Common parlance test applied to Vicks products: manufacturer's appeal upheld and goods treated as medicines for tax classification.

A manufacturer could maintain an appeal under section 62 of the Kerala Value Added Tax Act against a clarification issued under section 94, even though it was not the original applicant, because the clarification directly bound assessing authorities and affected its tax position; the preliminary objection was overruled. Vicks tablets, Vicks balm and Vicks Vaporub were then held classifiable under entry 36 of the Third Schedule as drugs or medicines, applying the common parlance and commercial identity tests, and the fact that they were sold over the counter did not alter their medicinal character; they therefore attracted tax at 4 per cent rather than the residuary rate.

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Issues: (i) Whether the manufacturer, though not the applicant for clarification, had a right of appeal under section 62 of the Kerala Value Added Tax Act, 2004 against a clarification issued under section 94 of that Act. (ii) Whether Vicks tablets, Vicks balm and Vicks Vaporub were classifiable under entry 36 of the Third Schedule to the Kerala Value Added Tax Act, 2004 as drugs or medicines, or under the residuary / confectionery entries attracting tax at 12.5 per cent.

Issue (i): Whether the manufacturer, though not the applicant for clarification, had a right of appeal under section 62 of the Kerala Value Added Tax Act, 2004 against a clarification issued under section 94 of that Act.

Analysis: Section 94 empowers the Commissioner to issue clarifications on tax liability, rate of tax and classification, and sub-section (5) makes such orders final and binding on the applicant and subordinate authorities. Since a clarification on the product directly affected the manufacturer by binding all assessing authorities, the manufacturer was a person aggrieved. Section 62 permits an appeal by any person objecting to an order affecting him, and the limitation for a non-applicant was treated as running from knowledge of the order.

Conclusion: The manufacturer had a maintainable appeal under section 62, and the preliminary objection was overruled.

Issue (ii): Whether Vicks tablets, Vicks balm and Vicks Vaporub were classifiable under entry 36 of the Third Schedule to the Kerala Value Added Tax Act, 2004 as drugs or medicines, or under the residuary / confectionery entries attracting tax at 12.5 per cent.

Analysis: The products were examined in the light of the common parlance test and the accepted approach for classification of medicinal preparations. The Court relied on the treatment of similar Vicks preparations as ayurvedic medicaments and on the principle that the absence of a statutory definition requires the goods to be understood in their ordinary commercial sense. The fact that the products were sold over the counter did not, by itself, exclude them from being medicines. Clause 23 of the Rules of Interpretation did not displace the conclusion that the goods were medicinal preparations falling within entry 36.

Conclusion: The products were classifiable under entry 36 of the Third Schedule and attracted tax at 4 per cent, not 12.5 per cent.

Final Conclusion: The clarification was set aside to the extent it classified the products otherwise than as medicines, and the assessee succeeded on the principal tax classification issue.

Ratio Decidendi: For classification under a taxing entry, medicinal preparations are to be understood according to their common parlance and commercial identity, and sale across the counter does not by itself deprive a product of its character as a medicine or medicament.

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