2008 (6) TMI 628 - HC - VAT / Sales Tax

Court orders reevaluation of GLA-120 Capsules classification under tax law, emphasizing product purpose. -120Capsules

The court set aside previous decisions and directed the assessing authority to reevaluate the classification of GLA-120 Capsules under the KGST Act within ... - Issues involved:Classification of GLA-120 Capsules under KGST ActSummary:The assessee, a registered dealer under KGST Act, filed annual returns conceding a total turnover for certain assessment years, including sales of GLA-120 Capsules. The assessing authority treated the capsules as food supplement taxable at 20% under Entry No. 87 of the First Schedule. The Tribunal upheld this decision based on previous rulings. The core issue is whether GLA-120 Capsules should be classified under Entry 87, Entry 56, or as an unclassified item under the residuary entry.The assessee argued different classifications before various authorities, claiming it should be treated as an unclassified item, under Entry 56, or as Medicine under Entry 79. The product manual described GLA-120 as containing Gamma Linolenic Acid for nerve growth/functioning, particularly for diabetic neuropathy. The assessing authority classified it under Entry 87 for non-alcoholic drinks and similar items, while the residuary entry taxed unclassified goods at 12.5%.The Tribunal noted the distinction between dietary supplements and medicines, emphasizing the need for clear categorization based on usage. Since no authority determined the nature of GLA-120, the court set aside all previous orders and directed the assessing authority to reevaluate the classification, considering the purpose of the product. The reassessment must be completed within six months, affording the assessee a fair hearing.In conclusion, the court ordered the closure of pending applications and disposed of the revision petitions accordingly.