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of <h1>Isabgol husk is a medicine, taxable at 3% under Entry 16, Part IV of Schedule II (not kirana)</h1> <h3>Commissioner, Commercial Tax M.P., Indore Versus M/s Seth Medical Agency, Indore, M/s Reliance Medical Agency, Indore</h3> Commissioner, Commercial Tax M.P., Indore Versus M/s Seth Medical Agency, Indore, M/s Reliance Medical Agency, Indore - 2025:MPHC - IND:21637 ISSUES PRESENTED AND CONSIDERED 1. Whether 'Isabgol Husk' (Sat. Isabgol), being the processed husk of Isabgol seed, is a 'medicine' taxable at 3% under Entry 16 of Part IV of Schedule II, or a 'kirana' (grocery) item taxable at 12% under Entry 13 of Part VI of Schedule II. 2. Whether, in the absence of a definition of 'drug' or 'medicine' in the Sales Tax enactment, the statutory/official definitions and pharmacopoeial recognition (including the Drugs & Cosmetics Act, 1940 and the Pharmacopoeia of India) are applicable to determine classification for sales-tax purposes. 3. The legal test to be applied in classifying an item for taxing schedules - whether the popular/common parlance or the technical/scientific meaning governs when an item is not defined in the taxing statute, and how prior judicial authorities on classification are to be applied. ISSUE-WISE DETAILED ANALYSIS Issue 1: Characterisation of Isabgol Husk - medicine (3%) v. kirana (12%) - Legal framework: Taxation entries in Schedule II of the Sales Tax Act classify goods by entries; the correct entry depends on the nature and ordinary/user-purpose of the item. If an item falls within the statutory notion of 'medicine' it attracts the lower rate under Entry 16; otherwise it may fall under the kirana entry. - Precedent treatment: The Court relied on established principles from authorities requiring classification to be guided by ordinary or commonly known purpose and the sense in which dealers and consumers understand the item (Atul Glass Industries, Annapurna Carbon Industries, C.S.T. v. Jaswant Singh Charan Singh, Ramavatar Budhaiprasad, and others). The decisions were followed, not overruled or distinguished. - Interpretation and reasoning: The Court distinguished raw Isabgol seed (listed in the memoranda as 'Isabgol') from the processed product 'Isabgol Husk' (Sat. Isabgol). It accepted the factual and pharmacopoeial position that the husk is a distinct processed product which is used as a laxative and is not a culinary/grocery ingredient. The Pharmacopoeia of India expressly recognises Ispaghula (Isabgol) Husk as a laxative and describes its standards, dose and medicinal characteristics. The Court held that the ordinary/common use of Isabgol Husk is medicinal (to treat constipation and related stomach disorders), and that such ordinary user-character determines classification for the taxing statute. - Ratio vs. Obiter: Ratio - the processed product Isabgol Husk, being a distinct product from the seed and having an established medicinal use (recognised in the Pharmacopoeia of India), is to be classified as a 'medicine' for sales tax purposes and taxed under Entry 16 at 3%. Obiter - observations that mere sale of an item in kirana shops does not alter its character as medicine. - Conclusion: Isabgol Husk (Sat. Isabgol) is covered under medicines and is taxable at 3% under Entry 16 of Part IV of Schedule II; it is not taxable under Entry 13 of Part VI as a kirana good. Issue 2: Applicability of the Drugs & Cosmetics Act definition and Pharmacopoeia when Sales Tax statute is silent - Legal framework: Where a taxing statute does not define a term (e.g., 'drug' or 'medicine'), other relevant statutes and authoritative sources may be applied to determine meaning; the Drugs & Cosmetics Act, 1940 provides a statutory definition of 'drug' which includes medicines for human or animal use. The Pharmacopoeia of India is an authoritative compendium setting official standards for medicinal articles. - Precedent treatment: Followed established approach that, absent statutory definition in the taxing enactment, definitions and functional characteristics under relevant regulatory statutes and authoritative texts are applicable to ascertain whether an item is a 'medicine' (as reflected in Leukoplast, and other cited authorities endorsing resort to common parlance or regulatory definitions as appropriate). - Interpretation and reasoning: The Court applied Section 3(b) of the Drugs & Cosmetics Act to observe that 'drug' includes medicines for use in human beings or animals and substances intended for diagnosis/treatment etc. The Pharmacopoeia entry for Ispaghula Husk confirms its classification and medicinal use; therefore, the regulatory definition and pharmacopoeial recognition support classifying the husk as a medicine. The Sales Tax Act's silence on definition justified resort to the Drugs & Cosmetics Act and Pharmacopoeia for determining tax classification. - Ratio vs. Obiter: Ratio - where a taxing statute is silent, relevant statutory definitions and authoritative pharmacopoeial standards may be applied to determine if an item is a 'medicine' for tax classification. Obiter - none material beyond application to present facts. - Conclusion: The Drugs & Cosmetics Act definition and the Pharmacopoeia of India are properly applicable to determine that Isabgol Husk qualifies as a medicine for sales-tax classification purposes. Issue 3: Use of popular/common parlance versus scientific/technical meaning in classification - Legal framework: Judicial precedent mandates that when an item is not defined in a taxing statute, classification should ordinarily follow its popular or trade meaning - i.e., the sense in which sellers and buyers understand it - unless the word is of a technical or scientific character requiring technical construction. - Precedent treatment: The Court reiterated and followed authorities (Atul Glass, Annapurna Carbon, C.S.T. v. Jaswant Singh, Ramavatar Budhaiprasad, West Bengal case) that common parlance/trade usage guides classification and that technical meanings are to be resorted to only when the term is technical in character or popular meaning is ambiguous. - Interpretation and reasoning: The Court found that the popular/trade understanding of Isabgol Husk is as a medicinal laxative and not as a culinary/grocery product. The technical/pharmacopoeial description, while available, corroborates the common parlance use. The Court emphasised that ordinary user-purpose and trade understanding control classification and applied that test here. - Ratio vs. Obiter: Ratio - classification under taxing schedules must track the ordinary/common parlance or trade understanding of the article unless the term is essentially technical; this test applied to conclude Isabgol Husk is a medicine. Obiter - general commentary that scientific meaning is relevant when the word is technical. - Conclusion: The common/trade understanding that Isabgol Husk is medicinal governs classification; resort to pharmacopoeial/scientific description supports that understanding rather than supplanting it. Cross-reference and final determination - The Court cross-referenced the factual distinction between Isabgol seed (listed in the notification/memo as 'Isabgol') and the processed Isabgol Husk (Sat. Isabgol), and held that difference in processing and use is decisive. Applying the legal framework set out above, and following the cited precedents, the Court concluded that the Board of Revenue correctly classified Isabgol Husk as a medicine taxable at 3% under Entry 16 of Part IV of Schedule II rather than as a kirana item under Entry 13 of Part VI.
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