1991 (3) TMI 343 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of T.M. poultry formula under Gujarat Sales Tax Act, 1969.
2. Classification of T.M. egg formula, T.M. forte, and T.M. 5 under Gujarat Sales Tax Act, 1969.

Detailed Analysis:

1. Classification of T.M. poultry formula:

The primary issue was whether T.M. poultry formula should be classified under entry 25 of Schedule I as "poultry-feed" or under entry 26(1) of Schedule II, Part A as "drugs and medicines" of the Gujarat Sales Tax Act, 1969. The Deputy Commissioner of Sales Tax initially held that T.M. poultry formula, being primarily used for treating and preventing diseases, could not be regarded as poultry-feed and thus fell under entry 26(1) of Schedule II, Part A. The Tribunal, however, after referring to authoritative literature and applying the test laid down in Glaxo Laboratories (India) Ltd. v. State of Gujarat [1979] 43 STC 386, held that the product could be described as poultry-feed. The State argued that the product, containing terramycin, a known drug, should be classified as a drug or medicine. The Court concluded that T.M. poultry formula, being a drug or medicine, is covered by entry 26(1) of Schedule II, Part A to the Gujarat Sales Tax Act, 1969.

2. Classification of T.M. egg formula, T.M. forte, and T.M. 5:

The Deputy Commissioner initially held that these products, containing terramycin, could not be regarded as poultry-feed and should fall under the residuary entry 13 of Schedule III. However, the Tribunal, after examining the composition and use of these products, determined that they could be described as poultry-feed. The State conceded that if these products were not regarded as poultry-feed, they would fall under entry 26(1) of Schedule II, Part A as "drugs and medicines." The Tribunal, referring to the literature and the test laid down in Glaxo Laboratories' case, found that these products, being in the nature of additives given to poultry for nutritional purposes, could be classified as poultry-feed. The Court agreed with this assessment, noting that the concept of poultry-feed has evolved to include additives like vitamins, minerals, and antibiotics. Thus, T.M. egg formula, T.M. forte, and T.M. 5 were classified as poultry-feed under entry 25 of Schedule I, making them exempt from tax.

Conclusion:

1. T.M. poultry formula is classified as a drug or medicine and covered by entry 26(1) of Schedule II, Part A to the Gujarat Sales Tax Act, 1969.
2. T.M. egg formula, T.M. forte, and T.M. 5 are classified as poultry-feed and covered by entry 25 of Schedule I to the Gujarat Sales Tax Act, 1969, exempting them from tax.

Final Judgment:

The question was answered in favor of the State regarding T.M. poultry formula and in favor of the assessee regarding T.M. egg formula, T.M. forte, and T.M. 5. There was no order as to costs in this reference. The reference was answered accordingly.