2000 (1) TMI 968 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of I.V. sets (blood donor sets) as either surgical goods or medicines.
2. Determination of the applicable tax rate for I.V. sets under the Rajasthan Sales Tax Act, 1954.
3. Consideration of definitions and classifications from other statutes, such as the Drugs and Cosmetics Act, 1940, in determining taxability under the Sales Tax Act.
4. Interpretation of statutory terms in common parlance versus technical or scientific sense.

Detailed Analysis:

1. Classification of I.V. Sets:
The primary issue was whether I.V. sets should be classified as surgical goods or medicines. The respondent-assessee contended that I.V. sets should be classified as medicines based on government notifications and the treatment of such items by other authorities, such as the Municipal Council charging octroi on I.V. sets as medicines.

2. Applicable Tax Rate:
The determination of the tax rate hinged on the classification of I.V. sets. If classified as medicines, I.V. sets would be taxable at 6% under entry 56 of the Schedule; otherwise, they would fall under the residuary entry and be taxed at 10%.

3. Definitions from Other Statutes:
The Additional Commissioner, Commercial Taxes, Jaipur, initially held that I.V. sets are not medicines, emphasizing that they are not understood as medicines by doctors, patients, wholesalers, or retailers in commercial parlance. The definition under the Drugs and Cosmetics Act, 1940, was deemed irrelevant for tax classification purposes.

However, the Rajasthan Tax Board, Ajmer, overturned this decision, citing a government circular that classified disposable hypodermic syringes, needles, and perfusion sets as medicines. This classification was pivotal in determining the tax rate.

4. Interpretation in Common Parlance:
The court emphasized that the interpretation of terms in the Sales Tax Act should be based on their common parlance meaning rather than scientific or technical definitions unless the legislature explicitly indicates otherwise. This principle was supported by several precedents, including the Supreme Court's rulings in Porritts & Spencer (Asia) Ltd. v. State of Haryana and Commissioner of Sales Tax, Madhya Pradesh, Indore v. Jaswant Singh Charan Singh, which underscored the importance of how commodities are understood in trade and commercial contexts.

Conclusion:
The High Court upheld the Rajasthan Tax Board's decision, affirming that I.V. sets should be treated as medicines for tax purposes under the Rajasthan Sales Tax Act. This conclusion was supported by the fact that I.V. sets are classified as drugs under the Drugs and Cosmetics Act, 1940, and are regulated accordingly. Therefore, the sale of I.V. sets is subject to the tax rate applicable to medicines, which is 6%. The revision petition by the Revenue was dismissed, and the court emphasized the importance of interpreting statutory terms in their common parlance meaning within the context of the Sales Tax Act.

Petition Dismissed:
The revision petition was dismissed with no order as to costs, affirming the Rajasthan Tax Board's decision to classify I.V. sets as medicines taxable at 6%.