TaxTMI 
TaxTMI 
2018 (2) TMI 1816
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....eferred to as 'Act of 1940') and are thus liable to be taxed @ 4% in view of Item 41 of Part 'A' in Schedule-II to U.P. VAT Act. Tribunal has negatived the contention of the revenue that the product is not covered under Entry 41 of Part 'A' of IInd Schedule and is liable to be taxed under the residuary entry in Schedule-V @12.5%. For arriving at such conclusion, Tribunal has placed reliance upon a Division Bench judgment of Uttarakhand High Court in respect of same assessee, and same products, in Commissioner, Trade Tax/Commercial Tax Vs. Perfetti Van Melle (India) Pvt. Ltd., reported in (2009) 19 VST 218 (UTT). Nature of product, relevant literature on the subject and the applicable provisions of law are noticed in the judgment, which shall be dealt with at the appropriate stage. 2. The applicable provisions of Uttaranchal Value Added Tax Act, 2005 are on similar lines to the U.P. Value Added Tax Act, 2008. The taxing entry are substantially similar. Item 41, existing in Part-A of Schedule-II of the U.P. Act, as amended from time to time, as also the residuary entry occurring in Schedule-V, are extracted hereinafter:- "S.No.41: Original....
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....siduary entry @ 12.5%. It is contended that Tribunal has erred in failing to apply 'common parlance test', so as to ascertain the true nature of the product itself. It is contended that merely because product is manufactured under a drug licence would not be the conclusive proof of it being a drug or medicine. It is also contended that both the products are sold across the counter even without Doctor's prescription. It's sale is otherwise not restricted to a chemist shop. Submission is that the assessee has failed to adduce any evidence to establish that products in question are medicine and not unclassified commodity. To support the above proposition, reliance is placed upon a decision of this Court in Paras Pharmaceuticals Limited Vs. Commissioner, Trade Tax U.P. Lucknow, reported in 2007 NTN (Vol. 33) 313. The decision of the Apex Court in Commissioner of Central Excise, Nagpur Vs. Shree Baidyanath Ayurved Bhawan Ltd., reported in 2010 NTN (Vol. 42) 63, is also relied upon to strengthen the proposition so advanced. 5. Revision is opposed by the assessee, relying upon various judgments, which shall be dealt with in the later part of this judgment. 6. I have ....
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.... and pudeena (spearmint). Our attention is also drawn to the fourth chapter of book titled 'Dravy-agurna Vijnana' Volume II, written by Prof. P.V. Sharma, in which medicinal qualities of eucalyptus are mentioned. On the basis of properties mentioned of peppermint and pudeena, it is argued that the items manufactured by the assessee have medicinal value and for the reason that the chlormint preparations included the aforesaid peppermint and spearmint, as its contents. Therefore, the same are ayurvedic medicines and not the confectionary. On the other hand, Shri Sudhir Kumar, learned Counsel for the revisionist, argued that Haldi (turmeric), Kalimirch (black pepper), etc., also have medicinal values and that does not make everything medicine. What makes an item medicine is formulae for the medicines in its proper dose for the treatment of a disease or disorder. 10. No doubt, merely for the reason that some plant or its leaves, stem, or fruit has medicinal value does not make everything ayurvedic medicine. But in the present case, literature of 'Chlormint with herbasole' and 'Happydent' (white baking soda with mint flavour) shows that the same are manu....
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....icence. As such, having heard learned Counsel for the parties, and after going through the principle of law laid down in Puma Ayurvedic Herbal (P.) Ltd. v. Commissioner Central Excise, Nagpur MANU/SC/1303/2006 : 2006(196)ELT3(SC) and Naturalle Heath Products (P.) Ltd. v. Collector of Central Excise, Hyderabad MANU/SC/0912/2003 : 2003ECR513(SC) , and for the reasons discussed above, we hold that items-'Chlormint with herbasole' and 'Happydent' manufactured by the assessee under valid drug licence are ayurvedic medicines and trade tax payable on said items is four per cent as provided in Clause (b) of Sub-section (2) of Section 4 of the Uttaranchal Value Added Tax Act, 2005." 10. At this stage, it would be relevant to note that while Tribunal has taken note of aforesaid judgment, and also the literature referred to therein, but no contra evidence was adduced by the revenue before any of the authorities or even before the Tribunal. 11. It is not in dispute that the two products in question are manufactured under a drug licence issued under the Act of 1940. The observations of Uttarakhand High Court, quoted above, based upon the provisions of the Act of 1940 and t....
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.... patented or proprietary formula. The main criteria for determining classification is normally the use it is put by the customers who use it. The burden of proving that Bhanphool Oil is understood by the customers as an hair oil was on the revenue. This burden is not discharged as no such proof is adduced. On the contrary we find that the oil can be used for treatment of headache, eye problem, night blindness, reeling, head weak memory, hysteria, ammenesia, blood pressure, insomnia etc. The dosage required are also set out on the label. The product is registered with Drug Controller and is being manufactured under a drug licence." 39. From the above, it is clear that a patent Ayurvedic medicament could be one where all the ingredients find mention in the authoritative text books on Ayurveda, though the formula for prepaation of the medicament is not in accordance with the formula given in those text books. It is not in dispute that all the ingredients are mentioned in the authoritative text books on Ayurveda. In fact, in the case of appellant in Civil Appeal No. 2072/1996, the products satisfy the definition in Section 2(h) of Drugs & Cosmetics Act as "patent or proprietar....
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....tive or prophylactic value and it is not for the care of the skin per se." The Court went on to observe as under in para 17:- "17. ....... It also found that this product was manufactured under a drug licence as drug authorities had treated the same as a medicament. The Tribunal also found that the usage of this product was related to the effect of therapeutic or mitigating substance of prophylactic substances added. Thus, the effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament and classified under Chapter 30." 18. Learned counsel for the revenue has placed reliance upon a decision of this Court in Paras Pharmaceuticals Limited (supra). In the said case the Court was examining as to whether 'Bora Soft' is an ayurvedic medicine or is an ordinary cream. Relying upon the observations of Apex Court in Puma Ayurvedic Herbal Pvt. Ltd. Vs. CCE, reported in (2006) 3 SCC 266, the Court observed as under:- "In Puma Ayurvedic Herbal (Pvt) Ltd, the Supreme Court held that in order to find out whether the item is a medicament, it is not ne....
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....t whether medicament or cosmetic. There being no change in the nature, character and uses of DML, it has to be held to be a tooth powder - as held in Baidyanath I1. DML is used routinely for dental hygiene. Since tooth powder is specifically covered by Chapter Sub-heading 3306, it has to be classified thereunder. By virtue of Chapter Note 1(d) of Chapter 30 even if the product DML has some therapeutic or medicinal properties, the product stands excluded from Chapter 30." 20. I find substance in the argument of Sri Gulati the learned senior counsel that the principle laid down in Shree Baidyanath Ayurved Bhawan (supra) would not have much relevance where the issue is between a specific entry and a residuary entry. The product, herein, is being manufactured under a drug licence. The assessee has discharged its initial onus by producing relevant literature to show that product would be taxed as per Item 41 of Part-A of IInd Schedule. As such the burden was upon the revenue to establish by adducing evidence that the products were not covered by this entry, and that it would fall in the residuary entry. Accordingly, no such evidence has been adduced by the revenue. Consequen....