C.T.O. vs Dej Medical Stores Ltd.

Alok Sharma, J.—A challenge in this sales tax revision petition has been made by the Commercial Taxes Department, Govt. of Rajasthan (hereinafter the Department) to the judgment dated 20.02.2001, passed by the Rajasthan Tax Board, Ajmer allowing the respondent-assessee''s second appeal (hereinafter ''the assessee) and holding that Keo Karpin Baby Oil was classifiable as a medicine and not as a cosmetic at the time relevant to the assessment year under the Rajasthan Sales Tax Act, 1994 and therefore exigible to tax @ 6% ad valorem relevant to the medicines as against the higher rate of 12% ad valorem for cosmetics as claimed by the Department.

The facts of the case are that the assessee in the course of sale of Keo Karpin Baby Oil in the State of Rajasthan at the relevant time (Assessment Year 1991-92) paid @ 6% tax classifying it to be a medicine/drug. The Department contrarily claimed that Keo Karpin Baby Oil was not a medicine/drug exigible to sales tax @ 6%, but instead a cosmetic on which tax was leviable @ 12% ad valorem. And hence aside of differential of 6% on the tax payable, the assessee was also liable to interest on the tax short-paid. An order dated 06.01.1995 to this effect was passed by the assessing authority. The assessee preferred an appeal there-against. But vide order dated 30.10.1996 the appellate authority confirmed the assessee''s liability towards differential tax and interest thereon.

The assessee thereupon invoked its statutory right to a second appeal before the Tax Board, Ajmer. Relying upon an earlier judgment by the then extant Rajasthan Tax Tribunal, the Tax Board held that Keo Karpin Baby Oil was a medicine/drug and therefore exigible to tax @ 6% ad valorem. The orders of the assessing authority as also the appellate authority holding to the contrary were set aside. The Department is consequentially in revision u/s 86 of the Act of 1994 before this Court against the order dated 20.02.2001, passed by the Rajasthan Tax Board, Ajmer.

Mr. Babu Singh, OIC appearing for the Department in the absence of the Department''s Advocate owing to the Advocates'' strike, has submitted that the user of Keo Karpin Baby Oil was for the purpose of massaging and maintenance of a smooth and healthy skin and hence the product was wrongly classified as a medicine/drug, but in the facts had to be perforce on its user and common parlance test considered as a cosmetic. It was submitted that consequently the sale of Keo Karpin Baby Oil was liable to be subjected to tax @ 12% ad valorem as a cosmetic and not @ 6% ad valorem as applicable to medicine/drug. It has been submitted that there was no material before the Tax Board to upset the findings of fact that had been arrived at by the assessing authority and confirmed by the appellate authority with regard to the classification of Keo Karpin Baby Oil as a cosmetic.

Heard. Perused the judgment dated 20.02.2001, passed by the Tax Board as also the orders passed by the assessing authority and the appellate authority. Considered.

The State Government in the exercise of its powers u/s 5 of the Act of 1954 vide notification serial No. 798: F.4(37)FDGr. IV/90-15 dated 27.06.1990 (relevant to the assessment year 1991-92 in issue) had classified the goods sold in the State of Rajasthan for the purpose of levy of sales tax. Entry 55 of the notification aforesaid as also entry 70 and 71 thereof are relevant to the dispute in this revision petition. They read as under :

Medicines, Drugs and all kinds of pharmaceutical preparations excluding goods mentioned at item No. 71.

Perfumery (excluding Agarbattis, Dhoop and Loban), Cosmetics, Shampoos, Tooth Paste and Tooth Powder (Manjan) including ''Lip Pink'', Comb, Brushes, all types of Hair oil including refined or filtered coconut oil, Razor and other shaving articles but excluding Razor blades.

All types of facial creams including anti-septic creams whether Ayurvedic, Allopathic, Homoeopathic or Unani such as Boroline, Boroplus, Boroquine, Keo Karpin, Fair and Lovely, Prokin, Naturally fair, Curotine, Himami''s cold Turmeric Ayurvedi Cream, Cleartone, Hand and baby lotions, Electrically operated anti-mosquito devices and tablets used therein, Room fresheners including those operated electrically or with manual sprayers.

The Department''s case was confined to Keo Karpin Baby Oil being a cosmetic and did not proceed on it being a face cream under Entry No. 71--which it evidently is not. The consideration is therefore confined to the question of Keo Karpin Baby Oil being classifiable as a medicine or a cosmetic.

The Hon''ble Apex Court in the case of Ponds India Ltd. (Merged with H.L. Ltd.) Vs. Commissioner of Trade Tax, Lucknow, has held that the meaning of a drug under the Drugs and Cosmetics Act, 1940 (hereinafter ''the Act of 1940'') is very wide. It includes therapeutic and prophylactic products even with not very significant quantities of medicine which however define the character of the product.

The Hon''ble Supreme Court in the case of Ranbaxy Lab. Ltd. Vs. Municipal Council, Ropar, has reiterated that the burden to prove that a certain items is exigible to tax and falls under a given taxable entry is always on the revenue. In the aforesaid context, a perusal of the order dated 06.01.1995, passed by the assessing authority as also the confirming appellate order dated 30.10.1996 on the question of classification of the product in issue (Keo Karpin Baby Oil) indicates that the burden on the revenue department to bring it within the entry No. 70 relating to cosmetic as notified u/s 5 of the extant Rajasthan Sales Act, 1954 (hereinafter ''the Act of 1954'') was not at all discharged. No evidence of any sort with regard to the ingredients of the product sold or other aspects relating to its label and literature were even adverted to, what of considered by the assessing authority. The assessing authority merely seems to have proceeded on its own ipse dixit. That was mechanically dittoed by the appellate authority in its order dated 30.10.1996. The learned Tax Board has in its order dated 20.02.2001 relied on an early judgment of its superior authority i.e. the then extant Rajasthan Tax Tribunal in holding that Keo Karpin Baby Oil was a medicine/drug and not a cosmetic and thus liable to be taxed accordingly @ 6% ad valorem. Aside of the aforesaid a Division Bench of this Court in the case of State of Rajasthan and Another Vs. Deys Medical Stores Ltd. and Another, has held that the chemical composition of Keo Karpin Baby Oil which includes medicine (Isopropyl Myristate etc.) established the fact that it was a drug within the meaning of the terms under the Act of 1940. Further the product in issue was manufactured under a licence issued under the Act of 1940 and had prophylactic qualities, protecting children from rickets and checking Vitamin A & E deficiency in them, entitling it to be classified as a medicine/drug. In coming to its conclusion, the Hon''ble Division Bench applied the tests laid down by the Hon''ble Apex Court for determining whether a product sold was a drug/medicine or a cosmetic as enunciated in the case of B.P.L. Pharmaceuticals Ltd. Vs. Collector of Central Excise, Vadodara, and also followed in the cases of Commissioner of Central Excise, Calcutta-IV Vs. Pandit D.P. Sharma, - The Commissioner of Central Excise, Allahabad Vs. Himtaj Ayurvedic Udyog Kendra, -Himtaj Oil and Meqhdoot Gramodyoq Sewa Sansthan, U.P. Vs. Commissioner of Central Excise, Lucknow [ (2005) 4 SCC 15]--Bhringraj Oil. This Court is, aside of the other aspects on the merits of the assessee''s case as delineated hereinabove, also bound by the judgment of the Hon''ble Division Bench.

In Bharat Sanchar Nigam Ltd. and Another Vs. Union of India (UOI) and Others, the Hon''ble Supreme Court has held as under :

The decisions cited have uniformly held that res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar Courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The Courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction.

In the facts obtaining, I find no force in the challenge to the impugned order dated 20.02.2001, passed by the Tax Board. This revision petition seeks to re-agitate a question of law authoritatively settled. It is without force.

Dismissed.