Common-parlance drug classification controls sales tax treatment where a product has medicinal use and fits the statutory definition.

An article-classification dispute concerned whether "Lal Dantamanjan" fell within the inclusive definition of "drugs" in section 3(b) of the Drugs and Cosmetics Act, 1940 for sales tax purposes. The Court applied common parlance and intended medicinal use, noting that "drug" has wide amplitude and is not confined to medicines in a narrow technical sense; regulatory control under the Act and licensing were relevant characterisation factors. It also distinguished the revenue's precedent as not deciding this precise statutory question. On that basis, reassessment at the residuary rate on the assumption that the product was outside the drugs entry was held unsustainable, and the assessments were quashed with remand for fresh determination.

---

---

Issues: Whether the product "Lal Dantamanjan" is covered by the expression "drugs" in section 3(b) of the Drugs and Cosmetics Act, 1940 so as to fall within the relevant sales tax entry taxable at 4 per cent, and whether the reassessments levying tax at the higher residuary rate were sustainable.

Analysis: The governing entry covered drugs as defined in section 3(b) of the Drugs and Cosmetics Act, 1940. The expression "drug" in that provision is of wide and inclusive amplitude, extending beyond medicines in the narrow sense and embracing substances intended to be used for diagnosis, treatment, mitigation or prevention of disease. In determining whether an article is a medicine, the ordinary and popular meaning is material, not a technical or restrictive one. The product was asserted to be manufactured under the regulatory control of the Drugs and Cosmetics Act, 1940, and the requirement of licence under that enactment was treated as a relevant circumstance bearing on its character. The precedent relied on by revenue was distinguished because it did not decide the precise question whether this product fell within section 3(b) of the Drugs and Cosmetics Act, 1940, and the earlier view had to be read in the context of the statutory language then under consideration. The Court held that the nature and principal use of the product required factual examination and that the reassessment orders had proceeded on an erroneous legal basis.

Conclusion: The product was not to be excluded from the drugs entry merely because it was sold as tooth powder. The reassessments based on the residuary rate could not stand and were set aside, with the matter remitted for fresh assessment.

Final Conclusion: The writ applications succeeded, the assessment orders were quashed, and the assessing authority was directed to redo the assessments in light of the Court's observations.

Ratio Decidendi: For sales tax classification, an article falling within the inclusive statutory definition of "drugs" under section 3(b) of the Drugs and Cosmetics Act, 1940 must be taxed under the specific drug entry, and its character must be determined in common parlance with regard to its intended medicinal use rather than by a merely technical description.

---