A ‘no’ to pharma freebies, a ‘yes’ for public good

The judgment by a two-judge Bench of the Supreme Court of India in M/s Apex Laboratories Pvt. Upholding a decision by the Madras High Court, the Bench said that the act of pharmaceutical companies giving freebies to doctors is clearly ‘prohibited by the law’. A case of misuse Repelling the contention of the company by S. Ganesh, Senior Counsel, Justice Ravindra Bhat said that pharmaceutical companies have misused a legislative gap to actively perpetuate the commission of an offence of giving freebies to doctors to promote their brands, even though this was prohibited in the law framed by the Medical Council of India. The well-established principle of interpretation of taxing statutes — that they need to be interpreted strictly — cannot sustain when it results in an absurdity contrary to the intentions of the Parliament.” Upholding the Central Board of Direct Taxes circular dated August 1, 2012, and applying it to the case, the Court also cited and relied upon Regulation 6.8 of the Indian Medical Council Regulations, 2002 framed under the Medical Council Act, 1956, now repealed and substituted by the National Medical Commission Act, 2019. While overruling the Income Tax Tribunal’s view in the case of PHL Pharma and Max Hospital ILR 1 P. 620, the Court held that Regulations 2002 did apply to pharma companies also.