J. P. Deodhar J.

At the instance of the Applicant, Larger Bench of Maharashtra Sales Tax Tribunal, Mumbai has referred the following questions for the decision of this Court under Section 61 of the Bombay Sales Tax Act, 1959 :-

(i) Whether on the facts and circumstances of the case and on true and correct interpretation of the Schedule Entry C-II-37 appended to the Bombay Sales Tax Act, 1959 as amended by Amendment Act No. XIX of 1996, the Tribunal was legally justified in holding that the Diagnostic Kits sold by the Applicant by his invoice dated 27.8.96 are not 'drugs' covered by the said Schedule Entry C-II-37 ?

(ii) Whether on the facts and in the circumstances of the case and on true and correct interpretation of the Schedule Entry C-II-37 appended to the Bombay Sales Tax Act, 1959, the Tribunal was justified in interpreting the word "externally" appearing therein to mean "used upon the body" and not "used upon as well as outside the body", and in holding the said product to be not a medicine under the said Schedule Entry on the basis of such interpretation ?

(iii) Whether on the facts and in the circumstances of the case and on true and correct interpretation of Schedule Entry C-H-106 appended to the Bombay Sales Tax Act, the Tribunal was legally justified in holding that the Diagnostic Kit sold by the Appellant by his invoice dated 27.8.96 is a Scientific and Laboratory Instrument/Equipment covered by the said Schedule Entry C-II-106 merely because it is used exclusively in Pathological Laboratories for carrying diagnostic tests ?

The dispute in the present reference relates to the classification of Diagnostic Kits sold by the Applicant (hereinafter referred to as 'Assessee') vide Sale Invoice dated 27.8.1996. The Larger Bench of the Tribunal has held that the Diagnostic Kit sold by the Assessee are not classifiable as 'Drugs' under Schedule Entry C-II-37 but the same are classifiable as Scientific and Laboratory Instrument/Equipment under Schedule Entry C-II-106 of the Bombay Sales Tax Act, 1959 ('B.S.T. Act' for short).

The Assessee is a Public Limited Company engaged in the business of manufacture/import of Medicines, Diagnostic Kits, etc. The Assessee is duly registered under the provisions of the B.S.T. Act. The Assessee holds a licence under the Drugs & Cosmetics Act, 1949 (Drugs Act) for manufacture/import of various products.

Diagnostic Kits are used for the detection of 'AIDS'. These products are not manufactured in India but are imported under the licence granted to the Assessee under the Drugs Act. The Diagnostic Kits consist of the following products :-

|---------|-------------------------------------| | Sr. No. | Description of the product | |---------|-------------------------------------| | 1. | Accu Dot HIV 1/2 25 | | 2. | Accu Dot HIV 1/2 50 | | 3. | HIV 1+2 ELISA | | 4. | TEXOPLASMA GONDII-I (Code No. 4945) | | 5. | TEXOPLASMA GOND H-I (Code No. 4946) | | 6. | RUBELLA VIRUS Ig G- | | 7. | RUBELLA VIRUS Ig M | | 8. | T 4 ELISA | | 9. | TSH ELISA | | 10. | HEPATITIS B SURFACE | | 11. | CYTOMEGALD VIRUS Ig | | 12. | HERPES SIMPLEX VIRUS | |---------|-------------------------------------|

On sale of the said products vide Sale Invoice dated 27.8.1996, the Assessee made an Application to the Commissioner of Sales Tax under Section 52 of the B.S.T. Act seeking determination on the classification and applicable rate of tax payable on the aforesaid products.

Before the Commissioner of Sales Tax, the Assessee contended that the products which constitute Diagnostic Kits contained medicinal formulations made mainly of "Human Plasma" consisting of its major components namely :-

(i) Positive Control : Human Plasma containing either antibodies to HIV 1 + 2 OR H