2000 (1) TMI 936 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of tax rate on the ayurvedic product "Swad" tablets.
2. Classification of the product "Swad" as either an ayurvedic medicine or a confectionery.
3. Challenge to the order passed by the Commissioner of Sales Tax.

Analysis:
1. The petitioner, a manufacturer of "Swad" tablets, sought clarification on the tax rate applicable to their product under the M.P. General Sales Tax Act. They argued that since the tablets were ayurvedic medicine, they should be taxed at 3 per cent under the relevant schedule.

2. The Commissioner of Sales Tax determined that the "Swad" tablets were not ayurvedic medicine but classified as confectionery, subjecting them to a higher tax rate of 12 per cent. The respondents contended that the tablets contained only 3 per cent ayurvedic substances, making them more akin to confectionery than medicine in common perception.

3. The High Court referred to a previous division Bench judgment in Panama Chemical Works v. Union of India, which classified "Swad" tablets as ayurvedic medicine. As this judgment was not considered during the Commissioner's decision, the High Court quashed the order and remanded the matter for fresh consideration in light of the division Bench's classification.

4. Consequently, the impugned orders of both the Commissioner and the Assistant Sales Tax Commissioner were set aside, allowing for a reevaluation based on the division Bench's judgment. The authorities were directed to reconsider the classification of the "Swad" tablets and consider any other relevant judgments presented by the State. The petitions were disposed of without costs, and any security deposits were to be refunded to the petitioners.