9911796707
TMI Blog2003 (9) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the West Bengal Sales Tax Act, 1954 (repealed) as also under the Central Sales Tax Act, 1956 and is a manufacturer of "Ayurvedic medicine" and "Ayurvedic hair oil" in the name of "Himtaj oil". By assessment order dated June 20, 1996, Commercial Tax Officer (CTO), Esplanade Charge (respondent No. 1) categorised the product as "Ayurvedic hair oil". Against that order dated June 20, 1996, the petitioner filed appeal before the Assistant Commissioner, respondent No. 2 who by order dated May 5, 1997 came to the conclusion that the applicant's product "Ayurvedic hair oil" was plainly an "Ayurvedic drug" within the meaning of the said notification dated September 27, 1982. In RN-137 of 1997, this Tribunal did not give any opinion as to the real nature of "hair oil" and directed to raise the question before the appropriate forum at the appropriate time of assessment hearing. The petitioner alleges that by the suo motu revisional order, respondent No. 3, Deputy Commissioner, set at naught the above finding of respondent No. 2 arbitrarily without having reason for the said revision. The petitioner adds that the respondent No. 3 further arbitrarily enhanced exorbitantly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for doing so. Suo motu power of revision of the Deputy Commissioner (D.C.) can be exercised to correct any order or illegality committed by the assessing authority in the order of assessment. Further case of the respondent is that there are numerous decisions by the different judicial authorities which would help to show that "Himtaj oil" is oil and not medicine. Even by common parlance concept and as per the Drugs and Cosmetics Act, "Himtaj oil" is nothing but hair oil and taxable at the rate of 8 per cent. Even if in the Central Excise Act, the commodity is taken to be "Ayurvedic drug", the finding in respect to that referential legislation will not be of any help while determining the character of the commodity with reference to the Sales Tax Act. A commodity has to be classified according to the intention of the Legislature and according to the statute which governs that commodity. Even if in any past assessment, the product has been assessed as hair oil that cannot operate as an estoppel or as res judicata in the matter of taxation, since each year's assessment is separate. It is the further contention of the respondent that the petitioner paid huge amount of excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of West Bengal. The Allahabad High Court as well as the Bombay sales tax authorities have already held that "Himtaj oil" is medicine. So, the returns filed by the applicant during the relevant periods were not incorrect. Even on the basis of common use theory "Ayurvedic Himtaj oil" cannot be said to be oil for the very fact that the same is not used by the general public as "hair oil". The suo motu revisional order having been passed only on presumption or guess and on the basis of his own opinion founded on non-application of mind about the exact nature of "Himtaj oil", the impugned order in the suo motu revision is liable to be set aside. 4.. The points that fall for consideration are: (i) Whether the initiation of suo motu revision by the Deputy Commissioner in the way done for revising the assessment made by Assistant Commissioner in appeal is justified in law. (ii) Whether "Himtaj oil" is "Ayurvedic drug" so as to be taxable at the rate of 4 per cent or is a "hair oil" simpliciter so as to be exigible to tax at the rate of 8 per cent ad valorem. (iii) Whether the enhancement of gross turnover as made by the Deputy Commissioner in suo motu revision is to be uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proceeding was as a result of threat or dictate of the audit and not due to independent application of the mind of the authority. So in that reported case, the initiation was not according to law. The Tribunal held that revision proceeding can be drawn up after calling for and examining records and upon consideration of the fact that the order passed is erroneous and prejudicial to the interest of the revenue. The next case is reported in [1970] 26 STC 251 (SC) (State of Kerala v. K.E. Nainan) which was a decision on the provisions of the TravancoreCochin General Sales Tax Act, section 15(1) read with rule 33 of the Kerala General Sales Tax Rules, 1950. Question of limitation was particularly at issue in that case while considering legality, propriety and regularity of the exemption of turnover granted under the licence in respect of some auction sales. No. question of limitation is involved here before us. The other ruling is of the Supreme Court reported in [1976] 38 STC 1 (Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue, West Bengal) which has already been referred to and which enunciates that power of revision in the Sales Tax Act is more extensive than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edicine or drug which should be subjected to tax at the rate of 8 per cent as sale of "hair oil". Gross turnover figure which is proposed to be made and the order that is proposed to be passed were also mentioned. We do not find any fault in the said notice. Moreover, the petitioner appeared in the hearing on receipt of the notice and must have come to know some other matters in details which was wanting, as per him, in the notice. Therefore taking into consideration all the aspects, we hold that the respondent No. 3's initiation of the suo motu revision does not suffer from any legal infirmity. 6.. The next dispute that requires to be resolved relates to the interpretation of goods, namely, "Himtaj oil" according to the Sales Tax Schedule. It is to be decided whether "Ayurvedic hair oil" is "Ayurvedic drug" or "hair oil" so that correct rate of tax for the same can be levied and collected and this interpretation of a taxable item is to be resolved by this Tribunal. The nature, character and classification of that item, namely, "Ayurvedic hair oil" is required to be determined under the law on the basis of facts or evidence collected. We are also required to consider the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authoritative books of Ayurveda numbering as many as 54. So, the mandatory condition for attracting the inclusive part of definition is that the medicine must be manufactured exclusively in accordance with the formulae described in "authoritative books" on Ayurveda, Siddha and Unani Tibb Systems of medicine as specified in the Schedule of the Act. So, naturally on the basis of simply a drug licence issued under the Drugs and Cosmetics Act, it cannot be conclusively held for the purpose of taxation under the 1954 Act that the product was a "drug". "Ayurveda" itself is a medical science and in preparation of "Ayurvedic drug", the formulations prescribed in authoritative books on Ayurveda must be followed. Grant of Drug Licence by the Director of Drugs Control may not help since such licence is very often issued without thoroughly examining the compositions of that substance. Merely because some certificates are collected by any manufacturing company from doctor or specialist for production before the assessing authority showing medicinal elements are present, the product does not become "drug". So, the petitioner has to bear the burden of proving through evidence that "Ayurvedic h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is. It has at least a pain relief effect on head and nerves and cooling effect on brain. Dandruff also can be removed on application of this product. So as per the learned advocate for the petitioner, application of this product "Ayurvedic himtaj oil" has effect of giving relief more to the head than to the hair of a person. So, it is not actually "Himtaj oil" but a "drug". It is not also used by general public as "hair oil". Only those having disease in head use the same. So, learned lawyer for the petitioner concludes that "Himtaj oil" is "Ayurvedic drug" within the meaning of the Schedule appended to the West Bengal Sales Tax Act, 1954 and can never be classified as "hair oil". A reasonable period after the conclusion of the argument, learned advocate for the petitioner mentioned and submitted in presence of the other side, Xerox copy of two judgments rendered by the honourable Supreme Court in Civil Appeal No. 1512 of 2001 disposed of on April 30, 2003 (Commissioner of Central Excise v. Pandit P.D. Sharma [2004] 37 VKN 352) and Civil Appeal No. 7610 of 1999 also disposed of by the said division Bench on April 30, 2003 (Commissioner of Central Excise v. Sharma Chemical Works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne is allowed to sell or store drugs or medicine and the same are to be obtained from drug store or chemist shop. "Himtaj oil" is available from every other stores. Similar claims concerning other products like Roshan Shital Tail, Brahmin Tail, Jabakusum, Boroplus, Himani, etc., have been adjudged not to be "medicine" though claimed to be Ayurvedic preparations and hence medicine by the assessees under the Sales Tax Act. 10.. We have perused the judgments dated April 30, 2003 of the apex Court concerning, "Himtaj oil" and "Banphool oil" holding the commodity as falling under tariff item No. 3033.30, i.e., "Ayurvedic medicine" and not "hair oil". We have also taken into consideration that in the Central Excise Act, there is provision of different tariff entries and chapters. Moreover, there are different chapter notes as well as Board circulars and different guidelines when much of preparations adopted for a product would or would not fall under pharmaceutical products. There is also provision, in case of dispute regarding classification of a product, for reference, if necessary, for getting report on reference from the State Drug Licence Authority concerned with Ayurvedic. In cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 and the relevant notifications mentioned already. We have to consider the specific inclusive definition of "hair oil" explained in the relevant notification concerning the entry of "hair oil". The language has to be interpreted as per admitted guidelines of different rulings of the apex Court and the different High Courts. Such interpretation results in widening the meaning of the specific entry, i.e., "hair oil", which has been recognised in our Sales Tax Act as a separate commodity for the purpose of taxation. So, the intention of the Legislature is to treat "hair oil" as a separate commodity. That it is not "hair oil" but "Ayurvedic medicine" is required, as such, to be proved by the petitioner-manufacturer. 12.. Sri S.N. Bose, learned Senior Advocate for the petitioner, in order to discharge that onus relies on judgment rendered by the Allahabad High Court on September 7, 1993 in the case of Balaji Agency v. Commissioner of Sales Tax 1994 UPTC 184. Xerox copy of that judgment is annexure H, page 33. By the said decision, the honourable High Court disposed of sitting in revision, on the nature of five different items including "Himtaj oil" in the context of the U.P. Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s medicine. No prescription is filed from any doctor showing "Himtaj oil" has been recommended for numerous diseases of head. We can also take note of the fact that this oil is available not only from drug store or chemist shop but also from any other store in the market. Under the Drugs and Cosmetics Act, only drug store and chemist shop can sell drugs. We also take note of the fact that medicated Brahmi oil, "Kajal", "Roshan til tail" all had some medicinal qualities but different High Courts rendered decision holding those as nothing but "hair oil ". Regard being had to the contents of advertisement in Hindi and Bengali where it has been specifically held out that this product is helpful for luxuriant growth of hair, for blackening of hair, for prevention of dandruff, for cooling effect on brains and eyes, etc., and regard being had to the decision rendering regarding "Roshan til tail", "Mahabhringaraj tail", etc., having similar qualities, we hold that "Himtaj oil" cannot but be classified as "hair oil" despite having some medicinal properties therein. It is merely a hair tonic as it appears from facts and circumstances. Inclusion of some medicinal ingredients does not change t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 ". The Tribunal as such held that the condition precedent for confiscation of Indian currency has not been satisfied and accordingly that order of confiscation of the currency was set aside. Admittedly there was also raid by the officers of the Commercial Taxes Directorate in the factory and residence of the petitioner. Documents and books of account had also been examined by them, but the sales tax authorities could not discover anything. Paragraph 15 of the application to this effect goes unchallenged in paragraph 18 of the affidavit-inopposition. Turnover has been enhanced simply on the basis of initial report after raid of the Central excise personnel. In view of subsequent finding rendered by the said Tribunal as referred and in view of failure of the sales tax authorities to establish independently that there was any undisclosed sale as alleged by the assessee, the respondent under law is not entitled to presume only on the basis of the initial report after raid by the Central Excise Officials that there has been suppression of sale as alleged leading to increase in turnover. It has been reported in [2000] 121 STC 1 (SC); [2001] 37 STA 39 [P.C. Ittymathew Sons v. 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