2019 (3) TMI 174 - SC - VAT and Sales Tax

Classification of manufactured goods - Aswini Homeo Hair Oil - classified under Entry 37 of Schedule-I to The Andhra Pradesh General Sales Tax Act, 1957 - Held that - The fact that the respondent is using the Homeopathic Pharmacopoeia referred to earlier in manufacturing of the hair oil has not been traversed by the appellant. Neither has the Commissioner dealt with that contention of the respondent nor was such a plea taken before the High Court by the appellant - the product manufactured by the respondent was rightly assessed at the relevant point of time in the assessment years 1994-1995 and 1995-1996, as covered by Entry 37 of Schedule-I of the APGST Act. The view taken in these appeals is in the fact situation of this case and confined to the assessment years 1994- 1995 and 1995-1996 only and would not apply or be of any avail to the respondent for the subsequent assessment years, in view of the amendment effected in the APGST Act - appeal disposed off.

Summary

Issues:
1. Interpretation of Entry 37 of Schedule-I to The Andhra Pradesh General Sales Tax Act, 1957.
2. Assessment of a product named 'Aswini Homeo Hair Oil' under the relevant entry.
3. Consideration of the Homeopathic Pharmacopoeia in determining the nature of the product.
4. Reversal of assessment order by the High Court based on the nature of the product.

Detailed Analysis:
1. The Supreme Court heard appeals challenging a judgment of the High Court that reversed the decision of the Commissioner regarding the assessment of 'Aswini Homeo Hair Oil' under Entry 37 of the APGST Act. The High Court restored the assessment order passed by the Deputy Commissioner, accepting the respondent's claim that the product fell under Entry 37.

2. The appeals focused on the assessment years 1994-1995 and 1995-1996, clarifying that the entries in question were amended after August 1, 1996. Before the amendment, the product was assessed under Entry 37, but post-amendment, it was classified under Entry 36. The respondent had been paying sales tax under Entry 36 after the amendment.

3. The respondent argued that the hair oil contained specific ingredients from the Homeopathic Pharmacopoeia, making it a medicine under the Drugs and Cosmetics Act. The Commissioner had questioned the curative properties of the product, but the High Court noted the presence of medicinal ingredients and ruled in favor of the respondent.

4. The High Court found that the product was rightly assessed under Entry 37 based on the medicinal nature of the ingredients, contrary to the Commissioner's decision. The Court highlighted that the appellant did not address the use of the Homeopathic Pharmacopoeia in manufacturing the product, supporting the respondent's claim that it was a medicine and not a cosmetic product.

5. The Supreme Court upheld the High Court's decision, emphasizing that the product was correctly assessed under Entry 37 for the assessment years 1994-1995 and 1995-1996. However, the judgment was limited to the specific facts of the case and would not apply to subsequent assessment years due to the amendment in the APGST Act. The appeals were disposed of accordingly.