Tax classification of herbal drugs: natural herbs, roots and barks are not medicinal preparations under the Karnataka sales tax entry.

Herbs, roots and barks of trees used as country drugs were held not to be medicinal and pharmaceutical preparations under entry 41 of the Second Schedule to the Karnataka Sales Tax Act. Applying the common parlance test, the Court reasoned that the entry is narrower than the word "medicine" and covers only a distinct, identifiable medicinal preparation produced from raw materials, not natural drugs or raw materials with medicinal use. The classification adopted by the appellate authorities was therefore rejected, the revisional challenge succeeded, and the assessment made by the assessing authority was restored.

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Issues: Whether herbs, roots and barks of trees used as country drugs could be treated as medicinal and pharmaceutical preparations falling under entry 41 of the Second Schedule to the Karnataka Sales Tax Act.

Analysis: The disputed goods were admittedly dried herbs, roots and barks used for curing diseases. The decisive question was whether such goods, by reason of their medicinal value, could themselves be described as medicinal and pharmaceutical preparations. The expression in the taxing entry was materially narrower than the word "medicine", and the goods had to be a separate and identifiable medicinal preparation produced out of raw materials. Applying the common parlance test, herbs, roots and barks were drugs or medicine, but not preparations.

Conclusion: Herbs, roots and barks of trees do not fall within entry 41 as medicinal and pharmaceutical preparations. The issue is answered in favour of the assessee.

Final Conclusion: The revisional challenge succeeded, the tax classification adopted by the appellate authorities was set aside, and the assessment made by the assessing authority was restored.

Ratio Decidendi: For a commodity to fall within a taxing entry for medicinal and pharmaceutical preparations, it must be a distinct medicinal preparation and not merely a natural drug or raw material having medicinal use.

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