1998 (9) TMI 644 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "Boroplus" under the West Bengal Sales Tax Act, 1954.
2. Whether "Boroplus" is a Homeopathic medicine, Ayurvedic drug, drug, patent or proprietary medicine, or cosmetic.
3. Validity of assessments and reassessments for various periods.
4. Onus of establishing the classification of "Boroplus".

Detailed Analysis:

1. Classification of "Boroplus":
The primary issue was to determine the classification of "Boroplus" under the West Bengal Sales Tax Act, 1954. The company contended that "Boroplus" should be classified as a drug, Homeopathic medicine, Ayurvedic drug, or patent or proprietary medicine, rather than a cosmetic.

2. Whether "Boroplus" is a Homeopathic medicine, Ayurvedic drug, drug, patent or proprietary medicine, or cosmetic:
- The company claimed that up to October 15, 1987, "Boroplus" was manufactured according to the Homeopathic system of medicine, and since October 30, 1987, it was manufactured according to the Ayurvedic system of medicine.
- The Tribunal examined the definitions under the Drugs and Cosmetics Act, 1940, and the relevant notifications under the 1954 Act. It was found that "Boroplus" did not meet the criteria to be classified as a Homeopathic medicine or an Ayurvedic drug.
- The Tribunal noted that the product was not manufactured exclusively according to the formulae described in authoritative books of Ayurvedic or Homeopathic systems of medicine. The composition of "Boroplus" included ingredients like lanolin and paraffin, which are not recognized as medicinal in the authoritative books.
- The Tribunal also considered the inclusive definition of "drug" under section 3(b) of the Drugs Act, which includes all medicines for internal or external use in humans or animals and all substances intended for diagnosis, treatment, mitigation, or prevention of any disease or disorder. However, "Boroplus" did not qualify as a drug under this definition due to the lack of scientific clinical trials or recognized therapeutic efficacy.
- The Tribunal concluded that "Boroplus" should be classified as a cosmetic. It was noted that cosmetics can include products with some medicinal properties, and "Boroplus" was primarily intended for beautifying and improving the appearance of the skin.

3. Validity of assessments and reassessments for various periods:
- The Tribunal clarified that its earlier judgment dated May 6, 1996, quashed all the orders of assessment for the periods ending March 31, 1983, to March 31, 1994, and directed fresh assessments.
- It was noted that the fresh assessments should be limited to the product "Boroplus" and not include other products of the company that were not in dispute.

4. Onus of establishing the classification of "Boroplus":
- The Tribunal held that the onus of establishing that "Boroplus" falls under a particular classification (cosmetic) lies on the Revenue. The Tribunal found that the Revenue satisfactorily discharged this onus by demonstrating that "Boroplus" was a cream with primary use for beautifying and improving the appearance of the skin.

Conclusion:
The applications were dismissed in part concerning the sales of "Boroplus," affirming its classification as a cosmetic. However, the applications were allowed in part concerning the sales of other products of the company, which were not in dispute. The impugned orders of assessment were set aside for products other than "Boroplus," and reassessments were directed to be made according to the initial assessments for those products. No order was made for costs.