Therapeutic efficacy test governs sales tax classification of claimed homoeopathic preparations; hair tonic may be taxed as a cosmetic.

For sales tax classification, a preparation claimed as homoeopathic medicine must itself be shown to have therapeutic efficacy as a combination; a drug manufacturing licence, eligibility certificate, or the medicinal character of individual ingredients was not conclusive. On the materials, Arnika plus hair vitalizer and Triofer tablets were not proved to be homoeopathic medicines or "drugs" merely by their ingredients or licence status. Arnika plus, being marketed as a hair tonic or lotion, fell within the cosmetic entry and was properly classified as a cosmetic, while Triofer tablets did not fall within the cosmetic category and had to be taxed as general goods, requiring adjustment of the assessment.

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Issues: (i) Whether Arnika plus hair vitalizer and Triofer tablets were homoeopathic medicines or "drugs" within the meaning of the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 for sales tax classification purposes; (ii) whether Arnika plus hair vitalizer was classifiable as a cosmetic and Triofer tablets as general goods under the sales tax notification.

Issue (i): Whether Arnika plus hair vitalizer and Triofer tablets were homoeopathic medicines or "drugs" within the meaning of the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 for sales tax classification purposes.

Analysis: The mere existence of a drug manufacturing licence, registration as a manufacturer of homoeopathic medicines, or an eligibility certificate did not bind the sales tax authorities to accept the assessee's own classification. The decisive inquiry was whether the particular preparations, as marketed and manufactured, had established therapeutic efficacy and could be treated in law and in trade as homoeopathic medicines. The materials showed that the products were combination preparations not named in authoritative homoeopathic literature, and no satisfactory proof was produced that the specific combinations had been proved therapeutically effective as combinations. The licensing record also did not show any real consideration of therapeutic efficacy before grant of the licence.

Conclusion: The products could not be treated as homoeopathic medicines or as "drug" merely because their ingredients were individually known to homoeopathy or because a licence had been issued.

Issue (ii): Whether Arnika plus hair vitalizer was classifiable as a cosmetic and Triofer tablets as general goods under the sales tax notification.

Analysis: Arnika plus was described by the assessee itself as a lotion and was widely projected as a hair tonic or hair vitalizer, bringing it within the notification covering hair tonic and hair lotions among cosmetics of all varieties. Triofer tablets, however, were not covered by the notification's cosmetic entries merely because they were packed along with Arnika plus. On the evidence accepted by the Tribunal, Triofer did not fall within the cosmetic category and could not be taxed as such.

Conclusion: Arnika plus hair vitalizer was rightly treated as a cosmetic, while Triofer tablets were not cosmetics and were taxable as general goods.

Final Conclusion: The application failed in the main challenge, but the assessment was required to be modified to exclude Triofer tablets from the cosmetic category, with consequential adjustment of tax liability.

Ratio Decidendi: For sales tax classification, a preparation claimed to be a medicine must itself be shown to possess therapeutic efficacy as such; a drug licence or the medicinal character of individual ingredients is not conclusive, and a product marketed and understood as a hair tonic or lotion may be classified as a cosmetic notwithstanding the manufacturer's description.

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