2007 (2) TMI 604 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "Boro Soft" cream under trade tax regulations.

The judgment pertains to a trade tax revision u/s 11 of the U.P. Trade Tax Act, 1948. The Trade Tax Tribunal allowed Second Appeal Nos. 941 of 2003, 193 of 2003, and 593 of 2003, finding that "Boro Soft" cream is to be taxed under the entry "all kinds of cosmetics" at 15% and not as "ayurvedic medicine" at 8%. The assessing authority determined that "Boro Soft" falls within the entry of "all kinds of cosmetics and preparation" under a specific notification. However, the Joint Commissioner (Appeal) contended that "Boro Soft" is used as medicine and certified as an ayurvedic drug by the Joint Commissioner (Drugs), Foods and Drugs Control Administration, Gujarat. The Tribunal sided with the department in this matter.

The applicant argued that "Boro Soft" is an ayurvedic antiseptic cream certified as such by the Joint Commissioner (Drugs), Food and Drugs Control Administration. The cream is used for various skin conditions and is labeled as an ayurvedic medicine for external use only. Legal precedents were cited to support this claim. On the other hand, the Department's Standing Counsel cited a Supreme Court case emphasizing twin determination tests to classify items as medicaments or cosmetic products. These tests focus on common parlance understanding and ingredient analysis from authoritative texts on ayurveda.

The judgment analyzed the definitions of "cosmetic" and "medicament" under relevant Acts and legal interpretations. It was concluded that the presence of organic ingredients alone does not classify a cosmetic as an ayurvedic medicine. The Tribunal's finding that "Boro Soft" cream is not a medicinal preparation was upheld due to lack of evidence showing its purchase and use as an ayurvedic medicine. The certificates provided were based on cream ingredients, not actual use, and lacked support from authoritative ayurvedic texts. Consequently, the revision was dismissed.