23900700150 - Madhya Pradesh Commercial Tax Appellate Board

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M.P.COMIUERCIAL TAX APPELLATE BOARD BHOPAL
59, Arera Hills, Jail Road Bhopal
Before Ashok Das, Chairman/ Ashok Shukla, lMember.(Actt) Shri.K.S.Thakur, Membcr(Judicial)/
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A-295/CTAB/lNDn0l0 (State)
A-296lcrAB/lND/2ot o (ET)
Period 2006-07
N{/s. Subhash Stores, Ranipura, Indore
Tin No. 23900700150
V/s
.
Commissioner, Commercial Tax, M.P. Indore
: Respondent
A
nnellant
; a:l(rr\ (...
Shri. P.D Nagar & Co. C.A. for Appellant
Shri. H.P..Sharmg Spl. Govt. Counsel for Respondent.
Order dated 08.06.2016
Bv Ashok Das Chailman.
Appellant impugns the appellate order passed by Dy.
Commissioner, Commercial Tax (A) Indore, dated 12.01.2010,
wherein levy of tax on Vicco Vajradanti Ayurvedic Powder and
Vicco Turmeric Cream have been taxed under residuary Entry No.1
of Part IV of Schedule-Il of the M.P.VAT Act, 2002 @ 12.5%
instead of 4%o as claimed by appellant, under Entry No. l9.A of
Part-ll of Schedule-Il of the VAT Act. Similarly, the product of
Vicco Company viz. Vicco Vajradanti- Tooth Powder and Tooth
Paste, Vicco Turmeric skin cream and powder as reflected in
schedule II entry No. 32 and 50 are subject to 1%o Entry Tax. Since
the issues are identical, they are being heard jointly and order
passed accordingly.
2. The
firm being a distributor of
products
manufactured by M/s Vicco Laboratories Ltd. Appellant claims that
the Company's products like Vicco Vajradanti Paste and Powder
appellant
and Vicco Turmeric Cream are manufactured under
valid
Ayurvedic Drug License according to the Ayurvedic formula for
prevention and cure of tooth decay, phyrrhoea, Gingivitis,
laceration while Vicco Turmeric Cream prevents and cures eczema,
pimples, derrnatitis and other disorders of the skin. Hence appellant
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Period 2006-07
claims that these products being Ayurvedic were claimed by the
appellant to have been taxed as "Drugs and Medicines" which was
refused by the Appellate Authority and taxed under residuary Entry
No.1 of PartIV of Schedule II of the Act(d.12.5%.
3.
Appellant has objected to the levy of Entry Tax @l%o on the
products manufactured by Vicco Company and purchased by the
appellant for sale. Appellant claims that Vicco Turmeric skin cream
and powder, Vajradanti Tooth powder and Tooth paste being
Ayurvedic medicines are not subject to Entry Tax. Since the
products figure in schedule III and have been purchased for sale
they are not subject to Entry Tax.
4.
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-Tracing the history of the Entries in Schedule II of the
M.P€.T. Ac! the appellant stated that from 01.01.2000 to
,t+.0:.ZOO0 Part III of Schedule II had the followins Entries:
From 01.01.2000 to f 4.03.2000
Entry No.4
"Scents, perfumes, hair tonics, hair creams, hair
shampoo, depilatories, face creams, snows, lipsticks,
rougue & nail polish and other cosmetics @ l2yo."
Entry No.7
"Tooth paste, tooth powder, hair oils, face powder,
talcum powder, toilet soaps and other articles including
medical preparations thereof, combs, brushed, razors
and razors blades, washing soaps and detergents
@12%."
From 15.03.2000 Part III of Schedule
II
Entry 41 "Scents, perfumes, hair tonics, hair creams,
hair shampoo, depilatories, face creams, snows,
lipsticks, rougue & nail polish and other cosmetics
including medical preparations thereof @ 12o ."
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Period 2006-07
Entry 49 "Tooth paste, tooth powder, hair oils, face powder,
talcum powder, toilet soaps and other articles including
medical preparations thereof, combs, brushed, razors
and razors blades @ l2oh."
Entry
11
Part-IV ofSchedule-Il:
"Drugs & Medicines excluding those specified elsewhere in
this schedule @8%."
5.
Thus, w.e.f. 01.01.2000 additional words "including
medicinal preparation thereof' were inserted and separate entry for
drugs and medicines in Part-IV. The products Vicco Vajradanti
(Paste and Powder) and Vicco Turmeric Cream were treated as
assessment till
'Ayurvedic Medicines' for the purpose
of
01.01.2000.
fPart II
and medicines including vaccines, syringes,
/c.
'+/
dressings,
ointments produced under drug license and light liquid
of IP grade" @4%.
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plain reading of the aforesaid entries, it is evident that all
and medicines manufactured under a drug license were to be
covered in entry 19A of Part II of Schedule II of the Act w.e.f.
01.04.2006. Moreover, w.e.f. 01.01.2000 the additional words
"including medicinal preparation thereof' were inserted and a
separate entry was made for drugs and medicines in Part-IV.
7,
The appellant argued that the products Vicco Vajradanti
(Paste and Powder) and Vicco Turmeric Cream were treated as
'Ayurvedic Medicines' for the purpose of assessment till
01.01.2000. In classification matters. it is settled law that the
burden of proof is on the Revenue and that the said burden is
required to be discharged by adducing proper evidence. In Puma
Ayurvedic Herbal Pvt Ltd, V/s CCE (2006) 145 STC 200 (SC) it
was held
that:
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2.
"it
A-295/CTA B/tND/2010 (Srate)
A_296/CT AB/!ND/20t0 (ET)
period 2006-07
is settled Isw that the burden of showing correct classification
lies on the Revenue."
Similarly, in Union Of India V/s Garware Nylons Ltd. (1996)
87 ELT l2 (SC) it was held that:
"the burden of proof is on the taxing outltorities to show
thst tlte puticular csse or item in question, is tauabre in the
m(rnner claimed by tltem.',
8.
Appellate Authority in his order dated 12.0r.2010 has olaced
reliance on the case of ccr v/s west Bengal commercial rax
Tribunal (1993) 89 src 355 (WBTT) wherein, it was held that a
drug license issued under the Drugs and cosmetic Rules 1945 is not
proof of the fact that the preparation for which license has bee'
issued is a drug within the meaning of the r 940 Act. Further
reliance has been placed by the Revenue in the case of Balaii
Agencies Gorakhpur v/s cST (1993) srl 532 (Alrah) wherein lt
. was decided that every cosmetic usually has some medicinal
properties for the care of skin, hair, teeth etc and simplv because
they have some medical properties or simply because- they are
manufactured under license from the Authorities under the Druss
Act, they cannot be treated as medicines
9. It is an accepted principle of classification that the soods
should be classified according to their popular meaning or as"they
are understood in their commercial sense and not as pericientific
or
technical meaning. How the product is identified 6y the class or
section of people dealing with or using the products is also a test.
In the case of Nagar Mahapalika V/s State of U.p. (l9gg) 70 STC
97 (SC) it was held that:
"while a meaning to an item contained in the scheclule of
article ltas decided that ntecricine is some substunce which is to ie
taken internally or applied externally
for preventing, mitigating or
treiling u disesse. The commodities tooth powder,looth
Jaste"
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A-295/CTAB/lN D/2010 (State)
2.
A-2e6lcrAB/rN,?it#3#;]
and face cresm sold by the petitioner do not serve this purpose,
hence cunnot be trested us drug and medicine."
10. Various tests set out for consideration before the Apex Court
to decide whether a commodity of product can be included under
Drugs and Medicines. In the case of BPL Pharmaceutical Ltd.
(1997) 104 STC 164 (SC) the following tests laid down were
whether:
(l) The commodity is used for the treatment of disease;
(2) It fulfills the requirement of a drug as understood
(3)
in
aommon panance;
It is being marketed as a patent or proprietary medicine
through registered pharmacists who hold valid drug
license and not be any dealer;
On the label of container, is mentioned that the
product is to be used as directed by the physician;
The literature or container gives a cautionary note on
how it should be used:
It should be used as directed by the physician;
Whether the commodity is being sold on the prescription
of the physician.
it
ll.
As a matter of fact, in common parlance the product is not
described as medicine but as Toilet preparation or Cosmetics. Since
the primary object of the Act is to raise revenue, resort should not
be had for the purpose of classification, to the scientific and
technical meaning of the term and expression used therein but to
their popular meaning, that is to say, the meaning attached by those
using the product.
Ordinarily, a medicine is prescribed by a medical practitioner
and it is used for a limited time and not for everyday use, unless it
is so prescribed to deal with a specific disease like blood pressure
etc. In BPL Pharmaceutical (1997\ 104 STC 164 (SC) case, the
Apex Court upheld Selsun shampoo a medicated shampoo, as
medicine. The medicated shamooo. treated as medicine is used for
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Period 2006-07
the treatment of dandruff and not used regularly. Similarly, in the
case of Popular Sales Jabalpur v/s State of M.P. (2012) 20 STJ 287
(MP-HC) Prickly heat powder, (dermicool) is declared to be under
drugs and medicine, as its use is beneficial in the cure of prickly
heat (ghamoree). Thus if a item used for treating a specific medical
disease, it can be placed under drugs & medicines.
In our view, medicine and medicinal
preparation are two
different things. Medicine is exclusively used to cure some disease
or disorder. The medicament or the medicinal preparations
contained in the medicine content is of a fixed percentage. Any
h preparation may cause some reverse effect to the body, like
ion or tingling sensation and so on. Thus the manufacturing
sale of the medicine and medicinal preparation need to be
dardized and to retain the standards as per the Drugs and
metic Act. The products are manufactured and sold under the
drug license. In our opinion, manufacturing a product only under a
drug license do not suggest that all medicinal preparations are under
the definition of Drug as defined in Section 3 (b) of the Drug &
Cosmetic Act which is as under:
3(b)"drug'includes(i) all medicines for internal or extemal use of human beings
or animals and all substances intended to be used for or in
the diagnosis, treatment, mitigation or prevention of any
disease or disorder in human beings or animals, including
preparations applied on human beings or animals,
including preparations applied on human body for the
purpose of repelling insects like mosquitoes;
Similarly, "Cosmetic" is defined is as under:
3 (aaa)
"cosmetic" means any "article intended
to be rubbed,
poured, sprinkled or sprayed on or introduced into, or
otherwise applied to, the human body or any part thereof
for cleaning, beautiffing promoting attractiveness, or -
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Period 2006-0?
-altering the appearance, and includes any article intended
for use as a component of cosmetic.
(ii)
(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 formula described in the authoritative
books of (Ayurvedic, Siddha or Unani systems of
medicine), specified in the first Schedule)
The Medicinal & Toilet Preparations (Excise Duty) Act 1955
is enacted for the levy & collection of duties of excise on medicai
and toilet preparation containing alcohol. Medical preparation is
defined under this Act as below:
2 (g) "medical preparation" includes all drugs which are a
remedy or prescription prepared for internal or external use of
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human beings or animals and all substances intended is be used for
or in the treatment, mitigation or prevention of disease in human
,,,,,beingsior animals.
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.,The term "includes" denotes the specific item other than those
w-!idh'are generally used as medical preparation. In our view, the
':Drugs and Cosmetics Act 1940 speci$ cosmetics as different items
from that of drug and medicines. Thus, the cosmetic and toilet
articles cannot be said to be classified under medicines and drugs.
A separate license is necessary for its manufacture and sales. In the
Commercial Tax Act the term "drugs & medicine" is not defined.
The Legislature has however segregated the medical preparations of
the cosmetics and toilet articles for the purpose of taxation, from
those of drugs and medicine.
12.
Placing reliance on the decision of the Supreme Court in the
case IWs Leucoplast India Ltd. (1991) 105 STC 318 (SC) wherein it
was mentioned that whether the product in question can be called
medicament and whether it could be used to cure or alleviate or to
prevent disease or to restore health or preserve health are basically
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Period 2006-07
-question of facts. The Appellate Authority therefore determined
that the products sold by the appellant as tooth paste and tooth
powder are not Ayurvedic drugs as laid down in the Entries of the
M.P VAT Act but are ordinary tooth paste and tooth powder under
Schedule II of Part IV and are subject to tax @12.5oh.
13.
In the case of IWs Sanjay Agencies,
Raipur V/s CCT
Chhatisgarh (2007) reliance has been placed on the Apex Court's
ision in the matter of Union of India V/s Vicco Laboratories
7 (218)ELT,647 (SC)) as to whether the product would come
in the specific entry as drugs and medicines is no longer res
The issue having been already settled by the Supreme
the impugned order is therefore not sustainable.
14.
Keeping in view the above observations, the appeal is allowed
and the case is remanded to the Assessing Authority to have a relook at the classification in the light of the Sanjay Agencies,
Raipur's (supra) decision and pass suitable order thereafter.
Parties be informed accordingly.
K.S.Thakur,
Member(Judicial)
Ashok Shukla,
Member.(Actt)
Ashok Das
Chairman