TaxTMI 
TaxTMI 
2017 (1) TMI 1465
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....ned Tax Board was justified in law in holding that the product of respondent "Savlon" falls within the ambit of drug and medicine despite of the fact that the assessing authority as well as appellate authority have categorically held same to be falling in residuary entry liable to be taxed at higher rate. (iii) Whether in the facts and circumstances of the case the learned Tax Board was justified in law and has not acted illegally and perversely deleting the penalty u/s 61 of the Act despite of the fact that the tax at the lesser rate was deposited contrary to the applicable rate of tax on the goods sold by the respondent assessee." 2. Heard learned counsel for the parties finally. 3. Since all these petitions involve common questions, with the consent of parties all the petitions are being decided by this common order. It relates to assessment years 2006-07 to 2009-10. 4. Brief facts noticed are that the petitioner is a Limited Company and is carrying on business of manufacture/production of cosmetics, toilet articles and medicinal goods. It is the case of petitioner that insofar as products which carry medicinal properties, are manufactured under a....
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....not ordinary products as held by the lower authorities. Learned counsel contended that the license granted by the competent authority brings out clearly that in the product "shower to shower prickly heat powder" it contain "salicylic acid", "jasad bhasma","tankanamla", "starch & its derivatives", "perfume AL 5729","dugdhapashana", and other ingredients which prove that these are special products for specific purposes. Learned counsel contended that a similar product by the name Nycil having the same ingredients has been considered to be a medicine/drug in the case of B. Shah & Co. v. State of Gujarat [1971] 28 STC 5, and when the same ingredients or contents are available in the said product as that of Nycil, the claim of assessee is well justified and reasoned. 9. Learned counsel also contended that the product manufactured by the assessee of "Listerine Mouthwash" as also "Cool Mint Listerine Mouthwash" contains "Thymol IP", "Eucalyptol PCs", "Menthol IP", and other ingredients and all these are used for specialised purpose and are used as a medicine and not in ordinary sense. Learned counsel also contended that "Vicks" which also contains ethanol as in "Listerine" has bee....
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....ckitt & Colman of India Ltd. - [1995] 97 STC 279, Assistant Commissioner, Anti Evasion v. Camlin Limited & Ors. - 2015 (4) RLW 3130 (Raj.), Assistant Commissioner, Commercial Taxes Department v. Khandelwal Drug Agencies [S.T.R. 151/2005, decided on 25-11-2016 (Raj)]. 12. Learned counsel also contended that the penalty was rightly deleted by the Tax Board and there is no case made out of imposition of penalty as all facts were available before the AO and insofar as classification is concerned, penalty u/s 61 is not leviable or imposable and relied upon the judgments of Sree Krishna Electricals v. State of Tamil Nadu & Another - (2009) 11 SCC 687, of the Apex Court so also judgment of this Court in the case of CTO v. Bambino Agro Industries Ltd. [S.T.R. 59/2010, decided on 29-9-2015]. 13. Per contra, learned counsel for the respondent vehemently contended that a minor percentage of acid or ethanol contained in the product cannot be said to be a drug or a medicine. Learned counsel contended that the lower authorities have insofar as "Shower to Shower" and "Listerine" has in unison come to the conclusion that they contain no medicinal value or drugs and even are freely ....
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....there may be some percentage of acid or ethanol or similar ingredients, it cannot be said that they can be said to be like a medicine or even can be said to be a medicine or a drug. The Apex Court has time and again held that in the matters of classification, or products like this, common parlance test can be applied and in my view even by applying common parlance test, these two products, namely "Shower to Shower" and "Listerine Mouth Wash" cannot be said to be drugs or medicine. "Shower to Shower" is just like a cosmetic, may be it has some medicinal value, similar is "Listerine Mouth Wash" and by both these products one may merely feel good or fresh but these products certainly cannot be said to be medicines or remotely even drugs and these two products cannot improve any ailment, sufferance, disease of body/mouth. 18. In my view, though under Central Excise, Courts may have come to a conclusion that similar products are drugs or medicines but insofar as Sales Tax laws or VAT provisions are concerned, prima facie, they have to be independently decided on the basis of entries prescribed in the Schedule to charge certain rates as prescribed in Sales Tax/VAT laws. Taking af....
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....p;Another company Reckitt Benckiser (India) Ltd. which is manufacturing "Dettol" having same ingredients as that in "Savlon", the Kerala High Court in Reckit Benckiser (India) Ltd. v. State of Kerala [Cr. M.C. Nos. 4997 of 2010 and 541 of 2011] vide judgment and order dated 24-3-2011, though deciding a matter relating to Criminal Misc. Case, had extensively taken into consideration the antiseptic value and has considered medical dictionary, and observed as under :- " 'Disinfection' is defined as "the process of killing pathogenic organisms or of rendering them inert". The above descriptions persuades me to hold that the function of a 'Disinfectant' which is a chemical or mixture of chemicals of appropriate percentage is destruction or making inert micro organisms particularly on inanimate objects. But that does not mean that a Disinfectant could be used only on inanimate objects and the moment it could be used on animate objects also, it ceases to be a 'Disinfectant' and became an 'Antiseptic'. Its use on animate objects is only external with the same purpose - destruction or making inert micro organisms It includes sterilisation of instruments and general disinfection of war....
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....proper rate should be there and has not disturbed or tinkered or found any sale to be unrecorded even after conducting survey, and it is also a finding of fact that all the relevant entries have been found to be recorded in the books of account. The Apex Court as well as this Court have in identical cases held that when there is an issue of classification and issue being debatable, the penalty is not leviable/imposable/sustainable. The judgment in the case of Sree Krishna Electricals v. State of Tamil Nadu & Another - (2009) 11 SCC 687, of the Apex Court so also judgment of this Court in the case of CTO v. Bambino Agro Industries Ltd. - [2016] 90 VST 22 (Raj) are sufficient to refer for non-imposition of penalty. It would be appropriate to quote the relevant para of the judgment in Sree Krishna Electricals (supra) :- "7. So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities includes these items in the dealers' turnover disallowing the exemp....