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2017 (5) TMI 376 - HC - VAT and Sales TaxClassification of goods - Vicco Vajradanti tooth paste and powder or Vicco Turmeric cream - whether medicine and drugs or cosmetics? - The learned Single Bench has relied upon an order passed by the Division Bench in the case of Commissioner of Commercial Tax vs. Dawar Brothers 1998 (2) TMI 544 - MADHYA PRADESH HIGH COURT , to hold that Vicco Vajradanti tooth paste and powder or Vicco Turmeric cream possess medicinal properties, therefore, fall under the category of medicines and drugs and not the cosmetics - Held that - we find that the order of the learned Single Bench following the order in the Dawar Brother s case, cannot be sustained. In Dawar Brother s case, it has been noticed that the argument of the revenue was that the taxing statute does not define drugs and medicines, therefore, the provisions under consideration required to be given meaning in trade - The said argument of the revenue is factually incorrect. No doubt the drugs and medicines falling in Entry 16 Part-IV Schedule-II of the Act are not defined but cosmetics have been explained so as to include face cream and the toilet articles to include tooth paste and powder. Thus the statute itself have clarified the classification of the products manufactured by the writ petitioner as face cream and the tooth paste and tooth powder. There is no question as to whether it is an ayurvedic medicine or cosmetic cream. The classification of a product under a statute cannot be read into another statute. Each statute has to be interpreted on the basis of the provisions contained therein. Therefore, classification of the products in the said judgments dealing with the Central Excise Laws are not relevant for examining the classification of the products under the local Act, which have specifically included face cream under the Entry of Cosmetics and tooth paste and tooth powder under the Entry of Toilet articles. Petition dismissed - decided against petitioner.
Issues Involved:
1. Validity of the show cause notice for re-assessment under the Madhya Pradesh General Sales Tax Act, 1958. 2. Classification of Vicco Vajradanti and Vicco Turmeric Cream for tax purposes. 3. Applicability of previous judgments and their binding nature. 4. Interpretation of statutory provisions and entries under the Madhya Pradesh General Sales Tax Act, 1958. Detailed Analysis: 1. Validity of the Show Cause Notice for Re-assessment: The appeal challenges the order passed by the learned Single Judge on 21.09.2001, which set aside a show cause notice dated 24.02.1995 for re-assessment under the Madhya Pradesh General Sales Tax Act, 1958. The Single Bench had relied on a Division Bench order in the case of Commissioner of Commercial Tax vs. Dawar Brothers to determine the classification of Vicco products as medicines and drugs, thereby exempting them from higher tax rates. 2. Classification of Vicco Vajradanti and Vicco Turmeric Cream: The petitioner argued that Vicco products should be classified under Entry 16, Part IV of Schedule II of the Act as "Drugs and Medicines," attracting a tax rate of 3%. However, the respondent contended that these products fell under "Toilet articles" and "Cosmetics," attracting higher tax rates of 12% and 16% respectively. The court examined the statutory entries: - Entry 21 Part II Schedule II: "Scents, perfumes, hair tonics, hair shampoo, depilatories, and cosmetics including face creams, snows, lipsticks, rouge, and nail polish" (16%). - Entry 2 Part-III Schedule-II: "Toilet articles including toothpaste, tooth powder, perfumed hair oil, talcum powder, brushes, razors, razor blades, but including articles specified in Entry 21 of Part-II" (12%). - Entry 16 Part-IV Schedule-II: "Drugs & Medicines" (3%). The court concluded that the products should be taxed as per the specific entries in the statute, i.e., 16% for face cream and 12% for toothpaste and powder, irrespective of their medicinal properties. 3. Applicability of Previous Judgments and Their Binding Nature: The petitioner cited previous judgments, including those from the Bombay High Court and the Supreme Court, which classified the products as medicines for excise duty purposes. However, the court clarified that these judgments pertained to different statutes (Central Excise Tariff Act, 1985) and were not applicable to the classification under the Madhya Pradesh General Sales Tax Act, 1958. The court emphasized that each statute must be interpreted based on its provisions. 4. Interpretation of Statutory Provisions and Entries: The court held that the judgment in Dawar Brothers was rendered in ignorance of the specific statutory provisions of the Madhya Pradesh General Sales Tax Act, 1958, making it a judgment per incuriam. The court cited several precedents to explain the concept of per incuriam, indicating that a decision given in ignorance of a statutory provision or binding authority is not a binding precedent. The court concluded that the statutory entries clearly classified the products as cosmetics and toilet articles, thus attracting higher tax rates. The argument that the products should be given trade meaning was dismissed as the statute itself provided clear classifications. Conclusion: The order of the learned Single Bench was set aside, and the writ petition was dismissed. The Department was directed to proceed with the decision on the show cause notice in accordance with the law. The court emphasized the importance of interpreting each statute based on its provisions and clarified that previous judgments under different statutes were not applicable in this case.
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