2016 (8) TMI 133 - HC - VAT and Sales Tax

Classification of KADIPROL - entry 25 of Schedule I of the Gujarat Sales Tax Act, 1969 - Held that - it appears that the Tribunal has committed an error. The product KADIPROL manufactured by the Veterinary Division of the appellant is covered by the entry 25 of Schedule I of the Gujarat Sales Tax Act, 1969. Accordingly, the issue raised in this reference is answered in favour of the appellant and against the Department.

Summary

Issues:
Interpretation of entry 25 of Schedule I of the Gujarat Sales Tax Act, 1969 regarding the classification of the product "KADIPROL" as poultry feed or drugs and medicines.

Analysis:
The case involved a reference made by the Gujarat Sales Tax Tribunal to consider whether the product "KADIPROL" manufactured by the appellant falls under entry 25 of Schedule I of the Gujarat Sales Tax Act, 1969. The Deputy Commissioner initially classified the product as a drug or medicine under a different entry. The Tribunal upheld this classification, stating that "KADIPROL" is a non-nutritional feed additive and not primarily for nutrition, thus not qualifying as poultry feed under entry 25. The Tribunal referred to previous judgments for interpretation.

The appellant argued that the product was an animal feed supplement labeled as "Not for Medicinal Use" and did not require a license under the Drugs & Cosmetics Act. They contended that the Tribunal misinterpreted previous judgments and should rule in their favor. The Assistant Government Pleader supported the Tribunal's decision.

The High Court analyzed the Tribunal's order and the relevant judgments. It emphasized that the expert authority had deemed no license necessary under the Drugs & Cosmetics Act for manufacturing the product. The Court highlighted the commercial understanding of the term "poultry feed" and the evolving concept of additives in such feeds. It rejected the government's contention that the warranty on the bill implied medicinal use, emphasizing the common understanding of the term.

Referring to specific paragraphs from a previous judgment, the Court concluded that "KADIPROL" fell under entry 25 of Schedule I as poultry feed. It criticized the Tribunal for its error in classification and ruled in favor of the appellant. The judgment clarified that the product was correctly classified as per the common understanding and commercial usage, overturning the Tribunal's decision.

In conclusion, the High Court's judgment resolved the issue by interpreting the relevant entry in the Sales Tax Act and considering the common understanding of the term "poultry feed." The Court emphasized the importance of expert opinions and commercial usage in determining the classification of products for taxation purposes, ultimately ruling in favor of the appellant based on the correct interpretation of the law and previous judgments.