Drug licence classification for ayurvedic products favours medicinal entry over confectionery for sales tax purposes.

Goods manufactured under a valid drug licence and consistently treated by precedent as ayurvedic medicines were classified as medicines, not confectionery, for sales tax purposes under the Punjab Value Added Tax Act, 2005. The court relied on earlier decisions of other High Courts, noted the absence of rebuttal material from the revenue, and accepted that the statutory scheme placed such products within the medicinal entry. The higher tax classification was therefore set aside, and the tax demand based on treatment as confectionery could not be sustained.

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Issues: Whether the goods namely Choloromint Herbasol and Happydent White were classifiable as medicines or as confectionery for the purpose of tax under the Punjab Value Added Tax Act, 2005.

Analysis: The goods were manufactured under a valid drug licence issued by the Directorate of Ayush, and the dispute had already been examined in earlier decisions holding these products to be ayurvedic medicines rather than confectionery. The consistent view taken by the Uttarakhand High Court, the Allahabad High Court, and the Telangana High Court supported the conclusion that the products fell within the medicinal entry. The revenue did not produce material to rebut the assessee's position, and the statutory scheme treated drugs and medicines manufactured under a drug licence as falling within the relevant lower-tax entry.

Conclusion: The goods were held to be medicines covered by Entry 31 of Schedule B to the Punjab Value Added Tax Act, 2005, and the higher tax classification was set aside in favour of the assessee.

Final Conclusion: The tax demand based on treatment of the products as confectionery could not be sustained, and the assessee succeeded on the classification issue.

Ratio Decidendi: Goods manufactured under a valid drug licence and treated consistently by precedent as ayurvedic medicines are to be classified as medicines, not confectionery, for sales tax purposes.

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