Common parlance test upheld Ayurvedic classification of a digestive preparation, defeating confectionery treatment and related interest demand.

For sales tax classification, the essential character of a product in common parlance controls: a preparation used for digestion and relief from stomach disorder was treated as an Ayurvedic medicine because its ingredients and intended medicinal use aligned with the statutory concept of an Ayurvedic drug. Mere sale through outlets where confectionery is available did not convert it into toffee or candy, and the absence of contrary evidence supported the assessee's classification. On that basis, the assessee's applied tax rate was upheld, and the related interest demand did not survive independently.

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Issues: Whether "Swad" is an Ayurvedic medicine or a confectionery item for the purpose of sales tax classification and whether interest was payable on the differential tax demand.

Analysis: The relevant statutory definition of Ayurvedic, Siddha or Unani drug under the Drugs and Cosmetics Act treats medicines intended for diagnosis, treatment, mitigation or prevention of disease or disorder, when manufactured in accordance with authoritative formulae, as drugs. Applying the common parlance test to the ingredients and use of the product, the Court found that "Swad" is consumed for digestion and relief from stomach disorder and cannot be treated as a toffee or candy merely because it is sold at places where confectionery is available. The Court also held that the Assessing Officer produced no contrary evidence to establish that it was confectionery, and that the place of sale does not alter its essential character. On that basis, the rate applied by the assessee was held to be justified, and the consequent interest demand did not survive independently.

Conclusion: "Swad" was held to be an Ayurvedic medicine, not confectionery, and the tax rate of 6% applied by the assessee was upheld; the revenue's challenge on interest also failed.

Ratio Decidendi: For tax classification, the essential character of the product as understood in common parlance, supported by its ingredients and intended medicinal use, prevails over its mere availability in ordinary retail outlets; a product genuinely used as an Ayurvedic preparation is not treated as confectionery absent contrary evidence.

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