1996 (3) TMI 523 - AT - VAT and Sales Tax

Summary

Issues:
- Nature of sanitary napkins: Whether they qualify as a toiletry article, cosmetic article, medicine, or fall under the residuary entry for tax purposes.

Analysis:
1. The revision petitions were filed against the Rajasthan Sales Tax Tribunal's order confirming reassessment orders for the assessment years 1987-88 and 1992-93, where sanitary napkins were taxed as toiletry and cosmetic articles, respectively. The petitioner argued that the notice under section 12(1) was not issued within the required 5 years. The department contended that the notice was issued within the limitation period.

2. The main issue revolved around the classification of sanitary napkins. Previous assessments varied in categorizing them, with some years taxed at the residuary rate and others as toiletry or cosmetic articles. The petitioner claimed sanitary napkins were medicines due to their medical uses, while the department argued they were correctly classified as toiletry/cosmetic articles based on common understanding.

3. The absence of specific definitions for medicine, cosmetic article, or toiletry article in the relevant tax laws led to a reliance on common parlance for interpretation. The primary use of sanitary napkins, i.e., absorption of blood and infection prevention, was considered. The court noted that they were not used for healing or treatment, ruling out their classification as medicine.

4. The term "cosmetics" was defined broadly to include articles for beautification or skin protection, which did not align with the purpose of sanitary napkins. Similarly, the term "toilet article" encompassed a wide range of objects related to personal grooming and hygiene, fitting the description of sanitary napkins.

5. The judgment concluded that sanitary napkins should be classified as toiletry articles for tax purposes. Revision petition No. 8 was dismissed, while revision petition No. 9 was allowed, modifying the tax treatment for the assessment year 1992-93. Any excess amounts collected were to be refunded within three months, with no costs imposed.

6. The decision provided clarity on the classification of sanitary napkins under tax laws, emphasizing common understanding and primary use as key factors in determining their nature for taxation purposes.