Drug classification under sales tax law follows regulatory character for I.V. sets used in treatment.

I.V. sets used for blood donation and treatment were treated as drugs for sales tax classification because the controlling regulatory law governed their trade character. Although sales tax classification ordinarily follows common parlance, the court held that the Drugs and Cosmetics Act, 1940 and the relevant notification were relevant where they brought the commodity within the statutory definition of a drug. As disposable perfusion sets had been specified as drugs and I.V. sets were used in administering treatment, they could not be treated as mere non-medicinal accessories. They therefore fell within the lower tax entry applicable to medicines or drugs, and the revision failed.

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Issues: Whether I.V. sets (blood donor sets) are to be treated as medicines or drugs for the purpose of sales tax classification and, consequently, whether they fall within the lower taxable entry rather than the residuary higher rate.

Analysis: In sales tax matters, goods are ordinarily classified according to their common parlance or commercial sense and not by importing definitions from other enactments. However, the Court held that the statutory framework controlling the trade in the commodity is relevant where it shows how the trading community is required to deal with that commodity. The Drugs and Cosmetics Act, 1940 defines 'drug' to include specified devices intended for internal or external use in diagnosis, treatment, mitigation or prevention of disease. The relevant notification under that Act had also specified disposable perfusion sets as drugs. On that basis, I.V. sets, being devices used in the administration of treatment and falling within the regulatory definition, could not be treated as mere non-medicinal accessories for tax classification purposes.

Conclusion: I.V. sets are drugs for sales tax purposes and are liable to tax under the entry applicable to medicines or drugs. The revision was therefore without merit.

Ratio Decidendi: Where a commodity is brought within the statutory definition of a drug under the controlling regulatory law and is dealt with in trade under that regulated character, it may be classified accordingly for sales tax purposes despite the ordinary common-parlance test.

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