2009 (4) TMI 897 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "body deodorants" under the West Bengal Sales Tax Act, 1994.
2. Applicability of tax rates on body deodorants.
3. Interpretation of legislative intent regarding the classification of goods.

Issue-wise Detailed Analysis:

1. Classification of "body deodorants" under the West Bengal Sales Tax Act, 1994:
The primary issue in this case is whether "body deodorants" should be classified under entry 54(i) or 54(ii) of Notification No. 1109 FT dated April 20, 2005, under the West Bengal Sales Tax Act, 1994. Entry 54(i) includes "perfumes, depilatories, cosmetics, toilet articles and preparations (whether medicated or not) including hair cream, hair dye, hair tonic, hair conditioner and hair lotion," taxed at 20%. Entry 54(ii) includes "tooth brush, tooth paste (whether medicated or not), tooth powder (whether medicated or not) and other dentifrices, mouth washes and deodorants," taxed at 17%.

2. Applicability of tax rates on body deodorants:
The petitioner argued that body deodorants should be taxed at 17% under entry 54(ii), while the assessing authority and the Additional Commissioner of Commercial Taxes (CCT/WB) levied a 20% tax, treating body deodorants as falling under entry 54(i). The Additional CCT/WB, in his order dated December 4, 2007, concurred with the assessing authority, stating that the principle of "ejusdem generis" applies, meaning deodorants listed in entry 54(ii) are related to mouth products, thus excluding body deodorants. The Additional CCT/WB classified body deodorants as cosmetics, taxable under entry 54(i) at 20%.

3. Interpretation of legislative intent regarding the classification of goods:
The petitioner contended that the legislative intent was not to classify body deodorants as cosmetics under entry 54(i) but under entry 54(ii). They referenced the Commodity Classification and Code issued by the Directorate of Commercial Taxes, West Bengal, where cosmetics and deodorants are listed separately. The petitioner argued that if the legislature intended to tax deodorants at 20%, it would have included them with items in entry 54(i). The respondent-authorities, however, argued that body deodorants should be considered cosmetics based on definitions from the Drugs and Cosmetics Act, 1940, and Hawley's Condensed Chemical Dictionary, which describe deodorants as cosmetics.

Judgment:
The Tribunal concluded that body deodorants marketed by the petitioner should be classified as cosmetics under entry 54(i) and taxed at 20%. The Tribunal upheld the Additional CCT/WB's decision, relying on the definitions and principles of statutory interpretation, including "noscitur a sociis" and "ejusdem generis." The Tribunal found that the petitioner's argument about legislative intent and separate classification in the Commodity Code was not persuasive enough to overturn the established classification and tax rate.

Conclusion:
The Tribunal confirmed the imposition of a 20% tax on body deodorants, classifying them as cosmetics under entry 54(i) of the West Bengal Sales Tax Act, 1994. The petitioner's appeal was dismissed, and the order of the Additional CCT/WB was upheld.