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2008 (12) TMI 357 - HC - VAT and Sales TaxLizol and Harpic- Items essentially used as stain removers and deodorants though they kill germs as well. HSN Code No. 3808 covers essentially disinfectant and not clearing agent which serves as a disinfectant as well. Not covered under HSN Code No. 3808 and under entry 44(5) of third Schedule to the Kerala Value Added Tax, 2003. Since items are not covered by any other entry of Schedule 2 or 3, these products come under entry 27(4) of Notification No. SRO 82/2006 as stain busters, stain removers etc. Dettol kills germs and a product generally to maintain hygiene. No case that detol is able to prevent or cure any disease, hence it is not a medicament. Item falls under residuary entry of Notification No. SRO 82/2006-Kerala Value Added Tax Act, 2003.
Issues: Interpretation of Kerala Value Added Tax Act, 2003 Rules, Classification of Products under Specific Entries, Scope of Government Notification on Tax Rates, Classification of Disinfectant Products, Classification of Dettol as a Medicament.
Interpretation of Kerala Value Added Tax Act, 2003 Rules: The Supreme Court directed the High Court to consider the Rules of interpretation of the Kerala Value Added Tax Act, 2003, and decide the matter accordingly. The Commissioner of Commercial Taxes clarified the classification of various products of the appellant under specific entries of the Act. The Rules of Interpretation state that commodities under a four-digit HSN number include all those commodities under that heading. The appellant's products were found to fall under Entry 44(5) of the Third Schedule to the Act based on the specific coverage of repellents for insects such as flies and mosquitoes under the HSN Code provided. Classification of Products under Specific Entries: The High Court analyzed the scope of Entry 66 of Notification 82/2006 in relation to the powers conferred under Section 6(1)(d) of the Act. It was emphasized that if any item is specifically covered under the Second or Third Schedule to the Act, the Government cannot issue a notification prescribing a different tax rate for that item. The Court noted the deletion of HSN Code 3808 from Entry 44(5) but refrained from considering its impact due to the focus on the validity of the clarification issued by the Commissioner. Classification of Disinfectant Products: Regarding products sold under the brand names Lizol, Harpic, and Dettol, the Court examined whether they qualified as disinfectants falling under specific HSN Codes. The products' descriptions and nature of use were crucial in determining their classification. While the appellant claimed Lizol and Harpic were disinfectants, the Court found their primary purpose to be stain removers and deodorants, leading to their classification under a different entry. The products were classified under Entry 27(4) of SRO 82/2006 as stain busters and cleaning agents. Classification of Dettol as a Medicament: The appellant argued that Dettol should be classified as a medicament falling under a specific entry of the Act. However, the Court examined the nature of use of Dettol and concluded that it did not qualify as a medicament used for therapeutic or prophylactic treatment of diseases. Dettol was deemed a product for maintaining hygiene, and as the appellant failed to establish its classification under any other entry, the Commissioner's decision to classify it under the residuary entry of Notification SRO 82/2006 was upheld. Conclusion: The appeal was allowed in part, with the Court providing detailed reasoning for the classification of the appellant's products under specific entries of the Kerala Value Added Tax Act, 2003, based on the Rules of Interpretation and the nature of the products in question.
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