HOECHST PHARMACEUTICALS LTD V. STATE OF BIHAR (1983) 4 SCC 45
FACTS
The petitioner, a company manufacturing and selling medicines and life-saving drugs in India, registered a Patna branch and sold products through wholesale distributors and retailers in Bihar. 94% of medicines and drugs sold by companies/distributors were at the controlled price absolute of local levy under the Drugs (Price Control) Order, 1979. Companies were prohibited from selling these medicines above the fixed price, allowing manufacturers to pass on tax liability to consumers. Dealers with gross turnover exceeding Rs. 5 lakhs were also prohibited from collecting the balance of the payable surcharge. The petitioner challenged the constitutional validity of price-lists for their medicines, claiming they were selling prices inclusive of excise duty. The High Court upheld the validity, despite an appeal.
ISSUES:
- Whether the subject matter of the impugned legislation was competently enacted under Article 246 or not.
- JUDGMENT-
- The various entries in the three Lists of the Constitution are not "powers" of legislation but rather "fields" of legislation. Article 246 and related constitutional provisions grant the power to legislate. Taxation is considered a distinct subject for determining legislative competence. Therefore, the power to impose taxes cannot be derived from a general legislative entry as an inherent power.
- Taxation and general subjects of legislation are distinct categories, each covered by different sets of entries. A list I contain Entries 1 to 81 related to general subjects of legislation and Entries 82 to 92-A related to taxes. List II contains Entries 1 to 44 pertaining to general subjects of legislation and Entries 45 to 63 related to taxes. List III, the Concurrent Legislative List, does not include any entry related to taxation, as the exclusive power of the State to make laws regarding the levy and imposition of taxes on the sale or purchase of goods is covered by Entry 54 of List II.
- Consequently, the two laws in question, namely Section 5(3) of the Act and Paragraph 21 of the Control Order issued by the Central Government under Section 3(1) of the Essential Commodities Act, operate in separate and distinct domains. They do not conflict with each other, and there is no issue of repugnancy between the two laws.