True character test in sales tax classification keeps a herbal hair preparation in the hair-oil category, with prospective relief discretionary.

Classification under sales tax turns on the product's true character, assessed from its constituents, essential use and trade understanding, not merely on the manufacturer's description. Applying that test, "Dandwala Keshkalpa" was held to remain a hair-oil despite herbs and claimed medicinal qualities, so it fell under the hair-oil entry and not the drugs and medicines entry. The Tribunal's refusal to give the determination order prospective effect was also upheld because such relief was discretionary under the Act and not available as of right, and no sufficient basis was shown for it. The reference was answered in favour of the Revenue on both issues.

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Issues: (i) Whether the product known as "Dandwala Keshkalpa" was classifiable as drugs and medicines under entry 26(1) of Schedule II, Part A to the Gujarat Sales Tax Act, 1969, or as hair-oils under entry 7 of Schedule III; (ii) Whether the Tribunal was justified in declining to give prospective effect to the determination order.

Issue (i): Whether the product known as "Dandwala Keshkalpa" was classifiable as drugs and medicines under entry 26(1) of Schedule II, Part A to the Gujarat Sales Tax Act, 1969, or as hair-oils under entry 7 of Schedule III.

Analysis: The product contained a substantial oil base and was prepared with herbs and other ingredients said to have medicinal qualities, but its constituent materials and use showed that its essential character remained that of a hair-oil. Certificates and opinions relied upon by the assessee only indicated that the product helped prevent or cure common hair and scalp complaints and promoted hair growth; they did not establish that it was accepted in trade or in substance as a medicinal preparation. The label or literature describing it as an ayurvedic medicine was not decisive, because classification depends on the true character of the article, not on the description adopted by the manufacturer. Applying the relevant test of real character and user, the product fell within the hair-oil entry.

Conclusion: The product was correctly held to fall under entry 7 of Schedule III and not under entry 26(1) of Schedule II, Part A, and the answer to this issue was against the assessee and in favour of the Revenue.

Issue (ii): Whether the Tribunal was justified in declining to give prospective effect to the determination order.

Analysis: The power to direct that a determination order operate prospectively was held to be discretionary under section 62(2) of the Act. Such prospective operation was not available as of right, and no sufficient basis was shown for insisting on it. The record also did not show that the request for prospective effect had been pressed at the stage of determination.

Conclusion: The Tribunal was justified in refusing to grant prospective effect, and the answer to this issue was against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered in favour of the Revenue on both questions, confirming the tax classification of the product as a hair-oil and upholding the refusal to restrict the determination order prospectively.

Ratio Decidendi: For sales tax classification, the true character of a product must be determined from its constituents and essential use, and a hair-oil does not become a medicine merely because it contains herbs with medicinal qualities or is described by the manufacturer as an ayurvedic preparation; a prospective-tax direction under the determination provision is discretionary and not claimable as of right.

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