2013 (8) TMI 868 - HC - VAT and Sales Tax

Whether the Mediker is to be classified under an item drugs and medicine under the M.P. Commercial Tax Act also and starch is not to be treated as the chemical under the E.T. Ac - Held that - Mediker and starch admittedly having not been classified under the Entry Tax Act nor is it covered under Schedules I and II of the said Act. Then undoubtedly the charging section is to be taken into consideration and requires to be interpreted. The apex court held already directed that the goods may be charged under the charging section by exclusion or implication and in the present case it has to be considered on the touch stone of the charging section by implication. Mediker is basically a medicinal product but is used as shampoo, however, its period of treatment is four weeks and the shampoo is not used generally for washing hair and, therefore, the principle of ejusdem generis is not applicable (Grasim Industries Ltd. 2002 (4) TMI 52 - SUPREME COURT OF INDIA relied on) and in this sense, it is not the cosmetic and, therefore, both respondents Nos. 2 and 3, Additional Commissioner of Commercial Taxes and Assistant Commercial Tax Officer have erred in charging Mediker and starch under the Entry Tax Act. Moreover it is also out of the purview Schedule III cannot be taxed since both Mediker as well as starch are used in the production of further products and not meant for sale as is being projected. - Interpretation of the charging section by implication also must be followed in the strict sense, if the article is not taxable goods under the statute then the provisions of the Entry Tax Act cannot be attracted - Decided in favour of assessee.

Summary

Issues:
Classification of "Mediker" under the M.P. Commercial Tax Act and M.P. Entry Tax Act, classification of "starch" under the M.P. Entry Tax Act, application for exemption, interpretation of charging section, proper classification of goods, evidence produced in lower courts, judicial precedent references.

Classification of "Mediker" under the M.P. Commercial Tax Act:
The petitioner challenged the order passed by the Additional Commissioner, Commercial Tax, regarding the classification of "Mediker" under the M.P. Commercial Tax Act. The petitioner argued that "Mediker" should not be classified as a shampoo but as a medicinal product due to its primary function as an anti-lice treatment. The court analyzed various judicial precedents and held that "Mediker" cannot be purely treated as shampoo, and its classification as a cosmetic under the Commercial Tax Act was incorrect. The court emphasized that the charging section must be interpreted properly, and if an article is not taxable under the statute, the provisions of the Entry Tax Act cannot be applied.

Classification of "starch" under the M.P. Entry Tax Act:
The petitioner also contested the classification of "starch" under the M.P. Entry Tax Act, arguing that it is not a chemical as per the Act. The court examined the arguments presented and concluded that "starch" was wrongly classified as a chemical under the Entry Tax Act. The court emphasized the need for a strict interpretation of the charging section and held that if goods are not taxable under the statute, the provisions of the Entry Tax Act cannot be invoked.

Application for Exemption and Proper Classification of Goods:
The petitioner contended that both "Mediker" and "starch" should be exempted from the Entry Tax Act as they were not mentioned in Schedules I and II of the Act and were not meant for sale. The court reviewed the evidence presented in the lower courts and found that the classification of "Mediker" as a cosmetic and "starch" as a chemical was incorrect. The court ruled in favor of the petitioner, quashing the orders of the lower courts and the demand notice.

Interpretation of Charging Section and Judicial Precedent References:
The court extensively discussed the interpretation of the charging section in relation to the classification of goods under the Commercial Tax Act and Entry Tax Act. Various judicial precedents were cited to support the arguments presented by both parties. The court emphasized the importance of a strict interpretation of tax statutes and held that goods not falling under the purview of the statute cannot be taxed. The court referred to previous judgments to support its decision to allow the writ petition and quash the orders of the lower courts.