1967 (7) TMI 114 - HC - VAT and Sales Tax

Summary

Issues:
1. Classification of the commodity "Sarvaroga Sanjeevi Thailam" under the Madras General Sales Tax Act, 1959.
2. Interpretation of item 51 of the First Schedule to the Act.
3. Application of precedents in determining the classification of the commodity.

Analysis:
The High Court of Madras, in the case concerning the classification of the commodity "Sarvaroga Sanjeevi Thailam" under the Madras General Sales Tax Act, 1959, addressed several key issues. The revenue initially considered the commodity as a drug subject to multi-point tax, but later changed its view, asserting that it falls under item 51 of the First Schedule to the Act. The Tribunal disagreed with this view, leading the revenue to seek revision. Concurrently, the assessee filed writ petitions to prevent the assessing authority from reopening assessments for earlier years based on the revised classification of the commodity.

The Court primarily relied on a pamphlet describing the commodity as "Sarvaroga Sanjeevi Thailam." While the pamphlet highlighted the medicinal benefits of the product for skin diseases, it did not explicitly align with the items listed under item 51 of the Act. The Court noted that the commodity contained medicinal drugs, herbs, roots, and barks, emphasizing its therapeutic properties. Additionally, the commodity was permitted under the Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954, and classified as a drug under the Trade Marks Act. Considering these factors, the Court concluded that the commodity did not fall within the scope of item 51.

In its analysis, the Court referenced relevant precedents to support its decision. It cited the case of Plastic Products Ltd. v. Commissioner of Sales Tax, U.P., Lucknow, where a plastic safety-razor was not considered a cosmetic or toilet requisite under a similar notification. The Court highlighted the distinction between items intended for beautification and those primarily aimed at curing ailments. Drawing parallels, the Court also mentioned cases involving sandalwood oil and hair oils, emphasizing the importance of the intended use and composition of the product in classification.

Ultimately, the Court affirmed the Tribunal's view that the commodity was primarily a drug intended for medicinal purposes, even if it had ancillary beautifying effects. Based on the composition and advertised use of the commodity, the Court concluded that it did not fit within the description of items listed under item 51 of the First Schedule. Consequently, the tax case was dismissed, and the writ petitions were allowed, with no costs imposed.