Telangana High Court
The State Of Andhra Pradesh vs M/S. Emani Limited on 14 June, 2024
Author: P.Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
IN THE HIGH COURT FOR THE STATE OF TELANGANA:
HYDERABAD
***
TAX REVISION CASE Nos.155, 156, 166, 169, 182, 183, 187,
188, 192, 193 and 211 of 2004
Between:
The State of Andhra Pradesh and Others.
Petitioners
VERSUS
M/s.Himani Limited and Others.
Respondents
COMMON ORDER PRONOUNCED ON: 14.06.2024
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments? : Yes
2. Whether the copies of judgment may be
marked to Law Reporters/Journals? : Yes
3. Whether His Lordship wishes to
see the fair copy of the Judgment? : Yes
__________________
P.SAM KOSHY, J
Page 2 of 30
* THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
+ TAX REVISION CASE Nos.155, 156, 166, 169, 182, 183,
187, 188, 192, 193 and 211 of 2004
% 14.06.2024
# Between:
The State of Andhra Pradesh and Others.
Petitioners
VERSUS
M/s.Himani Limited and Others.
Respondents
! Counsel for Petitioner(s) : Mr. Lakshmi Kumaran,
learned counsel, along
with Mr. Narendra Dave,
Mr. Sumanth Chanda and
Ms. Anushka Rastogi.
^Counsel for the Respondent(s) : Mr. Swaroop Oorilla, learned
Standing Counsel for
Commercial Taxes
<GIST:
> HEAD NOTE:
? Cases referred
1) 2023 SCC Online SC 561
2) 2009 (245) E.L.T. 71 (Ker.)
3) 2011 (263) E.L.T. 335 (All.)
4) 2015 SCC Online Gau 818
5) (1986) 62 STC 76
Page 3 of 30
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
TAX REVISION CASE Nos.155, 156, 166, 169, 182, 183, 187,
188, 192, 193 and 211 of 2004
COMMON ORDER:
(per the Hon'ble Sri Justice P.SAM KOSHY)
These are eleven Tax Revision Cases assailing the common
order passed by the Sales Tax Appellate Tribunal, Hyderabad
(hereinafter referred to as 'STAT') in T.A.No.1124 of 2000,
T.A.No.1125 of 2000, T.A.No.1301 of 2001, T.A.No.1305 of 2001,
T.A.No.503 of 2003, T.A.No.504 of 2003, T.A.No.505 of 2003 and
T.A.No.506 of 2003 decided on 31.03.2004.
2. Heard Mr. Lakshmi Kumaran, learned counsel along with
Mr. Narendra Dave, Mr. Sumanth Chanda and Ms. Anushka
Rastogi, learned counsel for the petitioner/assessee and
Mr. Swaroop Oorilla, learned Standing Counsel for Commercial
Taxes, appearing for the respondent/Department.
3. These Tax Revision Cases pertains to sister companies
known as M/s.Himani Limited and M/s.Emami Limited. Of these
eleven Tax Revision Cases, three each have been filed by two
assessees. Tax Revision Case Nos.193, 188 and 187 of 2004 have
been filed by M/s.Himami Limited for the assessment years 1996-
1997, 1997-1998 and 1998-1999. There are two Tax Revision
Cases in respect of the company where the challenge has been
made by the Department i.e. Tax Revision Case Nos.211 and 155 of
2004 challenging the order for the assessment years 1997-1998
and 1998-1999. Likewise, there are three Tax Revision Cases filed
by M/s.Emami Limited i.e. Tax Revision Case Nos.182, 183 and
192 of 2004 for the assessment years 1998-1999, 1999-2000 and
2000-2001. Similarly, there are three Tax Revision Cases filed
against M/s.Emami Limited by the Department, those are Tax
Revision Case Nos.166, 169 and 156 of 2004 for the assessment
years 1998-1999, 1999-2000 and 2000-2001.
4. The whole dispute revolves around six products being
manufactured and marketed by the two sister concerns. Those are
Navaratan Oil, Gold Turmeric Ayurvedic Cream, Nirog Dant Power
Lal, Boroplus Antiseptic Cream, Boroplus Prickly Heat Powder and
Sonachandi Chavanprash.
5. The whole issue involved in the instant set of Tax Revision
Cases are whether the aforementioned products manufactured by
two sister concerns would fall within the purview of cosmetics or
drugs under the APGST Act, 1957 (for short, 'the Act'). The
question substantially to be decided is, whether the
aforementioned products would fall under Entry 36 or Entry 37 of
the CGST Act and TGST Act? The issue primarily arises on account
of the fact that if the products would fall under the classification of
a cosmetic, then it becomes leviable of GST at the rate of 20%. On
the other hand, if these products are to be treated as drugs within
Entry 37, then these products would be leviable of duty at the rate
of only 10%.
6. (A) Of the six products, the STAT has held (i) Navaratan Oil
(ii) Gold Turmeric Ayurvedic Cream and (iii) Nirog Dant Power Lal
to be products which are otherwise either cosmetics or toiletry
products. Thus, it was this finding of the STAT which has been
challenged by the petitioner/assessee through the instant Tax
Revision Cases.
(B) Whereas, the STAT further also held that the three
products (i) Boroplus Antiseptic Cream (ii) Boroplus Prickly Heat
Powder and (iii) Sonachandi Chavanprash have been held to be
drugs and not cosmetics and it is this declaration of these three
products as drugs which has led to the Department filing the Tax
Revision Cases. At the same time, the assessee is fighting the
exclusion of these three products (i) Navratan Oil (ii) Gold Turmeric
Ayurvedic Cream and (iii) Nirog Dant Powder Lal as drugs which
led to filing of Tax Revision Cases by the assessee.
7. As can be seen from the previous paragraphs, there are two
set of Tax Revision Cases. For convenience sake, we take up the
Tax Revision Cases which have been filed by the Department first.
Those are Tax Revision Case No.155 of 2004 for the assessment
year 1998-1999, Tax Revision Case No.166 of 2004 for the
assessment year 1998-1999, Tax Revision Case No.169 of 2004 for
the assessment year 1999-2000, Tax Revision Case No.211 of 2004
for the assessment year 1997-1998 and Tax Revision Case No.156
of 2004 for the assessment year 2000-2001. It is pertinent to
mention here that there was yet another Tax Revision Case which
was filed by the Department i.e. Tax Revision Case No.161 of 2004
for the assessment year 1996-1997 which was dismissed for
default vide order dated 20.07.2009.
8. There does not seem to be any further effort made for
restoration of the said Tax Revision Case and by efflux of time, the
assessment order so passed for the assessment year 1996-1997
has attained finality. Whatever be the effect of the same, we
proceed to decide the substantive issue so far as the
aforementioned remaining five Tax Revision Cases filed by the
Department challenging the findings of the STAT. So far as (a)
Himami Sonachandi Chavanprash (b) Himami Boroplus Antiseptic
Cream (c) Himami Boroplus Prickly Heat Powder being ordered to
be treated as drugs and not as a cosmetic i.e. treating these three
products falling under Entry 37 and not under Entry 36 of the I
Schedule of the Act and with a further direction to revise the
assessment orders accordingly.
9. In the three Members Bench of the STAT, one of the
Departmental Member is said to have taken a contrary view in
respect of the aforesaid majority view of the STAT and all the
appeals before STAT stood decided in accordance with the majority
view.
10. Now for adjudicating upon the dispute whether the STAT was
justified and the order was proper and legal or not, we proceed to
deal with the characteristics of the three products.
11. So far as the product Himani Sonachandi Chavanprash is
concerned, the rapper affixed on the container in which this
Himani Sonachandi Chavanprash is sold in the market would
disclose its composition whereby it has been specifically mentioned
that the product is made of around fifty two rare herbs and
minerals along with the powder of gold, silver and saffron and it
also specifically reflects the benefits of consuming Himani
Sonachandi Chavanprash like (i) improves eye sight and
complexion (ii) builds immunity (iii) helps in absorbing quashment
(iv) strengthens teeth and bones (v) improves stomach and forms
healthy blood (vi) builds body and active muscles and lastly (vii)
meets everyday energy needs.
12. Another fact which needs to be reflected/appreciated at this
juncture is the literature in respect of Himani Sonachandi
Chavanprash and the reference of the said product in the books
and texts used by the Vaids in Ayurvedic discipline. The reference
of this product is found in:
"(REF. - CHARAK SAMHITA - CHIKITSA STHANA -
CHAPTER 01 - RASAYAN ADHYAHA - PADA 01 -
SHLOKA 63 - 60)
(#REF. - BHAVA PRAKASHA, CHAUKHAMBHA, 8TH
RESPECTIVELY)
(## REF. - BHAVA PRAKASH, P.NO.234)"
13. In addition to this, what is also required to be understood is
that the petitioner/assessee has obtained license for
manufacturing of the said Himani Sonachandi Chavanprash and is
being sold as a product under the Drugs and Cosmetics Act, 1940.
According to the petitioner/assessee, it would be a product which
would fall under Entry 37 of the 1st Schedule of Act. It is this, what
is being claimed by the petitioner/assessee as well. The STAT has
duly appreciated the aforesaid factual matrix of the case and also
the ingredients of the product coupled with the appreciation of
definition of "Cosmetics" under the Drugs and Cosmetics Act,
1940, where "Cosmetics" are defined under Section 3(aaa) and
"Drugs" are defined under Section 3(b) and has reached to the
conclusion of the product being drug and not cosmetic. Thus, the
said issue was decided in favour of the petitioner/assessee.
14. Disputing the said finding, the learned Standing Counsel for
the respondent/Department contended that the product has
saffron in it and since saffron lends vigor to the body and glow to
the skin, hence, the glowing and the luster of skin being qualities
related to cosmetics, therefore, it has been brought under Entry 36
of 1st Schedule of the Act. Apart from this oral contention of the
learned Standing Counsel appearing for respondent/Department,
there was no documentary proof, material, literature or text with
which the Department could sustain their contention while
contending that Himani Sonachandi Chavanprash is a cosmetic
and not a drug.
15. If we look at the definition of cosmetics as per Section 3(aaa)
which for ready reference is reproduced herein under:
"(aaa) cosmetic means any article intended to be rubbed,
poured, sprinkled or sprayed on, or introduced into, or
otherwise applied to, the human body or any part thereof
for cleansing, beautifying, promoting attractiveness, or
altering the appearance, and includes any article
intended for use as a component of cosmetic"
From the aforesaid definition it can be safely concluded that
cosmetic means an article which otherwise is not a product which
is edible or can be drinked. It is something which is applied
externally over the body and not to be consumed internally.
16. Whereas drugs which stands defined under Section 3(b) of
the Drugs and Cosmetics Act which again for ready reference is
again reproduced herein under:
"(b) "drug" includes--
(i) all medicines for internal or external use of human
beings or animals and all substances intended to be
used for or in the diagnosis, treatment, mitigation or
prevention of any disease or disorder in human beings
or animals, including preparations applied on human
body for the purpose of repelling insects like
mosquitoes;
(ii) such substances (other than food) intended to affect
the structure or any function of the human body or
intended to be used for the destruction of [vermin] or
insects which cause disease in human beings or
animals, as may be specified from time to time by the
Central Government by notification in the Official
Gazette."
A plain reading of the aforesaid definition of drugs would clearly
indicate that it is a product which can be internally and externally
used. Hence, Himani Sonachandi Chavanprash is one product
which is only edible and is not a product which can be used
externally.
17. In view of the aforesaid factual aspect of the case and the
specific finding of fact given by the STAT, we are of the considered
opinion that no strong case has been made out by the learned
Standing Counsel for the respondent/Department to interdict the
finding so far as the product Himani Sonachandi Chavanprash is
concerned. The challenge to the said finding thus stands answered
in the negative affirming the finding given by the STAT.
18. Next we proceed to decide the characteristics of "Himani
Boroplus Antiseptic Cream". The very name of the product i.e.
Himani Boroplus Anticeptic Cream by itself denotes that it is no
ordinary cream or a cosmetic cream. Rather is a cream which has
antiseptic composition and as such is a medicine or a drug under
Entry 35 of 1st Schedule of the Act. Another aspect which needs
appreciation is the fact that the product as such is not any of those
body creams or lotions with medicated composition; rather, it is
fully medicated product in the form of a cream. Hence, it would not
fall under the purview of Entry 36 of 1st Schedule of the Act. The
said product "Himani Boroplus Antiseptic Cream" while it was
being applied for getting the license was required to reflect the
composition and the books of reference under the ayurvedic
literature with specific page numbers and chapters dealing with the
same. From the details so furnished with the Government agency
while obtaining license; the products, composition and book of
reference was reflected, which for ready reference is reproduced
herein under:
Composition Percentage Books ref. With Pg.No.
1. Extract of Chandan 1.0 Bhava Prakash (189)
(Santalum album) Raj Nighantu (397)
Charak Samhita (62)
2. Extract of Tulasi 0.4 Raj Nighantu (327)
(Occimum Sanctum) Bhava Prakash (509)
3. Extract of Kapoor 1.5 Ayurved Samgraha (151)
Kachari Charak Samhita {Su.4/30 (65),
(Hedychium spicatum) 4/37(67)}
Bhava Prakash (247)
4. Extract of Nimba 1.0 Bhava Prakash (329)
(Azadirachta indica) Charak Samhita {Su.4/14(62)}
5. Extract of Haridra 0.3 Bhava Prakash (115)
(Curcuma longa) Bangasen Samhita (473-474)
Ayurved Samgraha (137)
Brihannighantu Ratnakara (Sha)
The Ayurvedic Pharmacopoeia of
India (45)
6. Extract of 0.3 Charak Samhita {Su. 4/5 (60)}
Yastimadhu Bhava Prakash (65)
(Glycyrrhiza glabra) The Ayurvedic Pharmacopoeia of
India (127)
7. Extract of Ghrit 1.0 Bhava Prakash (419)
Kumari Charak Samhita (69)
(Aloe barbedensis)
8. Extract of Ushir 0.5 Raj Nighantu (331)
(Vetiveria zizinioides) Bhava Prakash (239)
Bhaisajya Ratnavali (596)
Charak Samhita (68)
9. Jasad Bhasma (Zinc 2.5 Dhanvantari Nighantu (117)
oxide) Ayurved Samgraha (298)
10. Tankan Amla (Boric 0.8 Dhanwantari Nighantu (74)
Acid) Brihannighantu Ratnakara (Sha)
Ayurved Samgraha (218)
Rasatarangini (318)
11. Hiravi (Talc) 11.0 Rasatarangini {11/233 (282)}
(Dugha pashana) Ayurvedic Formulary of India
Part I (237)
Ayurvediya Rasashastra (677)
12. Surasar (Alchahol) 0.7 v/w Dhanwantari Nighantu (222)
Charak Samhita {Su. 27 (392)
25/40(319)}
Ayurved Samgraha (263)
Sushruta Samhita Sutra
(45/148)
Bhava Prakash (785-786)
Bada Nigraha (36/45 (168)}
13. Incorporated in a Q.S. to
suitable ointment
vehicle with Ianolin, 100%
waxes, paraffin oil and
odoriferous substances.
19. Further from the percentage of various ayurvedic products
used in manufacturing of the same would clearly reflect that it is
the percentage of ayurvedic product with medicinal value which is
predominant in the said antiseptic cream. In addition to the
aforesaid facts, there is no material collected by the State
authorities or for that matter the Department in particular to show
that the product in question i.e. "Himani Boroplus Antiseptic
Cream" does not have medicinal value as claimed by the
petitioner/assessee.
20. What is also to be appreciated at this juncture is that the
said cream under no circumstances can be brought or treated as a
cosmetic. It can only be used for the medicinal value that it has
and it cannot be used as an ordinary facial or a body cream except
for the purpose for which it has been manufactured and sold. It
also is not a product which is otherwise capable of being used as a
cosmetic or a toiletry product. Neither can it be brought within the
purview of medicated goods as the medicated goods are those
which are used otherwise than as medicines with its added
incidental medicinal properties, for example medicated shampoo,
soap, hand wash etc. etc. As has been reflected in the rapper of the
product/label of the product, it is preventive in nature and has
curative and healing ayurvedic ointment and it is prescribed for dry
skin diseases, cuts, burns, minor skin burns, wounds, chapped
skins, furuncle impetigo and intertrigo. All of which by itself
establish that it is not a cosmetic product or a toiletry product.
Even the STAT has accepted the product to be having curative
effect along with it being a healing ayurvedic ointment for curing
the aforementioned skin disorders.
21. For the aforesaid reasons, we are of the considered opinion
that the finding given by the STAT is a well-reasoned finding which
does not warrant interference as no substantial material could be
brought on record either before the authorities concerned or before
this Court so as to disprove the findings given by the STAT. Thus,
for the aforesaid reason also, the challenge by the Department so
far as the finding given by the STAT stands negated.
22. The next product, the finding of which has been challenged
by the State Government and its Department is the Himani
Boroplus Prickly Heat Powder. However, perusal of the Tax
Revision Case and the documents attached therein does not show
any strong resistance by the State to the findings given by the
STAT so far as the product "Himani Boroplus Prickly Heat Powder"
is concerned. For ready reference, the relevant portion of the
findings given by STAT in respect of the said product is again
reproduced herein under:
"In order to decide whether this product covers under other
clause (a) or clause (c) of Entry 37, it is to be seen whether
Boroplus Prickly Heat powder is covered, described or
specified in any other entries of the I Schedule. The learned
State Representative submitted that this product is covered
under Item vix. 'Cosmetics and Toilet Preparations'. According
to him it comes under face powders and also personal
deodorants. He submitted that the containers of this prickly
heat powder contains the pictures of flowers which are
generally associated with beauty cosmetic and on the
container it is written as "it cures body odour" and the powder
is a white talcum powder with sweet smell and that the dosage
details are not mentioned in the booklet furnished by the
appellant it is described as deodorized agent and all those
characteristics clearly indicated that this prickly heat powder
is cosmetic. As seen from the literature furnished in the form
of booklet in respect of this prickly heat powder by the
appellant, the appellant declared the following ingredients and
its action as follows:
INDIAN NAME OF THE ACTION
INGREDIENT
1) Yavanala Satva Refrigerant and cures
pimples.
2) Jasad Bhasma Mild, soothing
astringent, cures
minor skin infections.
3) Shankha Churna Cures pimples.
4) Tankan Amla Cures skin related
Diseases and boils due
to heat.
5) Salicylic Acid Antiseptic,
antifungal. Effective
in heat rash and
burning sensation.
6) Surasar Vitalises skin.
7) Tulasi Ka Tel Antibacterial,
Deodorant and
antiseptic.
8) Marigold Oil Antiseptic.
9) Chandan Ka Tel Prickly heat action,
improves glow of skin.
10) Vetiver ka Tel Refrigerant and
fragrant, prevents
body odour.
11) Karpoor Antiseptic, refrigerant.
12) Pudina Ka Phool Antiseptic, refrigerant.
As seen from the said ingredients and its actions, it cannot be
said that it is a cosmetic. Merely, because it vitalizes the skin
and cure body odour and improves glow of the skin, it cannot
be said it falls under cosmetic. Curing pimples is a medicinal
action. Curing body is also a medicinal activity. Merely,
because one of the qualities is to improve glow of the skin it
cannot be characterized as cosmetic.
Nextly, it has to be seen whether the prickly heat powder is
'capable of being used' as cosmetic or toilet preparations and
thereby falls under exclusion clause (c) of Entry 37 of I
Schedule to the Act. As seen from the decision of the Hon'ble
Madras High Court in V.C., Ramalingam & Sons and Another
v. State of Tamilnadu and others reported in (2002) 127
APSTJ 382, the Legislature of Tamilnadu also brought out
similar amendment to the entry relating to the medicine in
TNGST Act in order to exclude products 'capable of being' used
as creams, hair oils, tooth paste, tooth powders, cosmetics,
toilet articles, soaps and shampoos from the entry 'medicines'.
The said amendment was challenged before the Hon'ble
Madras High Court. The Madras High Court while dismissing
the Writ Petition observed as follows:
"This classification does not discriminate against any
system of medicine or against any of the licenses. All
of them are treated alike. There is no hostile
discrimination against ayurvedic medicines or any
medicine by reasons of this explanation. It merely
carves out all preparations made by licencees holding
licenses under the Drugs and Cosmetics Act, 1940
and others, with reference to their dominant user,
and subject those preparations to a different rate of
tax having regard to that use. The classification so
made cannot be said to be arbitrary, or as lacking in
any nexus with the objects sought to be achieved.
Toothpastes which are used as articles of daily use
for cleaning the teeth are not to be taken out of that
class only by reason of their ingredients being
ingredients prescribed by ayurvedic texts, which also
makes it a ayurvedic medicine. Similarly face creams
which are meant to protect the skin on the face and
which are used by those who wish to take care of the
texture of their skin, also do not cease to be face
cream by reason of their contents being those
prescribed by the ayurvedic texts and such contents,
also having medicinal value. The words "capable of
being" are required to be construed as, used primarily
as creams, hair oils, tooth pastes, tooth-powders,
cosmetics, toilet articles, soaps and shampoos".
Therefore, the words capable of being used deployed in clause
(c) of Entry 37 is to be construed as used primarily. So in the
instant case, it has to be seen whether the prickly heat powder
is used primarily as cosmetic viz, face powder. We have
already observed supra that this prickly heat powder is not
mean for use to the face along and it is meant for use on the
entire body to prevent itching of the skin which is considered
as a disease of the skin by this Tribunal in the state of Andhra
Pradesh vs. Koduri Satyanarayana & Co., Therefore, we are
unable to agree with the contention of the learned State
Representative that this prickly heat powder is capable of
being used as cosmetics or toilet preparations. Thus, this
product prickly heat powder does not fall under either clause
(a) or (c) of Entry 37. As it is found supra, that this product
satisfies the definition of Sec.3 of Cosmetics and Drugs Act, it
falls under Entry 37 of I Schedule to APGST Act and it is to be
taxed only as product falling under Entry 37.
23. The Hon'ble Supreme Court in the case of Nycil Prickly Heat
Powder in Heniz India LTD vs. State of Kerala 1 upheld the
judgment of the Kerala High Court 2 and classified it as a medicated
talcum powder, a classification that is primarily rooted in the
product's composition, which includes medicinal ingredients.
However, despite these medicinal properties, the specific legislative
language of the concerned states, namely Kerala and Tamil Nadu,
classifies such products as cosmetics. This classification highlights
the dualistic nature of Nycil Prickly Heat Powder, which combines
therapeutic properties such as zinc oxide & boric acid and with
cosmetic usage.
2023 SCC Online SC 561
2009 (245) E.L.T. 71 (Ker.)
24. On the other side Himani Boroplus Prickly Heat Powder also
contains medicinal ingredients in a way that is similar to Nycil,
such as zinc oxide (Jasad Bhasma), boric acid (Tankan Amla) and
salicylic acid, a beta hydroxy acid. However the Himani Boroplus
Prickly Heat Powder could potentially be classified differently due
to the extra ingredient that is salicylic acid which makes the
product drug. In particular, it could be classified as a drug,
indicating a primary use for therapeutic or prophylactic purposes.
25. This product is not merely another addition to the endless
array of cosmetic skincare products available on the market; it is
meticulously formulated product that has been designed with a
specific purpose: to treat and heal skin conditions. This significant
distinction is primarily due to the potent medical properties of its
active ingredients, which include zinc oxide, boric acid, and
salicylic acid. On the other hand, Nycil powder is also designed for
skin health and comfort, with its primary component being talc,
known for its absorbent properties. Nycil is also medicated with
Zinc Oxide and may contain other ingredients depending on its
variant, such as cooling agents or additional medicinal ingredients.
Zinc oxide (Jasad Bhasma) a primary ingredient in the formulation,
is a compound known for its antiseptic properties. This ingredient
is instrumental in preventing skin infections and soothing irritated
skin, making it a crucial component in skincare products.
Additionally, zinc oxide creates a protective barrier on the skin's
surface, effectively repelling unwanted moisture and fostering an
environment conducive to the healing process. This feature is
particularly beneficial in hot and humid climates, where excessive
sweating can lead to skin discomfort and irritation.
26. Further enhancing the therapeutic efficacy of Boroplus
Prickly Heat Powder is boric acid (Tankan Amla). This compound is
known for its antifungal, antiviral, and antiseptic properties,
enabling it to combat a range of skin conditions. Boric acid's ability
to treat minor cuts, burns and scratches underscores the product's
medicinal nature and its alignment with pharmaceutical products
rather than merely cosmetic ones.
27. The inclusion of salicylic acid in the product's formulation
fortifies its medical potential. Salicylic acid, a beta hydroxy acid, is
a common ingredient in many skincare products due to its ability
to exfoliate the skin and treat conditions like acne. By promoting
the shedding of dead skin cells and preventing pore clogging,
salicylic acid contributes significantly to the overall health and
appearance of the skin.
28. Further the combination of these ingredients imbues Himani
Boroplus Prickly Heat Powder with a distinct therapeutic quality
not commonly found in ordinary cosmetics. The product's ability to
alleviate discomfort, promote healing and protect the skin from
further damage aligns it more closely with medicinal products. This
is further corroborated by the fact that the powder is manufactured
under a drug license, ensuring adherence to stringent quality and
safety standards that may not apply to regular cosmetic products.
Therefore, it is evident that due to the distinct medical benefits and
therapeutic potential it offers, Boroplus Prickly Heat Powder
rightfully belongs in the realm of drugs, rather than cosmetics.
29. Considering the presented arguments and the discussion has
thoroughly examined the classification of Himani Boroplus Prickly
Heat Powder in the context of the Schedule 1st of APGST Act. This
product, unlike Nycil Prickly Heat Powder has predominant
medicinal elements which has a soothing and protective effect on
the skin, which can be attributed to its cosmetic nature. It only
contains medicinal ingredients such as Zinc Oxide, Boric Acid and
Salicylic Acid, which gives it therapeutic and prophylactic
properties, making it more than just a cosmetic product.
30. Taking into account the decision of the Allahabad High Court
in the case of Himani Ltd. v. Comm. Of Commercial Tax 3 and
the common parlance test, it is clear that the public perceives
products like Himan Boroplus Prickly Heat Powder as medicinal or
2011 (263) E.L.T. 335 (All.)
Ayurvedic products rather than mere cosmetics. Furthermore, the
Advance Ruling sought by the assessee before the Guwahati
Commercial Taxes Department, which was later upheld by the
Gauhati High Court in Emami Limited and Another vs. State of
Assam and Another 4 adds more weight to this classification.
31. In view of these observations and legal precedents, it is
concluded that Himani Boroplus Prickly Heat Powder has been
rightly classified under Entry 37 in Schedule 1st of the APGST Act.
This classification acknowledges the product's medicinal properties
and its role in health and healing. Conversely, the product should
not be classified under Entry 36 as 'Cosmetics or Toilet
Preparations' in the same schedule of the Act. This is because such
a classification would downplay the product's medicinal attributes
and potentially misrepresent its purpose and use to the public.
32. Thus, the challenge to the said finding of the STAT does not
have any force or strength either in the form of any cogent material
brought on record or in the submissions that they have tried to
make to interfere with the findings of the STAT. The challenge to
the findings of the STAT so far as Himani Boroplus Prickly Heat
Powder not being a drug under Entry 37 Schedule 1st of the Act
2015 SCC Online Gau 818
fails and is rejected. The said contention of the Department also
stands negated.
33. As a consequence, the Tax Revision Case Nos.155, 156, 166,
169 and 211 of 2004 filed by the respondent/Department being
devoid of merits, deserves to be and are accordingly rejected.
34. Now we proceed to decide the Tax Revision Cases filed by the
assessee i.e. Tax Revision Case Nos.193, 188 and 187 of 2004 filed
by M/s.Himani Ltd. for the assessment years 1996-1997, 1997-
1998 and 1998-1999 and Tax Revision Case Nos.182, 183 and 192
of 2004 filed by M/s.Emami Ltd., the sister concern of M/s.Himami
Ltd. for the assessment years 1998-1999, 1999-2000 and 2000-
2001.
35. At the outset, the learned counsel for the petitioner/assessee
appearing for the two assessee companies submitted that they do
not challenge the assessment made by the Department so far as
the product Himani Nirog Dant Powder Lal. They are not pressing
the assessment so made by the Department bringing the said
product "Himani Dant Powder Lal" within the ambit of Entry 36 i.e.
the cosmetic product in 1st Schedule of the Act.
36. On account of giving up of the challenge to "Himani Nirog
Dant Powder Lal" product, the only two products which now
remains to be considered and adjudicated upon are (1) Himani
Navaratan Oil and (2) Himani Gold Turmeric Ayurvedic Cream. The
STAT in the impugned order has given findings of both this
products being cosmetic product which falls under Entry 36 of 1st
Schedule of the Act. Whereas the contention of the learned counsel
for the petitioner/assessee is that both these products are in fact
drugs as is reflected under Entry 37 of 1st Schedule of the Act.
The contention of the learned counsel for the petitioner/assessee in
so far as Himani Navaratan Oil is concerned, was that, the product
is a medicinal product and is prescribed for keeping the head cool,
relieve headache, helpful in providing sound sleep, effective
memory aid, it tones up body muscles, removes tiredness, useful in
minor burns and cuts and also prevents premature hair fall. None
of the actions as mentioned in the label of the product cater to the
definition of a cosmetic product or a toiletry product.
37. It was the contention of the learned counsel for the
petitioner/assessee that even the license for the product was
obtained as an ayurvedic product sanctioned by the Drug
Controller after thorough scrutiny of its composition with its
intended cure of headache, reduction in burns, improving blood
circulation and also for improving the hair growth. According to the
learned counsel for the petitioner/assessee, it is an ayurvedic
product and is not perfumed hair oil with medicinal value. All the
ingredients and compositions which are used for manufacturing of
the said product were found in ayurvedic texts.
38. Learned counsel for the petitioner/assessee relied upon a
decision of the Allahabad High Court in respect of the very same
products of the assessee's company which the Allahabad High
Court has accepted it to be products which otherwise fall under
Entry 37 and not under Entry 36 of 1st Schedule of the Act. He also
took the Court to the compositions of the product and reference to
the ayurvedic texts in respect of the various products involved in
the making of the said Himani Navaratan Oil. For ready reference,
the composition and reference to these ayurvedic texts are
reproduced herein under:
Composition 100 ml Books ref. With Pg.No.
contains
1. BENAMUL 0.05 gm Bharatiya Banousadhi,
Vol. V, P.No. 1293-1294.
Bhava Prakash, Vol. I,
P.No. 239.
2. LATA KASTURI 0.1 gm Chiranjib Banousadhi,
Vol. VII, P.No. 45.
Banousadhi Chandrodaya,
Vol. VI, P.No. 45.
Bhava Prakash, Vol. I,
P.No. 184.
3. KAKOLI 0.1 gm Banousadhi Chandrodaya,
Vol. II, P.No. 112.
Bhava Prakash, Vol. I,
P.No. 62.
4. SAILAJA 0.2 gm Wealth of India,
Vol. VI, P.No. 81-90,
Bhava Prakash, Vol. I,
P.No. 242.
5. GATELLA 0.2 gm Dravyaguna, P.No. 124.
6. MURAMANSI 0.25 gm Dravyanguna, P.No. 121,
Ayurveda Pradip,
P.No. 132.
7. KUNCH 0.25 gm Chiranjib Banousadhi,
Vol. III, P.No. 271-272.
Bhava Prakash, Vol. I,
P.No. 356.
8. AMLA 1.0 gm Bharatiya Banousadhi,
Vol. IV, P.No.1076-1077
Bhava Prakash, Vol. I,
P.No. 10-11.
9. MUSTHA 0.05 gm Bhava Prakash (244)
(60)}
10.KARPUR 0.05 gm Chiranjib Banousadhi,
(Camphor) Vol. III, P.No. 119-126.
Ayurveda Samgraha,
P.No. 143, 276, 468, 475,
514, 585, 1224.
Bhava Prakash, Vol. I,
P.No. 174.
11.PUDINA KA 2.3 gm Brihatnighantu Ratnakara,
PHOOL P.No. 71.
(Menthol) Banousadhi Chandrodaya
by Sri Chandraraj Bhandari
Vol. VI, P.No. 136-137.
12.GANDHA PATRA 0.2 gm Ayurveda Samgraha,
P.No. 700.
13.KAPOOR KACHRI 0.2 gm Indian Materia Medica]
by K.M. Nadkarni,
Vol. I, P.No. 608,
Bhava Prakash, Vol. I,
P.No. 248.
14.GULAB PHOOL 0.05 gm Indegenous Drugs of India
by R.N. Chopra, P.No. 238,
Bhava Prakash, Vol. I,
P.No. 489.
15.KESUT 0.05 gm Indian Medicinal Plants,
Vol. II, P.No. 1361-1363.
Bhava Prakash, Vol. I,
P.No. 430.
16.BRAHMI 0.01 gm Chiranjib Banousadhi,
Vol. I, P.No. 24.
Indegenous Drugs of India,
Bhava Prakash, Vol. I,
P.No. 462.
17.SURASAR 0.5 ml Arka Prakash, P.No. 81.
(Alchahol)
Incorporated in Q.S. to
Vegetable/mineral oil 100 ml.
base with odouriferous
substances,
preservatives etc.
It was based upon these compositions and reference to the
ayurvedic texts that the license was given as an ayurvedic drug
under the Drugs and Cosmetics Rules, 1945.
39. Enough literature and materials in respect of its curing
capacity as an ayurvedic medicine was made available with the
Department. Learned counsel for the petitioner/assessee also
relied upon the decision of the Tamil Nadu Sales Appellate
Tribunal, wherein the Tamil Nadu Sales Appellate Tribunal has
distinguished Navaratan Oil from the judgment of Commissioner
of Sales Tax vs. Raj & Co., 5 and had not accepted the said view in
the said judgment holding that Navaratan Oil has its therapeutic
values such as relieves stress, sound sleep, effective memory aid, it
tones up body muscles, removes tiredness and premature hair fall
and it is not anywhere advertised as an hair oil. The said judgment
of the Tamil Nadu Sales Appellate Tribunal was not challenged
further by the Department.
(1986) 62 STC 76
40. According to the learned counsel for the petitioner/assessee,
it was pure ayurvedic oil and under no stretch of imagination can it
be termed as a perfumed hair oil. Rather, it is never sold in the
market as hair oil and the said oil is an ayurvedic medicine and not
medicated goods. It was contended that medicated goods are those
which are intended to be used otherwise than as medicines. For
example; shampoos, soaps, hand wash with medicinal contents in
it. Medicated goods are those where incidental medicinal properties
are incorporated in small quantity and the product needs to be
otherwise sold for the very same purpose for which it was otherwise
manufactured and sold. Thus the finding of the STAT so far as
Navaratan Oil being a cosmetic and not a Drug is liable to be set
aside and it is ordered accordingly.
41. Now we come to the next product i.e. the Himani Gold
Turmeric Ayurvedic Cream. The petitioner/assessee has
manufactured the same and is marketing the same claiming it to
be highly effective for curing cracked skins, pimples, boils etc.
None of these actions as mentioned in the label of the product cater
the definition of cosmetics or toiletry product. As in the other
products, it was the contention of the learned counsel for the
petitioner/assessee that Himani Gold Turmeric Ayurvedic Cream
also was a product which has been licensed as an ayurvedic drug
by the Drug Controller based on the composition and these
compositions being from the ayurvedic texts with the intended cure
for skin diseases and also as an anti-inflammatory cream, it is
claimed to be a cream which helps in healing the wounds, cure
heat boils, pimples, antiseptic and anti-microbial etc. For ready
reference, the composition and the reference of the ayurvedic texts
in respect of the ayurvedic products used in the manufacture of the
said cream is hereby reproduced:
Composition & Book Percentage Books reference with page
Reference number
Extract of: 16% Ayurveda Sangraha - 137
Turmeric (HARIDRA) Bharatia Banousadi - IV
1158 - 60
By Dr. K.P.Biswas
Sandal Wood 6% Ayurveda Sangraha - 144
(CHANDAN) Bharatia Banousadi - IV
1025 - 31
Chiranjib Banousadi - I 174
Vativart 0.5% Ayurveda Sangraha - 151
(BENAMUL/USHIR) Bharatia Banousadi - V
1292 - 94
Chiranjib Banousadi - III
Saussuroa Lappa 0.5% Ayurveda Sangraha - 1073
(COSTUS/KUSTHA) Bharatia Banousadi - III 650
Chiranjib Banousadi - VI
254 - 59
Mehandi 3% Bharatia Banousadi - II 490
(LAWSONIA/MADANIKA) Chiranjib Banousadi - I 182
Tulsi (Ocimum) 3.3% Ayurveda Sangraha - 180
Bharatia Banousadi - IV
926 - 33
Chiranjib Banousadi - I 73
Ghritakumari (ALOE) 0.2% Ayurved Sangraha 172
Nadkarni - VOL. I 76
Darwantari 0.5% Indegenous D of I 289
(BERBERIS) Bhar. Banousadi I 42
TURMERIC Powder 0.2% Ayurveda Sangraha 137
Bharatia Banousadi IV
1158 - 60
By Dr. K.P.Biswas
42. What is necessary to be appreciated at this juncture is that,
from the rapper in which the cream is sold, very emphatically
highlights it as an ayurvedic medicine. The rapper also clearly
indicates that the cream is highly effective for cracked skins,
pimples, boils and numerous other skin blemishes. Nowhere did
they in the rapper claim it to be a cosmetic product or a product
which could enhance the complexion or fairness. The licensing
authority having granted license for the said product as an
ayurvedic drug, the manufacture, sale and distribution of the
product as a drug and not a cosmetic is established and it is being
marketed only as a drug and not as a cosmetic. Moreover, it cannot
be used as a cosmetic unless there is a license for it to be
manufactured and marketed as a cosmetic or a toiletry product.
The petitioner/assessee has by now made available all the requisite
documentary proofs with the Department for declaring the product
as a drug, particularly, in the light of the Revenue having utterly
failed to classify it as a cosmetic.
43. Though the learned Standing Counsel for the respondent/
Department contended hard to persuade this Bench to hold that
the two products i.e. the Himani Navaratan Oil and Himani Gold
Turmeric Ayurvedic Cream to be cosmetics, in the absence of any
strong material available, the findings given by STAT holding it to
be a product to be brought within the purview of Entry 36 of 1st
Schedule of the Act does not seem to be proper, legal and justified
for the grounds and reasons mentioned in the preceding
paragraphs, rather it is a case where there two products are
products which would be one under Entry 37 of the 1st Schedule of
the Act.
44. The Tax Revision Cases filed by the petitioner/assessee i.e.
Tax Revision Case Nos.193, 188 and 187 of 2004 filed by
M/s.Himani Ltd. and Tax Revision Case Nos.182, 183 and 192 of
2004 filed by M/s.Emami Ltd. deserves to be and are accordingly
allowed. Accordingly, the order of the STAT is set-aside/quashed.
45. In the result, the Tax Revision Case Nos.155, 156, 166, 169
and 211 of 2004 are rejected and the Tax Revision Case Nos.193,
188, 187, 182, 183 and 192 of 2004 stands allowed. No costs.
46. As a sequel, miscellaneous petitions pending if any, shall
stand closed.
__________________
P.SAM KOSHY, J
__________________
N.TUKARAMJI, J
Date: 14.06.2024
Note: LR Copy to be marked.
B/o.GSD
