Liquid glucose not classified as medicine for tax purposes in 1993-94 assessment year.

The High Court ruled in a tax dispute regarding the classification of liquid glucose as medicine for the assessment year 1993-94. The Court found that the liquid glucose, primarily used in bakery items, did not meet the criteria to be taxed as medicine due to the absence of a drug manufacturing license and specific criteria under relevant drug laws. The Court overturned the Tribunal's decision, allowing the revision and dismissing the appeal without imposing costs on either party.

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Issues:
1. Taxability of liquid glucose as medicine.

Analysis:
The High Court judgment revolves around the taxability of liquid glucose as medicine for the assessment year 1993-94. The Commissioner of Trade Tax filed a revision against the Tribunal's order, questioning whether liquid glucose should be taxed as medicine. The dispute arose as the dealer sold liquid glucose to manufacturers of bakery confectionery and tobacco, not to medicine dealers. The assessing authority initially taxed liquid glucose at 10% under the unclassified category, which was upheld in appeal but overturned by the Tribunal.

The Tribunal considered two primary grounds to classify liquid glucose as medicine: the low sugar content and the manufacturer's license under the Prevention of Food Adulteration Act. However, the High Court found this reasoning unsatisfactory. It emphasized that obtaining a license under the Act does not automatically categorize the product as a drug or medicine. Additionally, the Tribunal failed to establish that the manufacturer held a drug manufacturing license, crucial for such classification.

The Court further analyzed the glucose's composition, usage, and distribution. It concluded that the liquid glucose, primarily used in jam, jelly, and bakery items, was not sold in bottles like medicated glucose administered to patients. The Court highlighted the absence of evidence proving the manufacturer as a drug producer. It applied the principle that statutory terms should be understood in a commercial sense, considering common industry practices and consumer perceptions.

Drawing parallels with a Supreme Court case regarding petroleum jelly's classification as a drug, the High Court emphasized the need for specific criteria, such as licensing under relevant drug laws, to classify a product as medicine. Ultimately, the Court found the Tribunal's decision unjustifiable and set it aside. The revision was allowed, leading to the dismissal of the appeal before the Tribunal. The judgment concluded without imposing costs on either party.

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