2023 (9) TMI 708 - HC - VAT and Sales Tax

Classification of services - HIMANI BOROPLUS ANTISEPTIC CREAM - Medicament or not - to be classified as medicines falling within the scope of Entry 46 of Part-II of Schedule B appended to the Orissa Value Added Tax Act, 2004 - HELD THAT - Reliance placed on judgment of the Supreme Court in Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise, Nagpur, 2006 (3) TMI 141 - SUPREME COURT , in which the two tests were accepted. There can be no fact finding in adjudication of the revision petition. Keeping that in mind we have to understand what are the two tests that have been accepted by the Supreme Court. The first test is common understanding of the product to be a medicament, which is called the common parlance test. A user of the product would use it only for treating a particular ailment and stop its use after the ailment is cured. The second test is regarding ingredients used in the product, whether mentioned in authoritative textbooks on Ayurveda. The Tribunal did not direct remand, for ascertaining the question of fact regarding ingredients of the product. Instead, without itself ascertaining on the fact, it went on to dismiss the appeal of revenue. There was no satisfaction rendered by opposite party (assessee) on the second test. It must be said that it was for opposite party to prove the product fell under the entry as the Tribunal erred in saying the burden was on petitioner (Revenue) to prove the negative. Coming back to the first test, on perusal of both, impugned order as well as the one made by the Commissioner carrying concurrent findings, we have been unable to notice that there was finding also on fact, regarding common parlance test. It must be mentioned here that the advertisement relied upon by petitioner was so done at this stage and not in the earlier proceedings, ascertained by us on query made. Hence, we disregard the advertisement in our adjudication. Revision disposed off.

Summary

Issues involved:
The issue in this case revolves around determining whether the products "HIMANI BOROPLUS ANTISEPTIC CREAM" and lotion qualify as "medicines" falling within the scope of Entry 46 of Part-II of Schedule B appended to the Orissa Value Added Tax Act, 2004.

Judgment Details:

Issue 1: Interpretation of the Common Parlance Test and Ingredient Test
The petitioner argues that the product is a cosmetic based on an advertisement, while relying on the Supreme Court's judgment in Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise. The two tests accepted by the Supreme Court are the common parlance test and the ingredient test. The Assessing Officer classified the product under the residuary Part III of the Orissa Value Added Tax Act. The opposite party, however, presented studies demonstrating the product's medicinal use for treating minor cuts, burns, and dry skin diseases. The Commissioner and Tribunal accepted these reports, emphasizing the medicinal value of the product.

Issue 2: Burden of Proof and Lack of Finding on Ingredients
The Tribunal acknowledged the product's medicinal value but did not delve into the ingredients, leading to a dispute. The Tribunal dismissed the appeal without ascertaining the facts on ingredients. The burden of proof was on the opposite party to establish that the product falls under the relevant entry. The Tribunal erred in stating that the burden was on the petitioner to disprove this. The judgment highlights the absence of a finding on the common parlance test and disregards the advertisement relied upon by the petitioner.

Conclusion:
The High Court directed remand to the Tribunal for a detailed examination of the two tests accepted by the Supreme Court. The Court did not provide a direct answer to the question at hand, emphasizing the need for a thorough assessment of the facts. The restoration to the Tribunal is not limited to the two tests, allowing both parties to present all relevant points. The revision was disposed of with these directions for further proceedings.