of the Allahabad High Court Commercial Taxes Tribunal, Lucknow upheld the finding that Buro Plus Ayurvedic Cream is a ‘medicated ointment’ and not an ‘antiseptic cream’. Held that Buro Plus Ayurvedic Cream is taxable at 5% under Entry 41 Schedule II of the Uttar Pradesh Value Added Tax Act, 2008.
41 entry under the heading “Drugs and Medicines”, effective October 11, 2012, does not have Medicinal soap, shampoo, antiseptic cream, face cream, massage cream, eye gel and hair oil are included Vaccines, syringes and dressings, medicated salts, IP grade light liquid paraffin; Thieves; sugar pills for medicinal use in homeopathy; human blood components; CAPD fluid; Cyclosporine
Justice Shekhar B Saraf done that”Although antiseptic creams are excluded from entry 41, medicated ointments will be included because of the use of the word “but”. The word “but” is a clear indication that the legislature intended to include medicated ointments as an exception, although some medicated ointments may be classified as antiseptic creams. If a product is more than just an antiseptic cream and qualifies as a medicated ointment, it will be included in 41.
Case Background and Arguments
Boroplus Antiseptic Cream (BPAC) was assessed at a rate of 14% by the assessment agency classifying it as an ‘unclassified item’. The respondent, M/s Emami Ltd., filed an appeal against the order of the Assessing Authority which was dismissed. Subsequently, an appeal was filed in the Commercial Tax Tribunal where it was held that Boroplus Antiseptic Cream is a ‘medicated perfume’ and is taxable at 5% under ‘Drugs and Drugs’ in Entry 41 Schedule II. .
Challenging the court’s order, the department argued that for a long time BPAC was recognized as a cosmetic and assessed accordingly. However, the court has already held it as a medicine. It is stated that since antiseptic cream has been excluded from the entry of drugs and medicines in entry 41 of the second table from 11 to 11.of the As of October 2012, BPAC is taxable as a non-classified item.
It was argued that even if the respondent-assessee tries to assess the product as a medicated ointment, it declares it as BPAC.India’s number one antiseptic cream” The counsel for the department argued that BPAC was available without a prescription whereas a doctor’s prescription was required for the medicinal ointment. Accordingly, it was argued that BPAC is an antiseptic cream that is an “unclassified substance”. is taxed at 14%.
Counsel for the respondent- M/s Emami Ltd argued that BPAC is an Ayurvedic medicinal ointment under the drug license issued by the Drug Licensing Authority under the provisions of the Drugs and Cosmetics Act, 1940 and the Drugs Rules, 1945. That change of entry in 11of the October 2012 did not include antiseptic cream but did include a medicated ointment called BPAC.
High Court decision
The court ruled that Entry 41 classifies products based on their medicinal properties and uses, and provides tax benefits on products with medicinal properties. This word is coined
“But” in the entry is used intentionally to include items that were not previously part of the entry.
“But”, in entry 41, parallels terms such as “expect”, “however”, and “although”, which indicate an exception to the list of exclusions preceding the same.“
The court held that the court properly upheld BPAC’s classification as a “medicated ointment” because the legislature specifically chose to include “medicated ointment” in entry 41. It was considered to include medicated soaps, shampoos, face creams and massage creams. All cosmetic products under entry 41 clearly show the exclusion of antiseptic creams from entry 41.
The court observed that although BPAC was labeled as an antiseptic cream by the court’s technical advisor, a closer look at the ingredients of BPAC revealed that it had more properties than just an antiseptic cream and more with medicinal properties. closely related. Ointment
“BPAC’s ability to soothe, heal, and protect the skin from various ailments indicates that its composition is not just for antiseptic purposes. By providing hydration, reducing inflammation, and promoting healing, BPAC works like a medicinal salt to deal with chronic skin issues and overall skin health.“
The court held that the assessee has clearly shown before the court that BPAC is a medicated ointment and comes under entry 41 for taxation. This is while the responsibility for rejecting the asset claim rested with the state that failed to pay. It was shown that the department has not produced any material contrary to that produced by the examiner to show that BPAC is an ‘antiseptic cream’ and entry 41 has been excluded.
The Court ruled that when the Department seeks reclassification of goods, it must show specific evidence, including expert opinions, industry standards, etc., to justify the reclassification. This being so, in the absence of any evidence by the State, the reclassification was bad in law.
Noting that the Court is the final fact-finding authority and there is limited scope for interference by the High Court in a revisional judgment, Justice Saraf upheld the order of the Court that Buro Plus Antiseptic Cream Medicinal Ointment Classifies as 41 under second schedule. Uttar Pradesh Value Added Tax Act, 2008.
Case Title: Commissioner, Commercial Taxes V. M/S Emami Limited 2024 LiveLaw (AB) 523 [SALES/TRADE TAX REVISION No. – 274 of 2018]
Quote: 2024 LiveLaw (AB) 523
Advice for review: Manish Goyal, Additional Solicitor General assisted by Bipin Kumar Pandey
Counsel for the assessee: SK Bagaria, assisted by senior counsel Kumar Ajit Singh and Rahul Aggarwal
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