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2023 (4) TMI 408 - SC - VAT and Sales TaxClassification of goods - Mosquito Mats, Coils and Vaporizers - Mortein Insect Killers - Harpic Toilet Cleaner and Lizol Floor Cleaners - Dettol Antiseptic Liquid - classifiable under Entry No. 44(5) of the III Schedule to the Kerala VAT Act as being 'pesticides, insecticides' corresponding to HSN Code 3808 and therefore subject to VAT at the rate of 4% or not? - Dettol Antiseptic Liquid, classifiable under Entry 36(8) (h) (vi) being medicaments corresponding to HSN Code 3004.90 of the III Schedule or not - HELD THAT - It is required to be noted that HSN Code 3808 has been deleted from Entry 44(5) w.e.f. 01.07.2006 and from 21.01.2006 the aforesaid products would fall under Sl. No.66 namely Mosquito repellant , which is the specific entry and subject to VAT at 12.5%. The insecticides under Entry 44(5) therefore can be said to be a general entry. Once there is a specific entry the Mosquito Repellant , thereafter one is not required to go to the definition under another Act namely Insecticides Act. Sl.No.66 of Notification SRO 82/06 dated 21.01.2006 issued under Section 6(1)(d) of the Kerala VAT Act which covers Mosquito Repellants - Even otherwise it is required to be noted that Entry 44(5) which includes insecticides relates to products which are used in agricultural operations. All the products in the Entry are used in the agricultural field in relation to growing of agricultural products and controlling of pets, insecticides etc. which are attacking the plants. Therefore, in view of the specific Entry 66 of Notification SRO 82/06 dated 21.01.2006 the aforesaid products namely Mosquito Repellants, electric or electronic mosquito repellants, gadgets and insect repellants, devices and parts and accessories thereof are rightly classified as Mosquito repellants. In the present case under the KVAT Act there is a specific Entry Mosquito repellant so far as the product electric or electronic mosquito repellents, gadgets and insect repellents, devices and parts and accessories thereof are concerned and therefore the said specific entry shall be applicable in any case, the same cannot be said to be insecticides. We are in complete agreement with the view taken by the High Court that Mosquito Mats, Coils and Vaporizers and Mortein Insect Killers products shall not be classifiable under Entry 44(5) as insecticides. Harpic and Lizol - HELD THAT - What is required to be considered is the dominant use which is cleaning and removal of stains of floor and the toilet. Thereafter, the same shall not fall under Entry 44(5) HSN Code No.3808 as insecticides or disinfectant. Entry 27(4) of SRO No. 82 of 2006 is with respect to stain busters, stain removers, abir, blue and all kinds of cleaning powder and liquids including floor and toilet cleaning. In that view of the matter Entry 27(4) being a specific entry the same shall be applicable and the aforesaid two products namely Harpic and Lizol shall not be classifiable under general Entry 44(5) and in any case the same cannot be classifiable under Entry 44(5) as insecticides - the product Harpic and Lizol shall not be classifiable under Entry 44(5) and shall be classifiable under Entry 27(4) of SRO 82/2006 chargeable to tax at 12.5%. Dettol - HELD THAT - The active ingredients of Dettol are Chloroxylenol IP, Terpineol BP, Alcohol Absolute IP (denatured) and it is an antiseptic having germicidal properties and it kills germs, bacteria and it prevents infection therefore it is applied on wounds, cuts, grazes, bites and stings. It is also used in hospitals for surgical use and medical use - the Dettol is used as an antiseptic liquid and is used in hospitals for surgical use, medical use and midwifery, due to therapeutic prophylactic properties. Therefore, the same can be said to be an item of medicament to be treated as a drug and medicine. Here also the dominant use is a relevant consideration. In the case of PONDS INDIA LTD. VERSUS COMMISSIONER OF TRADE TAX, LUCKNOW 2008 (5) TMI 46 - SUPREME COURT this Court has held that while deciding the issue whether any particular item would be covered under relevant entry or classification, different tests viz. the dictionary meaning, technical meaning, user s point of view, popular meaning etc. are to be applied. The dominant use of Dettol and the active ingredients of Dettol referred to hereinabove and that the Dettol is used as an antiseptic and is used in hospitals for surgical use, medical use and midwifery due to therapeutic prophylactic properties the same would fall under Entry 36(8) (h) (vi) as claimed by the appellant and would not fall under the residuary entry as claimed by the Revenue. To that extent the impugned judgment and order passed by the High Court deserves to be quashed and set aside. The impugned judgment and order passed by the High Court in so far as the products Mosquito Mats, Coils and Vaporizers and Mortein Insect Killers; Harpic Toilet Cleaner and Lizol Floor Cleaners is hereby confirmed. So far as the impugned judgment and order passed by the High Court with respect to Dettol Antiseptic Liquid is concerned, the impugned judgment and order passed by the High Court is set aside and it is held that the product Dettol would fall under Entry 36(8) (h)(vi) of Schedule III of the KVAT Act and shall be liable to be taxed at 4%. Appeal allowed in part.
Issues Involved:
1. Classification of Mosquito Mats, Coils, and Vaporizers; Mortein Insect Killers. 2. Classification of Harpic Toilet Cleaner and Lizol Floor Cleaners. 3. Classification of Dettol Antiseptic Liquid. Summary: Issue 1: Classification of Mosquito Mats, Coils, and Vaporizers; Mortein Insect Killers The appellant contended that these products should be classified under Entry No. 44(5) of the III Schedule to the Kerala VAT Act as 'pesticides, insecticides' corresponding to HSN Code 3808, subject to VAT at 4%. However, the Commissioner of Commercial Taxes classified these products under Entry 66 of Notification SRO 82/06, which covers "Mosquito Repellants, electric or electronic mosquito repellants, gadgets and insect repellants, devices and parts and accessories thereof" corresponding to HSN Code 8516 79 20, subject to VAT at 12.5%. The High Court upheld this classification, and the Supreme Court agreed, stating that these products are specifically covered under Entry 66 and not as insecticides under Entry 44(5). Issue 2: Classification of Harpic Toilet Cleaner and Lizol Floor Cleaners The appellant argued that these products should be classified under Entry 44(5) of the III Schedule to the Kerala VAT Act as insecticides. The Commissioner classified them under Entry 27(4) of Notification SRO 82/06, which pertains to "stain busters, stain removers, abir, blue and all kinds of cleaning powder and liquids including floor and toilet cleaning," subject to VAT at 12.5%. The High Court upheld this classification, and the Supreme Court agreed, emphasizing that the dominant use of these products is for cleaning and removing stains, not as insecticides. Issue 3: Classification of Dettol Antiseptic Liquid The appellant claimed that Dettol should be classified under Entry 36(8)(h)(vi) of the III Schedule to the Kerala VAT Act as a medicament corresponding to HSN Code 3004.90, subject to VAT at 4%. The Commissioner classified it under the residual Entry 103 of Notification SRO 82/06, arguing that it is not a medicine with therapeutic or prophylactic properties but is used for cleaning purposes. The High Court upheld this classification. However, the Supreme Court disagreed, noting that Dettol is used as an antiseptic with germicidal properties and is applied on wounds, cuts, grazes, bites, and stings, and used in hospitals for surgical and medical use. Therefore, the Supreme Court held that Dettol falls under Entry 36(8)(h)(vi) as a medicament and is subject to VAT at 4%. Conclusion: The Supreme Court partly allowed the appeal: - Confirming the High Court's judgment for Mosquito Mats, Coils, Vaporizers, Mortein Insect Killers, Harpic Toilet Cleaner, and Lizol Floor Cleaners. - Setting aside the High Court's judgment regarding Dettol Antiseptic Liquid, classifying it under Entry 36(8)(h)(vi) of the III Schedule to the KVAT Act, subject to VAT at 4%. Corrigendum: The Court clarified that the observations made in paragraphs 9.1 and 9.4 of the judgment dated 10.04.2023 are specific to the Kerala Value Added Tax Act and should not be construed as general observations applicable to other State enactments.
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