STATE OF RAJASTHAN AND ANRS. vs RAJASTHAN CHEMIST ASSOCIATION

The Supreme Court upheld the Rajasthan High Court's decision that Section 4A of the Rajasthan Sales Tax Act, 1994, as amended by the State Finance Act, 2004, is not legally sustainable. The Court found that the tax on the first point sale of drugs and other commodities cannot be based on the Minimum Retail Price (MRP) published on the package, as it is not charged by the wholesaler to the retailer. The judgment clarified that the tax must be levied based on the actual price paid in the transaction, not an artificial amount determined by MRP, thus affirming the High Court's ruling.