2010 (6) TMI 710 - HC - VAT and Sales Tax

Whether the medical oxygen falls under the general category of gas and not a specific item of medical product? Held that - Having regard to the use of medical oxygen to a patient as rightly concluded by the Additional Appellate Assistant Commissioner the medical oxygen would positively satisfy the above three tests laid down by the Honourable Supreme Court in STATE OF GOA Versus LEUKOPLAST (INDIA) LTD. 1997 (2) TMI 124 - SUPREME COURT OF INDIA . Therefore when once the said findings of the Appellate Assistant Commissioner as regards the nature of product viz. medical oxygen has been noted it would travesty of justice to still hold that would be falling under the category of gas and not under the category of Entry 95 20-A of Schedule-I in the year 1991 to 1993. Therefore the ultimate conclusion of the Tribunal in the orders impugned in setting aside the order of the Appellate Assistant Commissioner cannot be found fault with. We are not therefore inclined to interfere with the said order. Moreover the said issue is directly covered by the decision of Kerala High Court in 139 STC. 504 supra. as the provisions are pari materia. In the said circumstances applying the said decision also we have no hesitation to hold that the medical oxygen would fall only under Entry 95 as of the year 1991 and under Entry 20-A as of the year 1993 and will not fall under Entry 106 as of the year 1991 and Entry 25 as of the year 1993 as contended by the petitioner. We therefore do not find merit in these Tax case revisions as well as the writ petitions and the same fail and are dismissed

Summary

Issues involved:
1. Classification of "medical oxygen" under different tax entries for assessment years 1991-92, 1992-93, 1994-95, and 1995-96.

Analysis:
The State challenged a Sales Tax Appellate Tribunal's order regarding the classification of "medical oxygen" under specific tax entries for different assessment years. The key issue revolved around determining whether "medical oxygen" should be categorized under Entry 95 of Schedule-I Part-I for 1991, Entry 20-A of Schedule-I Part-C for 1993 onwards, or other entries like Entry 106 and Entry 25 for the respective years. The Tribunal was directed to apply principles from a Supreme Court decision to make this determination.

The Tribunal found that "medicinal oxygen" met the criteria set by the Supreme Court and should be classified under Entry 95 for 1991-92 and Entry 20-A for subsequent years, attracting tax rates of 6% and 5% respectively. However, a penalty was upheld for belated tax payment under the Tamil Nadu General Sales Tax Act.

The State argued that "medicinal oxygen" should be considered a 'gas' falling under Entry 106 and Entry 25, citing a Kerala High Court decision. In contrast, the respondent contended that the product's classification was supported by the Supreme Court's criteria and the issuance of a manufacturing license under the Drugs and Cosmetics Act.

Upon review, the High Court upheld the Tribunal's decision, emphasizing that "medical oxygen" qualified as a drug under the Drugs and Cosmetics Act definitions. It concluded that the product's curative function and intended use aligned with the Supreme Court's criteria, warranting classification under Entry 95 and Entry 20-A, not Entry 106 or Entry 25. The Court dismissed the State's challenges, citing consistency with the Kerala High Court decision and denying any merit in the tax case revisions and writ petitions.