1998 (1) TMI 495 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of Vicco Vajradanti and Vicco Turmeric Vanishing Cream under the Kerala General Sales Tax Act, 1963.
2. Determination of whether these products are Ayurvedic medicines or cosmetic/toilet articles.
3. Justification of the Tribunal's reasoning, findings, and conclusions.

Issue-wise Detailed Analysis:

1. Classification of Vicco Vajradanti and Vicco Turmeric Vanishing Cream:
The core issue is whether Vicco Vajradanti (paste and powder) and Vicco Turmeric Vanishing Cream should be classified as Ayurvedic medicines under entry 75 of the First Schedule to the Kerala General Sales Tax Act, 1963, or as cosmetic/toilet articles under entries 79 and 80.

2. Determination of Product Nature:
The Tribunal held that these products are Ayurvedic medicines falling under entry 95/116 of the First Schedule. The Deputy Commissioner, in his suo motu revision, had classified these products as toilet articles and vanishing cream, taxable at higher rates of 8% and 10% respectively, arguing that they are not used as medicines but as tooth paste, tooth powder, and vanishing cream.

The assessee contended that these products are manufactured as per an Ayurvedic license under the Indian Drugs and Cosmetics Act, 1940, and are medicinal formulations used for treating diseases. The Tribunal accepted this contention, supported by various materials including expert opinions, affidavits, and certifications from the Commissioner, Food and Drug Administration, Bombay.

3. Justification of Tribunal's Findings:
The Tribunal's conclusion was based on extensive evidence, including the products' labeling as Ayurvedic medicines, expert opinions, and previous judgments from other High Courts and the Supreme Court. The Tribunal noted that these products are sold and understood in the market as Ayurvedic medicines, not as mere cosmetic or toilet articles.

The Revenue argued that specific entries for "tooth paste" and "tooth powder" should prevail over the general entry for medicines. However, the Tribunal found that the products' Ayurvedic classification and the lack of contrary evidence from the Revenue supported their classification as medicines.

Conclusion:
The High Court agreed with the Tribunal's view, emphasizing that the products are manufactured under an Ayurvedic license and are sold as Ayurvedic medicines. The court noted the absence of contrary evidence from the Revenue and upheld the Tribunal's classification under entry 75 of the First Schedule. The tax revision cases were dismissed, affirming that Vicco Vajradanti and Vicco Turmeric Vanishing Cream are Ayurvedic medicines subject to a 6% tax rate.