued for cosmetics and later on, for aurvedic drugs. The declaration by manufacturer for octroi purposes was for toothpaste. These two factors have led to some conflict in the evidence that was led. The evidence of Dentist/Surgeon in Vicco Laboratories' case showed that he did not prescribed it as a medicine and, therefore, the medicinal use was perhaps incidental. Counsel, therefore, contends that having regard to the cases above mentioned, all these tests adopted by the learned Judge in Vicco Laboratories' case must be held to be wholly irrelevant. I find merit in the contention of Shri Hidayatullah and having regard to the law laid down by this Court in Leukoplast's case 1988(36) E.L.T. 369A, Panama Chemicals case 1992, E.L.T. 241 and Bombay Chemicals case 1982 E.L.T. 171 and the law laid down by the Supreme Court in M.G. Abrol v. M/s. Shantilal Chhotalal and Co., it would not be open to the octroi authorities to investigate into the question as to whether the product "Chatpat Churanets" was not a `drug' and could fall under Entry 8 of Schedule `H' to the B.M.C. Act.
46. Similarly, I am unable to persuade myself to agree with the view of the learned Judge in Vicco Laboratorie's case that the factors such as use of the product, its availability in the open market and the contents of the advertisement are relevant for deciding the issue in the face of the product being classified as an Ayurvedic Drug under the Drugs & Cosmetics Act, 1940. It is also clear to me that the commercial understanding in respect of the product is that they are Ayurvedic Drugs under the Drugs & Cosmetics Act, 1940 and the same cannot be manufactured, exhibited or sold, except as an ayurvedic drug. In the face of the Division Bench decisions mentioned above and the Supreme Court Judgment in the case of M.G. Abrol v. M/s. Shantilal Chhotalal (supra), it is difficult to agree with the conclusions a reached by the learned Judge in the case of Vicco Laboratories. In my view, therefore, the Judgment in Vicco Laboratories' case is of no assistance to Shri Walvalkar.
47. In view of the above, my conclusions are as under:-
(i) in the facts and circumstances of the present case, it would not be proper at this stage to drive the petitioner to avail of the alternate remedy under section 217 of the B.M.C. Act. The question as to whether delay in filing the Appeal under section 217 of the B.M.C. Act can be condoned is left open. Similarly, the question as to whether the time for making deposit under sub-section (3) of section 217 can be extended is also left open and there is no expression of any opinion on either of these two questions falling under clause (a) of sub-section (2) of section 217 or clause (b) of sub-section (2) of section 217 read with sub-sections (3) and (4) of section 217.
(ii) In the facts of the present case when the product has been classified as an Ayurvedic Medicine under the Drugs & Cosmetics Act, 1940, the octroi officers of the first respondent Corporation have no jurisdiction to investigate into the question as to whether the said product is not a drug and can fall under Entry 8 of Schedule 'H' to the said Act.
(iii) In view of the decision of the Division Benches of this Court and of the Supreme Court in M.G. Abrol v. M/s. Shantilal Chhotalal, the ratio of the decision in Vicco Laboratories (supra) can have no application to the facts of the present case.
48. In view of the above, the Petition will have to succeed. Rule in the Writ Petition is made absolute. The impugned letter - Exhibit "J" dated 16th November 1988 is hereby quashed and set aside. Rule is made absolute in terms of prayers (a) and (b)(ii). No order as to costs.
49. The petitioners are discharged from the two undertakings filed by them viz. 1st December 1988 - to pay octroi and in respect of interest to be paid, pursuant to the order passed by the Division Bench in Appeal No. 142 of 1989 on February 20, 1989.
50. At this stage, shri Murthy prays for stay of the operation of the order making the rule absolute in terms of prayers (a) and (b)(ii) on the ground that the Corporation desires to carry the matter in Appeal. Shri Murthy prays for stay for 8 weeks to the operation of the order. Shri Hidayatullah opposes. However, the operation of the order is stayed for 6 weeks.
51. Certified copy of this order, if applied for, to be issued expeditiously.