1984 (11) TMI 176 - HC - VAT and Sales Tax

Classification of Talcum Powders & Forbina Powder under Sales Tax Act

COMMISSIONER OF SALES TAX Versus CIBA OF INDIA LTD.

COMMISSIONER OF SALES TAX Versus CIBA OF INDIA LTD. - 1986 (23) E.L.T. 343 (Bom.) Issues Involved:1. Classification of certain talcum powders under the Bombay Sales Tax Act, 1959.2. Classification of Forbina powder under the Bombay Sales Tax Act, 1959 and its eligibility for tax exemption.Issue-wise Detailed Analysis:1. Classification of Certain Talcum Powders:Relevant Question:(a) Whether the articles (i) Baby powder, (ii) Binaca talc for men, (iii) Binaca talc sandal, and (iv) Binella stardust talc, were not 'cosmetics' within the meaning of Entry 19 of Schedule E but were 'toilet articles' within the meaning of Entry 7 of Schedule E to the ActRs.Facts and Arguments:- The respondent, a registered dealer, sought determination on the correct tax rate for certain talcum powders.- The Commissioner classified these powders as 'cosmetics' under Entry 19, while the respondent contended they were 'toilet articles' under Entry 7.- The Tribunal held that 'cosmetic' is a genus and 'toilet articles' are a species of this genus, emphasizing that beautification is a decisive attribute of a cosmetic.- The Tribunal concluded that the powders were body powders and thus 'toilet articles,' not 'cosmetics.'Court's Analysis:- The court referred to Entries 7 and 19 of Schedule E, noting that certain articles could be regarded as both cosmetics and toilet articles.- It emphasized that the primary test for classification should be trade parlance.- The court found no evidence that talcum powders were regarded as cosmetics and not as toilet articles in trade parlance.- Dictionary definitions indicated that 'cosmetic' is for beautification, while 'toilet articles' are for cleansing and grooming.- The court concluded that the talcum powders in question were toilet articles used for freshening the body after a bath, not for beautification.Conclusion:- The court affirmed that the talcum powders were 'toilet articles' under Entry 7 of Schedule E and not 'cosmetics' under Entry 19.2. Classification of Forbina Powder:Relevant Question:(b) Whether Forbina powder was not 'cosmetic' covered by Entry 19 of Schedule E but was covered by Entry 22 of Schedule E and eligible to the benefit of Entry 38 of the notification issued under Section 41 of the ActRs.Facts and Arguments:- The respondent contended that Forbina powder, containing antiseptic and deodorizing chemicals, was a medicine under Entry 22.- The Tribunal classified Forbina powder as a medicine based on its composition and medicinal properties of its ingredients.Court's Analysis:- The court examined the composition of Forbina powder, noting that only a small percentage of its ingredients had medicinal properties.- It emphasized that the primary use of Forbina powder was as a toilet powder, not a medicine.- The court referred to advertisements for Forbina powder, which emphasized its deodorant and freshness qualities, typical of a toilet product.- The court distinguished this case from others, such as the Nycil medicated powder case, where the medicinal properties were more significant.Conclusion:- The court held that Forbina powder was a toilet article under Entry 7 of Schedule E and not a medicine under Entry 22.- Consequently, Forbina powder was not eligible for the tax exemption under Entry 38 of the notification.Final Judgment:1. The articles (i) Baby powder, (ii) Binaca talc for men, (iii) Binaca talc sandal, and (iv) Binella stardust talc are 'toilet articles' under Entry 7 of Schedule E.2. Forbina powder is also a 'toilet article' under Entry 7 of Schedule E and not eligible for tax exemption under Entry 38 of the notification.Costs:- No order as to the costs of the reference.