2001 (10) TMI 1109 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "Vicco vajradanti" toothpaste and "Vicco turmeric" face cream under the Tamil Nadu General Sales Tax Act, 1959.
2. Validity of the explanation to entry 1 in Part F of the First Schedule under Article 14 of the Constitution.
3. Determination of whether the products are ayurvedic medicines or consumer products.

Issue-wise Detailed Analysis:

1. Classification of "Vicco vajradanti" toothpaste and "Vicco turmeric" face cream:
The petitioners argued that "Vicco vajradanti" toothpaste and "Vicco turmeric" face cream are ayurvedic products and should be classified under serial No. 20 of Part C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, which pertains to medicines. The Revenue, however, treated "Vicco vajradanti" as a toothpaste under entry 7 of Part E and "Vicco turmeric" face cream under entry 1 of Part F, which includes products like face creams and cosmetics. The court noted that these products are marketed and advertised as consumer items of daily use, not just as medicinal products. The court emphasized that the primary purpose of these products is for daily use (toothpaste for cleaning teeth and face cream for skin care), which aligns with the classifications provided by the Revenue.

2. Validity of the explanation to entry 1 in Part F of the First Schedule under Article 14 of the Constitution:
The petitioners challenged the validity of the explanation to entry 1 in Part F, arguing that it discriminates against certain products by subjecting them to a higher rate of tax, which is violative of Article 14 of the Constitution. They relied on the Supreme Court judgment in Arya Vaidya Pharmacy v. State of Tamil Nadu, where a higher tax rate on certain ayurvedic medicines was deemed discriminatory. However, the court distinguished this case from the Arya Vaidya Pharmacy case by referencing the subsequent judgment in State of Assam v. Shri Naresh Chandra Ghose, which upheld a classification based on the alcohol content in medicinal preparations. The court found that the classification in the Tamil Nadu Act is based on the dominant purpose of the product and does not discriminate against any system of medicine or licensees.

3. Determination of whether the products are ayurvedic medicines or consumer products:
The court examined the ingredients and marketing of "Vicco vajradanti" and "Vicco turmeric" and concluded that their primary use aligns with consumer products rather than purely medicinal products. The court noted that these products are marketed for daily use and are widely advertised in the media, which is typical for consumer goods. The court also referenced the judgment in Commissioner of Sales Tax v. Vicco Laboratories, where "Vicco vajradanti" was classified as a toilet article. The court held that the additional medicinal properties of these products do not change their primary classification as consumer goods.

Conclusion:
The court dismissed the petitions, holding that "Vicco vajradanti" toothpaste and "Vicco turmeric" face cream are properly classified under the relevant entries for consumer products in the Tamil Nadu General Sales Tax Act, 1959. The classification and the explanation to entry 1 in Part F of the First Schedule were found to be valid and not violative of Article 14 of the Constitution. The products' primary use as consumer items was deemed the determining factor for their classification and taxation.