1969 (1) TMI 56 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of tooth-powder as a "cosmetic or toilet requisite."
2. Justification of the tax rate applied to tooth-powder.

Detailed Analysis:

1. Classification of Tooth-Powder as a "Cosmetic or Toilet Requisite"

The primary question addressed by the court was whether the tooth-powder, marketed under the trade name "Sarin Dant Manjan," falls under the category of "cosmetic or toilet requisite" as per entry 6 of Notification No. 905/X dated 31st March, 1956.

The court examined various definitions and interpretations to ascertain the meaning of "cosmetics and toilet requisites." According to Webster's International Dictionary, a cosmetic is "a preparation to beautify or alter the appearance of the body or for cleansing, colouring, conditioning or protecting skin, hair, nails, eyes or teeth." The term "toilet" is defined as "an act or process of dressing, especially formerly of dressing hair, and now usually cleansing and grooming of one's person," and "toiletry" means "an article or preparation used in making one's toilet such as soap, lotion, cosmetic, tooth-paste, shaving cream, cologne, etc."

The court noted that tooth-powder is used for cleaning teeth, which is an essential act of toilet. Despite any medicinal claims by manufacturers, tooth-powder remains a product primarily for dental cleanliness, aligning it with the everyday understanding of cosmetics and toilet requisites.

The court referenced several cases to support its interpretation. In D.K. Sandu Bros. v. State of Madhya Pradesh, medicated Brahmi Oil was considered a toilet article. Similarly, in C.C. Mahajan & Co. v. The State of Bombay, depilatory products were classified as toilet articles. The Supreme Court in Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola, and Another emphasized that terms not defined in the Act should be understood in their popular sense.

Two cases directly dealing with tooth-powder were also considered. The Madras High Court in V.P. Somasundara Mudaliar v. State of Madras held that tooth-powder did not fall under a similar entry due to its primary use for cleaning rather than enhancing beauty. However, the Bombay High Court in Commissioner of Sales Tax v. Vicco Laboratories classified tooth-powder as a toilet article, supporting the view that such products are understood in the popular sense as part of toilet requisites.

The court concluded that tooth-powder falls within the scope of "cosmetics and toilet requisites" based on both dictionary definitions and common parlance.

2. Justification of the Tax Rate Applied to Tooth-Powder

The dispute also involved the rate of tax applicable to the tooth-powder. The Sales Tax Officer had levied a higher rate, treating the tooth-powder as a single-point taxable commodity under section 3-A of the U.P. Sales Tax Act. The Judge (Appeals) and the Additional Judge (Revisions), however, treated it as an unspecified commodity taxable at the general rate under section 3.

Section 3 of the Act prescribes a general tax rate for all commodities, while section 3-A allows the State Government to notify specific goods taxable at a single point and at a different rate. Notification No. 905/X, dated 31st March, 1956, listed "cosmetics and toilet requisites" as taxable at a rate of 0-1-0 per rupee.

The court examined the history of notifications related to "cosmetics and toilet requisites" and noted that tooth-paste, tooth-powder, and other dentifrices were included under this category until they were separated by a notification on 1st November, 1966, and subjected to a different rate.

The court concluded that tooth-powder should be taxed as an article of "cosmetics and toilet requisites" under entry 6 of Notification No. 905/X, dated 31st March, 1956, at the rate of 0-1-0 per rupee.

Conclusion

The court held that the tooth-powder in question is an article of "cosmetics or toilet requisites" falling within item 6 of Notification No. 905/X dated 31st March, 1956, and should be taxed accordingly. The Commissioner of Sales Tax was entitled to costs assessed at Rs. 50 in each case, with the counsel fee for the department also assessed at the same figure.

Reference answered accordingly.