The Judgment of the Court was delivered by

Gentle, J.:— This is a reference by the Board of Revenue, Bengal, under Section 21, sub-section (1), of the Bengal Finance (Sales Tax) Act, 1941. The applicants are the North Bengal Stores, Ltd., who are dealers in patent medicines and medical sundries; they are also dispensing chemists and as such they make up and dispense prescriptions, written by medical practitioners for their patients.

2. By sub-section (1) of Section 4 of the Act, every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum, specified in sub-section(5) of the same section, shall be liable to pay tax oh all sales effected after the notified date. By sub-section (5), taxable quantum, so far as material for the present reference, means:—

Clause (a) in relation to any dealer who himself manufactures or produces any goods for sale, 10,000 rupees;

Clause (c) in relation to any other dealer, 50,000 rupees.

3. It is common ground that, during the year preceding the commencement of the Act, the applicants' turnover was less than Rs. 50,000 and they are not liable to taxation under clause (c). The Commercial Tax Officer, however, assessed the applicants on the grounds that dispensing chemists are manufacturers and, since the applicants' turnover during the year before the commencement of the Act exceeded Rs. 10,000, they are liable to assessment pursuant to clause (a).

4. The Commissioner of Commercial Taxes, Bengal, and the Board of Revenue, to whom respectively an appeal and a petition for revision were preferred by the applicants, upheld the assessment. The Commissioner expressed the opinion that mixing different medicinal ingredients into an ultimate mixture suitable for use by particular classes of patient consumers according to the manner prescribed by medical men is the manufacture of medicines. The view stated by the Board was that the applicants' business of compounding preparations for use by individual customers is manufacture or production of an entity, different essentially from its ingredients.

5. Three questions are referred by the Board to this Court; they are as follows:—

(i) Whether, on the facts proved, the petitioners' business is liable for registration under Section 7 of the Bengal Finance (Sales Tax) Act, 1941?

(ii) Whether the petitioners are manufacturers within the meaning of sub-section 5(a) of Section 4 of the Act?

(iii) Whether the petitioners, while serving out prescriptions for individual cases, can be said to be manufacturers?

6. The answers to questions (i) and (ii) will depend upon the answer to question (iii) and the opinion with respect to the meaning and effect of clause (a) of sub-section (5) of Section 4 of the Act.

7. Mr. Sinha, for the applicants, conceded that a manufacturing chemist, who makes up specific medicines in considerable quantities for sale to members of the public at large, is a manufacturer, but, he contended that the dispensing of a doctor's prescription for one patient is not manufacture, but is preparing for one person a drug or combining two or more drugs into a convenient form to be taken or used by a person according to a doctor's direction.

8. On behalf of the Board, the Advocate-General argued that the preparation of a doctor's prescription by a chemist is the manufacture of a medicine. He referred to the observations of Abbott, C.J, in The King v. Wheeler, (1819) 2 B. & Ald. 345, 349 : 106 E.R 392, where he said that—

“the word ‘manufacture’ has been generally understood to denote either a thing made, which is useful for its own sake, and vendible as such, as a medicine, a stove, a telescope, and many others.”

9. He referred, also, to Section 41, sub-section (1), of the English Finance (No. 2) Act, 1940, (3 & 4 Geo. VI c. 48) wherein “manufacturer” is defined as—

“a person who carries on in the United Kingdom a business of making goods or of applying any process in the course of the making of goods, so however that for the purposes of this definition the making up of drugs according to a formula prescribed by reference to the needs of a particular patient shall not be regarded as the making of goods.”

10. The learned Advocate-General contended that the preparation of a prescription is the making of a thing and was so recognised in Wheeler's case (supra), and, also, that the maker-up of drugs, according to a prescription, would have been a manufacturer of goods within the definition of the English Act but for the inclusion of the exception. Since the Bengal Act does not contain such exception it follows that a dispensing chemist manufactures or produces goods for sale within the contemplation of Section 4, sub-section (5), clause (a), of the Bengal Act.

11. Under the Bengal Act, a dealer is liable to pay sales tax who manufactured or produced goods for sale and whose gross turnover exceeded Rs. 10,000 during the year preceding the commencement of the Act. Section 2 of the Act defines “dealer” as—

“any person, firm or Hindu joint family, engaged in the business of selling or supplying goods in Bengal.”

12. It is not in dispute that the applicants are dealers within the meaning of Section 2 and that their gross turnover is within clause (a) of sub-section (5) of Section 4 of the Act.

13. I think the answer to the question, whether a dispensing chemist is such a dealer; is to be found by reference to the goods which he sells and what is done by him with respect to those goods before they are supplied.

14. Prescriptions specify the components of resultant mixtures or compounds which are obtained when the prescriptions are dispensed. They may be for internal use, for example, liquids in bottles, and solids in capsules, or for outward application, for example, ointments, plasters and powders. When customers give prescriptions to a dispensing chemist to be made up, thereby they place orders for the resultant compounds or mixtures to be supplied, and, by accepting to dispense the prescriptions, the chemist agrees to sell to his customers such compounds or mixtures. Dispensing is necessary for the purpose of obtaining the mixtures. Until prescriptions are dispensed and the compounds obtained, the chemist has not got the goods, which his customers have ordered and which he has agreed to sell. The process of dispensing is carried out for the purpose of producing the contract goods. When dispensing has taken place, but not before, the chemist has the goods with which to supply his customers and which he has agreed to sell to them. The resultant mixtures, after dispensing prescriptions, are the goods sold by a dispensing chemist to his customers; the process of dispensing is to produce those goods for sale, without which process sales of mixtures or compounds cannot be effected by a chemist. Even if that process is not the manufacture of goods, as articles of furniture, mechanical appliances and paints are made from raw materials, nevertheless, since it is the production of goods for the purpose of selling to customers, the chemist who dispenses prescriptions thereby produces goods for sale.

15. In my opinion, Section 4, sub-section (5), clause (a), of the Act applies to a dispensing chemist whose gross turnover exceeds Rs. 10,000 during the prescribed year. Upon the assumption that questions (ii) and (iii) in the reference include the words “produces any goods” in addition to the word “manufactures” in those two questions, in my opinion the answers to the three questions should be in the affirmative.

16. In the circumstances, there will be no order for costs.

Das, J.:— The several questions raised in this Reference depend, for their answers, on a true construction of the several relevant provisions of the Bengal Finance (Sales Tax) Act, 1941. That Act was passed because, as its preamble declares, it was found—

“necessary to make an addition to the revenues of Bengal, and for that purpose to impose a general tax on the sale of goods in Bengal,”

18. Section 7(1) of the Act enjoins that no dealer shall, while being liable to pay tax under the Act, carry on business as a dealer unless he has been registered and possesses a registration certificate. The prohibition contained in this section applies to a person only when it is shown: (i) that he is a dealer and (ii) that he is liable to pay tax under the Act.

19. As to (i): “Dealer” is defined in Section 2(c) as meaning—

“Any person, firm or Hindu joint family, engaged in the business of selling or supplying goods in Bengal.”

20. “Goods” is defined in Section 2(d) as meaning “all kinds of movable property” other than certain things specified therein. The definitions of “dealer” and “goods” are in very general terms and are coextensive in scope. “The business of selling or supplying” in which a person may be engaged so as to be a “dealer” may extend over “all kinds of movable propery” (with a few specified exceptions) which may conceivably be capable of being sold or supplied as a vendible or commercial commodity.

21. As to (ii): the liability to pay tax under the Act is imposed on a dealer by Section 4. Sub-section (1) of that section provides that, subject to the provisions of Sections 5 and 6, and with effect from a certain specified date, every dealer, whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum, shall be liable to pay tax under the Act on all sales effected after that date. I omit the proviso to this sub-section, for it is not material for the purposes of the present Reference. Sub-section (2) of this section enacts that every dealer to whom sub-section (1) does not apply shall be liable to pay tax with effect from three months after the commencement of the year immediately following that during which his gross turnover first exceeds the taxable quantum. The liability of a dealer to pay tax, therefore, depends on whether his gross turnover during the specified period exceeds the taxable quantum. “Turnover” is defined in Section 2(1) as meaning the aggregate of the amounts of sale prices and parts of sale prices received by any dealer during a given period. This aggregate sum has to exceed the taxable quantum to make the dealer liable to pay tax. “Taxable quantum” is fixed by sub-section (5) of Section 4 of the Act. There are three clauses in that sub-section prescribing different taxable quantum in relation to different kinds of dealers. It is common ground that the applicant company does not come within the categories of dealers in relation to whom taxable quantum has been fixed by clauses (b) and (c) of sub-section (5) of Section 4. We are only concerned to determine whether this company is a dealer of the kind mentioned in clause (a). Under Section 4, subsection (5), clause (a), taxable quantum means—

“In relation to any dealer who imports for sale any goods into Bengal, or himself manufactures or produces any goods for sale — 10,000 rupees.”

22. The first question to be answered under this clause is whether the dealer “imports for sale any goods into Bengal” or whether he himself manufactures or produces any goods for sale. In the case now before us it has been held that this company does not “import for sale any goods into Bengal”. We are, therefore, concerned to ascertain whether it itself manufactures or produces any goods for sale.

23. There is no definition of the terms “manufacture” and “produce” in the Act. These expressions, therefore, will have to be construed in their ordinary natural meaning according to the accepted usages of English speech and having regard to the context in which they are used in the Act. Etymologically “to manufacture” is “to make by hand”. The term “manufacture” is, however, used in common parlance in a wider sense. According to the Oxford Dictionary “to manufacture” is “to work up (material) into forms suitable for use”, or “to make or fabricate from material; to produce by labour (now especially on a large scale).” As a noun the term connotes “the action or process of making articles or material (in modern use on large scale) by the application of physical power or mechanical power” or “an article or material produced by the application of physical labour or mechanical power”. These meanings may help but are not decisive for, what we have to ascertain is what those expressions mean in the context in which they are used in the Act. I shall not, therefore, attempt to formulate any abstract definition of such general expressions as “manufacture” or “produce”. In the absence of any definition in the Act of these particular terms, I have to read the section itself and then to ascertain the meaning from the words used.

24. The relevant words in clause (a) are:—

“in relation to any dealer who………………himself manufactures or produces any goods for sale.”

25. I find that there are two expressions in this clause, namely, “dealer” and “goods”, which have been defined in the Act. I apply those definitions to those words, and find that the clause refers to any person………… engaged in the business of selling or supplying any kind of movable property (other than certain things) who himself manufactures or produces that kind of movable property for sale. The goods, the manufacture or production of which is contemplated, clearly refers to goods in respect of which “the business of selling or supplying”, in which the person is engaged, is carried on. In short, the words “manufactures or produces goods for sale” in clause (a) refer clearly to the manufacture or production of goods for the purpose of selling the same in course of the business of selling or supplying in which the dealer is engaged.

26. “To manufacture goods” in common parlance means “to bring goods into being”. To manufacture or produce goods for sale means to bring into being or to produce something in a form in which it will be capable of being sold or supplied in course of business. The essence of manufacturing, I apprehend, is that something is produced or brought into existence which is different from that out of which it is made, in the sense that the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which the thing is manufactured must necessarily lose their identity or become transformed in their basic or essential properties. When a goldsmith takes up a lump of gold and fashions it into an ornament the gold remains gold but the ornaments produced is, commercially, as well as in common parlance, something different from a mere lump of gold. When a cobbler uses leather and makes a pair of boots, the leather does not lose its existence, it still remains leather, but the pair of boots is, commercially, as in ordinary speech, a thing different from the leather with which it is made. When a carpenter makes a box out of wood, the box, though it is still wood, is different from mere wood. When a tailor makes a suit of clothes, it does not cease to be cloth, but commercially it is a different thing. In each of these cases a thing is made which is capable of being sold or supplied as a particular commercial article.

27. When a dispensing chemist mixes different drugs according to the prescription of a physician, the drugs may or may not be transformed into a different matter. The mixture may become a chemical compound in which the drugs used may have been transformed into a totally different thing in their character and properties, or it may result in what is called a mechanical or physical mixture, in which each drug retains its original properties. But in either case the resulting mixture is a distinct product brought into being in a particular form suitable for the particular use for which it is intended and capable of being sold or supplied for a price. When a man goes into a chemist's shop with a prescription he does not ask for this, that or the other drug mentioned in the prescription, but he really wants the finished product in a form in which as a medicine it will be suitable for the use of the patient and when the chemist compounds the drugs according to the prescription he produces that medicine and sells, not so many different drugs of different quantities or measures, but the finished product. The selling of the finished product is his business and he brings it into being for sale in his business. This finished product is different from the ingredients with which it is made, just in the same sense as an ornament is different from the lump of gold or a pair of boots different from the leather or a suit of clothes is different from the cloth or a box is different from the wood, but it is the article which he brings into being for sale in course of his business.

28. I decline to be drawn into an academic discussion as to the abstract meaning of the term “manufacture”, or as to whether the application of the creative faculty is of the essence of manufacture and so forth. I do not think it is useful to refer to the definition of the term in other Statutes of this country, e.g, Patent and Designs Act or of other countries, e.g, the English Finance Act or the Australian Sales Tax Act. All we have to ascertain is the meaning in which the term has been used in this particular Act. I have come to the conclusion that in common parlance “to manufacture” is to bring into being. “To manufacture or produce goods for sale” within the meaning of the Bengal Finance (Sales Tax) Act, which is concerned with “dealers”, i.e, persons engaged in the business of selling or supplying goods, must mean to bring into being a commercial article for sale in the business in which the dealer is engaged, i.e, an article which by itself has a commercial value and which can be the subject-matter of a sale for a price in course of the business of selling or supplying in which he is engaged. Although the term “manufacture” may, in a modern sense, connote production on a large scale, that, in my opinion, is not at all a test for the Act itself has indicated some scale by fixing the taxable quantum. Nor do I think that production for general public use is the essence of manufacture for the purposes of this Att. A goldsmith or a tailor or a shoemaker who only makes things to the order of particular customers is not any the less a manufacturer or producer than a goldsmith or a tailor or a shoemaker who makes and keeps ready-made things for all and sundry.

29. On a construction of the relevant sections of the Act, I have come to the conclusion that this company is a dealer, i.e, it is engaged in the business of selling or supplying goods, that its business is to sell or supply the finished article manufactured or produced, that is, brought into being by compounding the drugs according to the prescription of the physician and that it itself manufactures or produces, that is, brings into being that finished article as a commercial commodity and his business is that of selling or supplying the commodity so manufactured or produced by it and its taxable quantum is 10,000 rupees. It has been found that the company's turnover exceeds this taxable quantum and consequently the company is liable to pay tax under Section 4 and, therefore, it is bound to apply for and take out a registration certificate under Section 7. In my opinion, the decisions of the Commissioner and the Board are correct and I agree with my learned brother that all the questions referred to us should be answered in the affirmative.

30. Reference answered in the affirmative.