TaxTMI 
TaxTMI 
2017 (4) TMI 1379
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...., 2010-11 respectively. 2. The petitions were admitted on the following substantial questions of law which reads as under:- Petitions filed by Assessee; SB STR Nos. 7/2012, 8/2012, 9/2012, 11/2012, 12/2012, 13/2012, 14/2012, 15/2012, 16/2012 & 64/2014 :- "1. Whether the Tax Board erred in law in failing to appreciate the judgment of the Tax Board's judgment in the case of "Jyoti Laboratories (reported as (2009) 23 Tax Update 76) which relied on Hon'ble Karnataka High Court judgment in the case of Ashok Agencies Vs. State of Karnataka (reported as (2008) 16 STT 435 wherein it was held a specific entry (such as Entry 21 and 29 of the Schedule IV of RVAT Act) which does not qualify the said entries and limit their application only to be used in agriculture and horticultural purposes, a qualification cannot be imported by the respondents? 2. Whether the Tax Board erred in law in treating Entry 21 of Schedule IV of RVAT Act, wherein goods to qualify under the said entry were limited in terms of use or required to be used for agricultural/horticulture use. The Tax Board classified "Harpic" and "Lizol" under Schedule IV of RVAT Act on this erroneous premise? ....
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....is selling Electrically Operated Anti-mosquito devices & repellents, Electrically Operated Anti-Mosquito Mat, Anti-Mosquito Coil, Rat Kill, "Harpic", "Lizol", "Dettol" Antiseptic on which VAT @ 4% was being collected and paid and the Assessing Officer was prima-facie of the opinion that the claim of the assessee that it falls in Schedule-IV of the RVAT Act is not correct rather it falls in the residuary Schedule on which rate prescribed is 12.5% which was required to be paid and not 4% as claimed by the assessee. However, the Assessing Officer was not satisfied with the claim of the assessee and a show cause notice was given on 17.05.2007 as to why "Harpic" and "Lizol" be not classified under the residuary entry (Sr. No.1 of Schedule V to the RVAT Act) and differential tax @ 8.5% be not charged on the product as the residuary entry provides tax @ 12.5% whereas the tax was paid @ 4% only. An explanation was offered but the Assessing Officer did not accept the claim of the assessee and stated that the assessee has not been able to prove and justify that the above items would fall under Entry 21 or Entry 29 of Schedule IV of the RVAT Act. The assessee also relied on certain authoritie....
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....e present assessment years is wholly unjustified. Counsel further contended that licenses have been obtained from Central Insecticide Board Committee (Government of India) for Mortein (treating them as insecticide under the Insecticide Act) and for "Harpic", "Lizol" from the Drug Controller, Government of India (treating them as a disinfectant) and "Dettol", treating it as a Drug/medicine from the Drug Controller, Government of India. Counsel contended that they have well established that under common/Commercial parlance (principle laid down by the Apex Court) these products would certainly fall within entry 21 or/29 of the Act as the case may be. Counsel further contended that the assessee filed reports certifying the insecticide nature of Mortein before the lower authorities which has not been considered in right perspective. Counsel contended that the Test reports placed on record shows that the insecticidal effect of Mortein stands evidenced by various test reports given by the Government approved research and testing centers and most of the reports are of the Government bodies/ Agencies which ought to have given due credence and could not have been ignored by the Authorities b....
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...." would be liable to tax under Entry 21 of the Fourth Schedule to the Assam VAT Act. Counsel also contended that though Kerala High Court in the case of assessee had taken a different view in OT No.6/2006 but the Apex Court in Special Leave to Appeal (Civil) No(s) 6096/2007 vide judgment dt.29.04.2008 while setting aside the orders of the authorities below remanded/remitted the matter back to the High Court for fresh consideration. Counsel relied upon judgments in the case of Voltas Limited Vs. State of Gujrat (2015) 7 SCC 527, Berger Paints India Ltd. Vs. Commissioner Of Income Tax, Calcutta (2004) 12 SCC 42, Ponds India Limited (Merged with H.L. Limited) Vs. Commissioner of Trade Tax, Lucknow (2008) 8 SCC 369, Godrej Hicare Limited (Now Known As Godrej Sara Lee Ltd.) Vs. Joint Commissioner of Commercial Taxes (Legal), Hyderabad and Others (2007) 6 VST 636 (AP), M/s. Reckitt Benckiser (India) Ltd. Vs. Commissioner & Others decided on 17.12.2008, Bombay Chemical Pv.t Ltd. Vs. Collector of Central Excise, Bombay : 1995 Supp. (2) SCC 646, Ambey Laboratories Vs. Collector 2001 (131) ELT A86 (SC), M/s. Reckitt Benckiser (India) Ltd, Vs. State of Andhra Pradesh AIR 1995 SC 1469, Reckitt....
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....rpic" from Wikipedia. As per it "Harpic" is the brand name of a toilet bowl cleaner launched in England and now marketed by assessee holding it to be in the nature of Toilet Cleaner products etc. and nothing more. 14. Counsel for the revenue in support of the petitions preferred by Revenue is concerned contended that insofar as the "Dettol" is concerned, it cannot be said to be Drug/Medicine as it has also been used merely to prevent minor cuts in some part of the bodies and does not improve any deficiency/disease in the body so as to classify in the category of Drug/Medicines and Tax Board was unjustified in deciding in favour of the assessee. 15. Counsel also contended that the assessee knowing it fully well that the product falls in residuary category still took it as falling under Entry 21/29 of the Act, clearly prove the intention of the assessee that it wanted to evade tax and it is only during the course of survey, the revenue was able to bring such facts on record otherwise, the assessee was paying same rate of tax @ 4% whereas it ought to have paid tax @ 12.5% or 14%. Counsel also contended that the intention of the legislature being very clear and the assessee showing ....
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.... with the classification issued by the Department regarding use of wetting agents in the textile industries falling under Sub-Heading 3402.90. Test reports of the Chemical Examiner and Chief Chemist of the Revenue unless demonstrated to be erroneous, cannot be lightly brushed aside. The Revenue has not made any attempt to discredit or to rebut the genuineness and correctness of the reports of the Government, Chemical Examiner and Chief Chemist. Thus, the reports are to be accepted along with other documentary evidence in the form of classification issued by the Department regarding use of wetting agents in the textile industries to hold that the product Penetrator 4893 possessed surface active properties and, therefore, is covered by Exemption Notification No.101/66 dated 17-6-1966 as amended from time to time" 73. In this case also, the report of the chemical examiner is in favour of the assessee. Furthermore, in a case of this nature, where the Revenue itself has been holding the assessee to be a producer of a pharmaceutical product, the burden would be on the Revenue to establish that the goods cease to fall under a given entry. For the said purpose, no materia....
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....ll the bacteria in the gutters and the bathrooms. In the Report of the Deputy Chief Chemist it was mentioned that all above products numbering 14 were formulations containing high boiling tar acid as the principal active ingredient. It then noticed the definition of pesticide and disinfectant and observed that, "it appears from the above definition that disinfectants are used for killing or inactivating micro-organisms, in some literature for oils (containing high boiling tar acid) are mentioned in pesticide manual". But he opined that is was not clear whether the formulations containing tar acids, as in the case of the goods produced by the appellant which were used as disinfectants, will be covered broadly by term 'pesticides'. 6. 'Pesticide' has been defined in Butterworths Medical Dictionary, 2nd Edn., as "a comprehensive word to include substances that will kill any form of pests, e.g., insects, rodents and bacteria". The term 'pesticide' includes a large variety of compounds of diverse chemical nature and biological activity grouped together usually on the basis of what kind of pests they are used to destroy or eliminate. Under the US Federal Environment Pes....
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....ds satisfies the test then the issue which arises for consideration is whether it should be construed broadly or narrowly. One of the settled principles of construction of an exemption notification is that it should be construed strictly, but once a goods is found to satisfy the test by which it falls in the exemption notification then it cannot be excluded from it by resorting to applying or construing such notification narrowly. Item 18 is an exemption notification. As stated earlier, it mentions broad categories of goods which are entitled to exemption. Once a goods is found to fall even narrowly in any of these categories, there appears no justification to exclude it. The test of strict construction of exemption notification applies at the entry, that is, whether a particular goods is capable of falling in one or the other category but once it falls then the exemption notification has to be construed broadly and widely. Each of the words insecticides, pesticides, fungicides or weedicides are understood both in the technical and common parlance as having broad meaning. Therefore, if any goods or items satisfy the test of being covered in either of the expression, then i....
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....ourt (supra) which reads ad-infra:- "38. In respect of the aforesaid products, as discussed above, the disinfectants qualities of the Harpic and Lizol and the prophylactic qualities of Dettol have not been denied by the revenue authorities. The only stand taken by the revenue authorities is that these were not dominant nature of the products. However, it cannot be denied that these disinfectant and the prophylactic qualities of the aforesaid products are not insignificant, rather because of the aforesaid disinfectant and prophylactic qualities, the aforesaid products are used. It is now well settled principle of law that when two views are possible, the one which favours assessee should be adopted. In Mauri Yeast India Private Limited Vs. State of Uttar Pradesh, (2008) 5 SCC 680. : "46. It is now a well-settled principle of law that when two views are possible, one which favours the assessee should be adopted. (See Bihar 4 : (1997) 5 SCC 289 Here, in the present case , there are two possible view: either to take the products Harpic and Lizol to be merely stain remover and cleansing agents or as disinfectants and in respect of Dettol, to treat it ....
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....ll not interfere." 41. In the light of the above discussions, we are of the view that these petitions should be allowed and the products Harpic and Lizol having been declared to be pesticides as discussed above, would be liable to tax under Entry No.19 of the Part A of the Second Schedule of the Assam VAT Act and Dettol would be liable to be assessed as an item under Entry 21 of the Fourth Schedule of the Assam VAT Act and will not fall within the excluded category under the Explanation." 26. The Apex Court in the case of Ambey Laboratories Vs. Collector (supra) was considering the case of "Liquid Phenyle" an identical product and, held in a case of Central Excise Tariff Act, 1985 that "Liquid Phenyle" is disinfectant. 27. The Division Bench of Andhra Pradesh High Court in the case of (assessee) M/s. Reckitt Benckiser (India) Ltd, Vs. State of Andhra Pradesh (supra) was also considering case under Andhra Pradesh VAT Act and vide judgment dt. 13.06.2013, of the same product being "Mortein", "Lizol" & "Harpic" while the claim of the assessee was that it falls under Entry 20 of Schedule (iv) of the Andhra Pradesh Value Added Tax payable @ 4% but the claim of the revenue....
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....n taking it under the residuary Schedule (V). The claim of the assessee is just and proper. 30. Insofar as "Dettol" is concerned, this Court in the case of M/s. Johnson and Johnson Ltd. Vs. CTO & other connected cases decided on 13.07.2017 considered the case of "Savlon" and after taking into consideration the ingredients of "Savlon" to be identical held that "Savlon" is a drug/medicine and it has medicinal value and it would be appropriate to quote para-20 of the aforesaid judgment which reads as under:- "Insofar as the issue raised by the Revenue about "Savlon" is concerned, I do agree with the finding reached by the Tax Board that it is entirely a different product and it has medicinal value for it is used when there is some cut or injury on the skin and the same is used as an antiseptic. A product which is used mainly for curing or treating ailments or diseases and contains curative ingredients, is required to be branded as a medicament." In the above case, this Court also took note of the judgment of the Kerala High Court in Reckit Benckiser (India) Ltd. Vs. State of Kerala [Cr. M.C. Nos. 4997 of 2010 and 541 of 2011] who vide judgment and order dt. 24.03.2011 t....