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2012 Supreme(Mad) 1921
High Court of Judicature at Madras
CHITRA VENKATARAMAN & K. RAVICHANDRA BAABU
The State of Tamil Nadu Represented by The Deputy Commissioner of Commercial Taxes, Coimbatore
Versus
Tvl. Ramtirth International Pollachi
Tax Case (Revision) No.1767 of 2006
Decided On : 17-04-2012
For the Petitioner: R. Sivaraman, Spl. G.P.(T).
For the Respondent:S. Sivanandam, Advocate.
The primary use and application of a product, as well as the burden of proof on the Revenue to establish its classification, are crucial in determining its taxability.
Headnote:
Ramthirth Brahmi Oil - Taxability under Entry 20 Part C 1st Schedule - Summary of Acts and Sections
Fact of the Case:
The case involved the taxability of Ramthirth Brahmi Oil under different entries of the 1st Schedule. The assessee contended that it should be taxed at 5% under Entry 20 Part C as an ayurvedic medicine, while the Revenue argued it should be taxed at 16% under Entry 1(ii) of Part F as a hair oil.
Finding of the Court:
The Court found that the extensive use of Ramthirth Brahmi Oil was not limited to hair oil and had multifarious applications over the body, supported by voluminous materials and certifications from authorities. The Tribunal's decision to tax the oil under Entry 20 of Part C was upheld.
Issues: The main issue was the classification of Ramthirth Brahmi Oil for tax purposes, whether as an ayurvedic medicine or a hair oil, based on the entries in the 1st Schedule.
Ratio Decidendi: The court emphasized the need to consider the application and use of the product, as well as the burden of proof on the Revenue to establish the classification. It relied on various legal principles and precedents to support the decision.
Final Decision: The Tax Case Revision was dismissed, confirming the Tribunal's decision to tax Ramthirth Brahmi Oil under Entry 20 of Part C 1st Schedule.
CHITRA VENKATARAMAN, J.
1. The Revenue is on appeal against the order of the Tribunal made in C.T.A.No.214 of 1998 dated 18.1.2000 raising the following Substantial question of law: Whether on the facts and in the circumstances, the Tribunal is legally correct in holding that Ramthirth Brhmi Oil is taxable at 5% under Entry 20 Part C 1st Schedule as ayurvedic medicine and not falling under Entry 1(ii) of Part F of 1st Schedule ?
2. The assessment year relates to 1995-96. During the relevant point of time, there were two entries one dealing with medicine and the other dealing with hair oil. The entries as they appear in the statute read as under:-
20 (A) Medicines conforming to the following description:-
Any medicinal formulation or preparation At the point 5 95 ready for use internally of externally of first sale in or treatment or mitigation or the State prevention of disorders in human beings or animals (excluding products capable of being used as creams, hair oils, toothpastes tooth powders, cosmetics, toilet articles, soaps and shampoos) but including:
i) Allopathic medicine.
ii) Other medicines and drugs including ayurvedic, homepathic, siddha and Unani preparations.
iii) Medical mixtures or compounds the compounents of which have not already suffered
tax.
iv) Surgical dressing which expression shall include adhestive Plasters, adhesive Plaster if paris and eangages, velrocoop Eangages, elastro crape handages, zauze, Wadding gauz, lint and cotton woll poultices And similar articles impregated or coated with Pharmaxetidal substances put up informs or packings for surgical purposes which have been sterlised and confirm to the accepted Standard of the medical profession.
v) Pharmaceutical and surgical products of plastic and rubber including gloves aprons caps.
(B) Instruments and appliances used in medical, surgical, dental, veterinary sciemes, including scientific apparatus other electromedical apparatus and sight testing instruments including opthalmoscopoe, Otoscope, Laryago – Scope, rationscopoe, Binoular loupe, parts and Accessories thereor (Other than those specified Elsewhere in this schedule)
(i) Heart Pacemaker (Pulsde generator)
(ii) Intra-ocular lenses)
1. (1) Scents and perfumes in any form At the point 16% 51 excluding doop and agarpathis but of first sale including aragaja jab –javvadu and in the State punuupu.
(ii) Hair oils, hair creams, hair dyes, hair darkeners, Hair tonicsm Orillisantiners, pomades and Veselines.
(iii) Lipstics, Lipselve, nail polishes, nail varnished, nail brushes, beauty boxes fact powders, toilet powders, baby powders talcum powders, powder pads and puffs, toilet sets made of all materials (with or without contents, toilet sponges, scent spray, depilatoories, blemish removers, eye liners all sorts, , eye shadow, eye brow pencils, eye lash brushers, eaudecolone, solid colognes, Lavender water, snows, face creams, all purpose creams, cold creams, cleaning creams, make up creams, beauty creams, beauty milk, cleanif milk, hair foods, skin tonics complexion rouge, nail cuttars, sanitary towels andnapkins astringent lotions, pre-shave and after shave lotions and creams moistuisers of all sorts and personal (body) deodorants.
Explanations – Any of the items listed above even if medicated or as defined in section 3 of the drugs and cosmetics Act, 1949, (Central Act XXII of 1940) or manufactured on the license issued under the said Act will fall under this item.:
3. The assessee is a manufacturer cum dealer of Ramthirth Brahmi Oil. On the rate of tax to be applied in this case, the assessee contended that the item in question would fall under Entry 20 Part C 1st Schedule as medicinal formulation or preparation attracting the tax liability at 5%. The claim of the assessee was however rejected by the assessing authority, placing reliance on the explanation in Entry I Part F of the Act that Ramthirth Brahmi Oil is a hair oil even after medication and hence a drug as defi
