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TMI Blog2000 (1) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... o. X-11014/8/88 DMS/PF a photocopy of said notification is attached in duplicate, moreover the Executive Engineer, Municipal Council has been charged octroi on the I.V. sets of medicines." 3.. The above application was moved with a view to get a declaration whether the sale of I.V. sets is taxable at the rate of 6 per cent under entry 56 of the Schedule prescribing rates of taxes payable on the sale of commodities or are to be taxed at 10 per cent under residuary entry not otherwise specified in the Schedule. 4.. The application was forwarded for disposal to the Additional Commissioner, Commercial Taxes, Jaipur. The Additional Commissioner, Commercial Taxes, Jaipur decided the above application vide his order dated April 12, 1993 holding that I.V. sets are not medicines and hence they are liable to be taxed at 10 per cent. He held that I.V. sets are not understood as medicine by the doctors, patients as well as wholesalers and retailers in the commercial parlance as members of the trading community and the definition given in the Drugs and Cosmetics Act, 1940 is not relevant for the purpose of classification of goods to determine the rate of tax applicable. The I.V. sets are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at High Court in B. Shah & Co. v. State of Gujarat [1971] 28 STC 5, wherein while considering the question whether Nycil powder is a toilet powder or a medicine, it was observed as under: "It is clear from the composition of Nycil powder that it is primarily and essentially an article recommended for use to cure a person of certain skin ailments and that it is made of medicinal articles with starch and talc as its basis. The use for which it is recommended by the manufacturers is not for the purpose of grooming a person by beautifying his appearance but for the purpose of relieving a person from certain skin ailments and it is not even styled or advertised as a toilet powder. Having regard to these special attributes and property of Nycil powder as well as to the advertised use for which it is intended, it would be difficult to hold that Nycil powder would or could ordinarily be used for the purpose of grooming a person by beautifying his appearance. ..........The essential and true character of such an article as a remedial agent for diseases would not be thereby altered and the article in question must, having regard to its character and property, be held not to fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory or another is equally relevant consideration in assigning the meaning for the purpose of finding the correct weight of taxation to be applied. 14.. In Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433; (1979) 1 SCC 82, the Supreme Court was considering whether "dryer felts" manufactured by the assessee and used in paper making machinery fell within the category of "all varieties of cotton, woollen or silken textiles" specified in item 30 of Schedule "B" to the Punjab General Sales Tax Act, 1948 so as to be exempt under section 6 thereof, from sales tax imposed under the Act. The contention of the assessee did lost before the courts below. However, the Supreme Court held: "Where a word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. "Textile' means a woven fabric in ordinary parlance. Whatever be the mode of weaving employed and to whatever use the woven fabric may be put to, it would be 'textile'. 'Dryer felts' are clearly woven fabrics and are regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or "Gramoxone" (a brand of weedicide). The assessee claimed exemption on a turnover representing second sales of "Gramoxone". The assessing authority disallowed the claim of exemption holding that the commodity "Gramoxone" comes under "weedicides" which were liable at 4 per cent multi-point tax. The Appellate Assistant Commissioner agreed with the assessee and held that the commodity "Gramoxone" falls under entry 66 of the First Schedule to the Act and since the sales were only second sales, the assessee was not liable to pay any tax thereon. However, on further appeal, the Joint Commissioner held that at the relevant point of time, for the assessment year in question, the commodity "Gramoxone" which falls under "weedicides and fungicides", did not fall under entry 66 of the First Schedule and that the said commodity was liable at multi-point rate of taxation. The assessee questioned the correctness of the order passed by the Joint Commissioner by preferring an appeal before the Madras High Court. The contention of the assessee before the High Court was that entry 66 of the First Schedule, as it existed at the relevant time, dealt with "pesticides and insecticides" and the "Gramo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodity and considers that commodity to fall in what category. 20. Let us have a look at dictionary meaning of the word "medicine". In Webster Comprehensive Dictionary (Encyclopedia Edition), word "medicine" reads as under: "Medicine: 1. A substance possessing or reputed to possess, curative or remedial properties; 2. The healing art; the science of the preservation of health and of treating disease for the purpose of cure, specifically as distinguished from surgery or obstetrics; The dictionary meaning of term "medicine" as given in Words and Phrases, (Volume 26A), which reads as under: "The word 'medicine' is susceptible of distinct meanings: one indicating nothing more than a remedial agent that has the property of curing or mitigating diseases, or is used for that purpose, while the other indicates an art of healing and science which has for its province the treatment of diseases generally. Commonwealth v. Selbert 105 A. 507, 508, 262 pa 345." 21.. Like medicine, the drug in popular sense is used a noun for any substance used in the composition of medicine to cure, diagnose or prevent disease. In more popular sense, it indicates to narcotic substance especially an addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latory measure and directly affects the taxing event namely sale of the commodity or goods in question. 24.. It is relevant to mention here that import, manufacture, distribution and sale of drugs and cosmetics are also governed by the provisions of the Drugs and Cosmetics Act, 1940 (for short, "the Act of 1940"). The expression "drug" has been defined in section 3(b) of the Act of 1940 as under: "drug" includes,- (i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals as may be specified from time to time by the Central Government by notification in the Official Gazette; (iii) all substances intended for use as components of a drug including empty gelatin capsules; and (iv) such device intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling or stocking or exhibiting or offering for sale or distribute any drug which has been imported or manufactured in contravention of any of the provisions of this Act or any rule made thereunder. It also prohibits any person from manufacturing for sale or for distribution or to sell or stock or exhibit or offer for sale or distribute any drug except under and in accordance with the conditions of a licence issued for such purpose under this chapter. The aforesaid provisions of the Act of 1940 amply make it clear that a commodity which is defined as a drug and which fall in the definition of drug as provided in the Act is to be manufactured or sold or distributed as a drug by any person subject to constraints provided in the Act and not in any other common parlance meaning such commodity can be traded. If that is so, it stands to reason that if any commodity is treated by the trading community, whether as a manufacturer or wholesaler or retailer, as a drug under the statutory provisions, the same must be treated to be a sale of the commodity falling in that category only. 27.. Therefore, applying this principle, I am of the opinion that under section 3(b) of the Act of 1940, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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