2008 (7) TMI 897 - AT - VAT and Sales Tax

Summary

Issues involved:
1. Whether sugar of milk is considered a bulk drug for sales tax assessment under the West Bengal Sales Tax Act, 1994.

Detailed Analysis:
The case revolved around the classification of sugar of milk for sales tax assessment purposes under the West Bengal Sales Tax Act, 1994. The petitioner, an authorized partner of a homoeopathic distributor, imported and sold sugar of milk in bulk. The Commercial Tax Officer assessed the sales at 10% tax rate instead of 4% as per the petitioner's claim that sugar of milk should be considered a homoeopathic medicine or at least a component of a drug. The Assistant Commissioner and the Administrative Member of the West Bengal Commercial Taxes Appellate and Revisional Board upheld the assessment, leading to the petitioner's application to the West Bengal Taxation Tribunal.

The petitioner's argument was based on the inclusion of sugar of milk in the Indian Pharmacopoeia and Homoeopathic Pharmacopoeia as a homoeopathic medicine, emphasizing its medicinal properties. The petitioner contended that the term "drug" was not clarified in the Sales Tax Act but should be interpreted based on the Drugs and Cosmetics Act, which includes substances used in the diagnosis, treatment, or prevention of diseases as drugs. The Revenue, however, argued that sugar of milk is primarily a carrier or vehicle for homoeopathic medicines and not a drug itself.

The Tribunal considered various aspects, including the use of sugar of milk in preparing homoeopathic medicines and its acceptance as a homoeopathic medicine by the Homoeopathic Pharmacopoeia Laboratory of the Government of India. The Tribunal concluded that sugar of milk, being an essential component of homoeopathic medicines and meeting the criteria of a drug under the Drugs and Cosmetics Act, should be classified as a drug for sales tax assessment purposes.

In the final judgment, the Tribunal set aside the previous orders and directed the concerned authority to act accordingly, ruling in favor of the petitioner's classification of sugar of milk as a drug for sales tax assessment.

The Technical Member of the Tribunal concurred with the decision, leading to the disposal of the case with no order as to costs.