AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1998 (9) TMI 640
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....air oil and ayurvedic hair oil. The applicant manufactures "Ayurvedic Cool Banphool Oil". The manufacturer was granted a drug licence, under the Drugs and Cosmetics Act, 1940 and Rules framed thereunder, in form No. 25-D by the Director of Drugs Control, West Bengal, to manufacture Ayurvedic Banphool Oil. The Director of Drugs Control also approved the composition of the product. It is submitted by the applicant that the following diseases and/or physical ailments are cured by applying this product: headache, eye problem, night blindness, reeling of head, weak memory, hysteria, amnesia, blood-pressure, insomnia, stomach pain, pain in eardrum, nausea, burns, nasal bleeding, cuts, heat, stroke, etc. The product, viz., Ayurvedic Cool Banphool Oil is claimed to be specified under Sub-head 3003.30 of the Excise Tariff which deals in ayurvedic medicine. The product was also subjected to research by Roy Ayurvedic Research Centre, a premier research centre on ayurvedic medicine in the country. The research centre has conducted examination of patients belonging to various age groups and comprising both sexes and the statistical data provided in the research report reveals allegedly tremendo....
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....cturer of ayurvedic hair oil and also claimed that the rate of tax should be 4 per cent. In the grounds of appeal also the applicant did not ever claim that ayurvedic hair oil was an ayurvedic drug. There is no separate commodity in the list of notified commodities as ayurvedic hair oil. It is claimed that the Assistant Commissioner of Commercial Taxes, Bally Circle (respondent No. 2) rightly held by his order dated March 8, 1994 that ayurvedic hair oil is a hair oil and not an ayurvedic medicine or drug. The West Bengal Commercial Taxes Appellate and Revisional Board after hearing the applicant and the Revenue authorities, declined to interfere with the appellate order of the respondent No. 2 and upheld the appellate order following the ratio decidendi of the judgment and order of this Tribunal in the case of Commissioner of Commercial Taxes, West Bengal v. West Bengal Commercial Taxes Tribunal reported in [1993] 89 STC 355. It is submitted that merely because the substance or substances for the manufacture of hair oil by the applicant is or are ayurvedic substance or substances hair oil manufactured by the applicant therefrom cannot be regarded as ayurvedic medicine within the me....
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.... whether the dealer was manufacturing an ayurvedic medicine at all. The Assistant Commissioner in his appellate decision has mentioned the claim of the dealer that ayurvedic hair oil was ayurvedic medicine or drug. The Assistant Commissioner came to the finding that ayurvedic hair oil is also a general hair oil. The West Bengal Commercial Taxes Appellate and Revisional Board (in short, "the Board ") has accepted the submission of the departmental representative that dealer in its advertisement laid emphasis on the cosmetic value of the Banphool oil and he did not interfere with the order of the Assistant Commissioner, Commercial Taxes. Mr. Mookerji submitted that the business of the dealer consists of manufacturing hair oil/ayurvedic hair oil. He further submitted that the dealer was a holder of a drug licence issued by the Director of Drugs Control, West Bengal. He had to procure such a drug licence because under section 18 of the Drugs and Cosmetics Act, 1940 no one could manufacture any drug except under, and in accordance with the conditions of, a licence issued for such purpose. The licence which was issued to the dealer in form No. 25-D of the Drugs and Cosmetics Rules, 1945 ....
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....for improving the vision, in cases of vertigo, in hysteria and schizophrenia, migraine and blood pressure. It is also claimed to be effective in inducing sleep. It would, therefore, be seen that the product has so long been advertised as a medicinal product with ayurvedic ingredients. An eminent Kaviraj Dr. Mriganka Mohan Roy, Ayurved Tirtha, MASF, M.D. (Ay.) has certified in clear language the beneficial effects to be obtained by using Ayurvedic Cool Banphool Oil. Mr. Mookerji also drew our attention to the prescriptions issued by a number of ayurvedic practitioners who have prescribed the product "Banphool taila" for their patients. He also stated that the product is available in medicine shops and referred to cash memos issued by two medical stores, one at Calcutta and the other at Korba (Madhya Pradesh). From all these prescriptions, certificates and cash memos it was clear, Mr. Mookerji argued, that the product was not used for cosmetic purposes; it was an ayurvedic medicine prescribed by ayurvedic practitioners for various ailments. He also submitted that there was no evidence to the contrary offered by the Revenue. 7.. Mr. Mookerji also argued that the question whether any ....
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....vedic medicine even if the product is considered to be an ayurvedic medicine and hence even if a hair oil is an ayurvedic medicine, Mr. Saha argued, it should be taxable as hair oil and not as an ayurvedic medicine. 9.. Regarding the applicant's claim that the product marketed by him is an ayurvedic medicine, Mr. Saha argued that the product does not fall within the definition of clause (a) of section 3 of the Drugs and Cosmetics Act, 1940. In that clause it is necessary that the ayurvedic drugs should be manufactured exclusively in accordance with the formulae described in the authoritative books of ayurvedic medicine specified in the First Schedule. Mr. Saha stated that as many as fifty-six ayurvedic books are mentioned in the First Schedule of the Drugs and Cosmetics Act, 1940, but the applicant has not claimed that his product has been manufactured in accordance with any of the formulae described in any of the authoritative books mentioned in the First Schedule. They have referred to a book "Drabyaguna" compiled and enlarged by Kaviraj Debendranath Sengupta and Kaviraj Upendranath Sengupta. Even in that book no formula has been prescribed for the manufacture of this product. O....
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....ir oil but would be a medicinal preparation. It was also pointed out before the Revenue authorities that various persons holding important positions, in all walks of life, had certified regarding the effectiveness of the aforesaid preparation, which would also go to show that the product had medicinal value and therefore cannot be simply described as a hair oil. In this case it was urged that there were two entries in the Schedules of the Gujarat Sales Tax Act, 1969; one was in respect of medicines and drugs while the other one was in respect of hair oil and if it was accepted that the product in question had certain medicinal properties, it was argued, the same should fall within the entry relating to medicines and drugs. It was held that it cannot be said that the entry relating to medicines and drugs is a special entry within which the product in question would fall. Mr. Saha also referred to the case of Commissioner of Sales Tax v. Shri Sadhna Aushadhalaya [1963] 14 STC 813 (MP). The question before the Madhya Pradesh High Court in this case was whether the product known as Maha Bhringraj hair oil manufactured by the assessee was an ayurvedic preparation or not. In this case i....
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.... subjected to processing for being used as hair oil, but shall not include in either case coconut oil." He observed that the dealer had claimed ayurvedic hair oil as ayurvedic medicine or drug, which contained til oil as the main component, other ingredients being haritaki, lawanga, chandan and certain herbs. He held that from the given definition and explanation, ayurvedic hair oil is also a general hair oil. In the course of the revision application the West Bengal Commercial Taxes Appellate and Revisional Board has upheld this order of the Assistant Commissioner, Commercial Taxes. 14.. The applicant has claimed that the product manufactured by him is an ayurvedic hair oil for the purpose of manufacture of which he has been granted a drug licence under the Drugs and Cosmetics Act. The composition of this product has also been approved by the Drugs Controller. He has claimed that the product is therefore an ayurvedic medicine. 15.. As far as the licence to manufacture ayurvedic drugs issued by the Director of Drugs Control, West Bengal and his approval of the composition of the product are concerned, it is quite clear that a drug licence issued under the Drugs and Cosmetics Ru....
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.... building up the case of the applicant before this Tribunal. While this proximity in time may not be a conclusive piece of evidence, there is no doubt that the evidentiary value of these prescriptions and cash memos becomes somewhat suspect in view of the fact that they were procured within a short period before filing this petition. In any case purchase of a product from a medical store does not prove that the material purchased is a medicine as nonmedical items are also sold from chemist stores. Similarly, the inclusion of any item in the prescription of a medical practitioner may not necessarily mean that the item concerned must be a medicine. To cite an example, a prescription specifying that a patient should take 50 grams of white meat per day does not mean that white meat should be considered to be a medicine. Hence whether a substance is a medicine of a particular type or not should depend upon evidence strictly bearing upon that point. 17.. The applicant has sought to rely on the research paper prepared by one Dr. Mriganka Mohan Roy who is stated to be an expert in ayurvedic medicine. The credentials of Dr. Mriganka Mohan Roy apparently are quite impressive as he is report....
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....he circumstances, should have been recorded relating to the distribution of the patients on the basis of sex, marital status, dietary habits, etc. 18.. It appears that this report is one which is very casually drafted but what is even more surprising is that elementary precautions to be taken in a clinical trial regarding provision of suitable experimental design have not been followed in the report. We may refer, in this connection, to the well-known treatise"A Short Textbook of Medical Statistics" by Sir Austin Bradford Hill, CBE, D.Sc., Ph. D. Hon. D.Sc (Oxon), Hon MD(Edin), Professor Emeritus of Medical Statistics in the University of London, etc. This is a standard textbook by an author who is not at least less eminent that the author of the alleged research paper produced by the applicant on the subject of clinical trials. In Chapter 20 of his book dealing with clinical trials the author has stated as follows: "'Therapeutics', said Sir George Pickering in his Presidential Address to the section of Experimental Medicine and Therapeutics of the Royal Society of Medicine, is the branch of medicine that, by its very nature, should be experimental. For if we take a patient affli....
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....ment by Dr. Mriganka Mohan Roy were not of a nature where life or death, or serious after-effects were at stake and hence there was no reason why suitable controls should not have been provided. Under the circumstances, this clinical trial is bound to be uninformative and a waste of time and money and should not be considered to be of any value whatsoever. Hence no reliance can be placed upon the report of Dr. Mriganka Mohan Roy. 20.. It would, therefore, appear that the applicant has not succeeded in offering any satisfactory evidence to show that the product dealt in by him is a medicine or drug of any type. We must also take note of the fact that the applicant is registered for manufacturing ayurvedic medicine and has all along claimed that his product is an ayurvedic medicine. The notification relating to Ayurvedic medicine refers to section 3(a) of the Drugs and Cosmetics Act, 1940. Section 3(a) of the Drugs and Cosmetics Act, 1940 requires the medicines to be manufactured exclusively in accordance with the formulae described in authoritative books of ayurvedic medicine specified in the First Schedule. The applicant has not been able to refer to any of the authoritative books....
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....in proper exercise of the jurisdiction or not. Similarly, if Banphool hair oil is not a ayurvedic drug with the parameters laid down in the Act, credentials like a research certificate or cash memo will not change the position. For determining taxability of a product which is claimed to be a drug, it should be examined incidentally (as we are doing) whether the licensing authority correctly exercised his jurisdiction. 23.. Now, what the Legislature seeks to recognise as ayurvedic drug? The term has been defined as follows in section 3(a) of the Act: "3(a). 'Ayurvedic, siddha or unani drug' includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, and manufactured exclusively in accordance with the formulae described in the authoritative books of ayurvedic, siddha and unani (tibb) systems of medicines specified in the First Schedule." 24.. Mr. Mookerji has argued that the section gives an"inclusive definition" which means that the definition is not exhaustive in itself but there are items, falling outside the express definition, which are also ayurvedic drug and that....