Schedule-based concessional tax entry requires every bulk drug in the formulation to be specifically listed

A schedule-based concessional tax entry for formulations applied only when the product was composed of bulk drugs specifically covered by the relevant schedule. Panjon, containing acetyl salicylic acid, paracetamol and caffeine anhydrous, was found outside the concessional category because the combination included an ingredient not specified in the schedule. On the plain wording of the notification, a drug not listed as a scheduled bulk drug could not be treated as one merely because it was otherwise a drug. The product therefore fell under the residuary entry and attracted the higher rate of tax.

---

---

Issues: Whether panjon was a formulation specified in the Third Schedule to the Drugs (Prices Control) Order, 1987 so as to attract the concessional rate of tax, or whether it fell under the residuary entry and was taxable at the higher rate.

Analysis: The notification granted six per cent tax only to bulk drugs specified in the First and Second Schedules and to formulations specified in the Third Schedule as on 31 March 1994, while all drugs not included in that entry attracted eight per cent. Panjon contained acetyl salicylic acid, paracetamol and caffeine anhydrous. Although acetyl salicylic acid is aspirin and aspirin and paracetamol were included in the Second Schedule, the third ingredient was not. The expression "all formulations based on bulk drugs specified in the Second Schedule either individually or in combination with other bulk drugs" was construed on its plain language to mean a combination only of bulk drugs specified in the Second Schedule. A drug not so specified could not be treated as a bulk drug for the purpose of the notification merely because it was otherwise a drug.

Conclusion: Panjon did not fall within the concessional category and was liable to tax under the residuary entry at eight per cent plus surcharge.

Final Conclusion: The revisional challenge succeeded, the Tribunal's view on the taxability of panjon was reversed, and the matter stood restored for passing appropriate orders in accordance with law.

Ratio Decidendi: For a product to qualify under a schedule-based concessional entry covering formulations based on specified bulk drugs, every bulk drug in the relevant combination must itself answer the schedule description; an unscheduled ingredient takes the product outside the concessional entry and into the residuary category.

---