TMI Blog2008 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Manoj Dwivedi, Advocates with them, for the Respondent. JUDGMENT [Judgment per S. B. Sinha, J.] -1. Leave granted. 2. Whether petroleum jelly is a `drug' or a `cosmetic' within the meaning of the provisions of U.P. Trade Tax Act, 1948 is the question involved herein. The factual matrix of the matter is undisputed. The Legislature of the State of U.P. enacted U.P. Sales Tax Act, 1948. Entry 26(a) as inserted in the Schedule appended thereto by notification No.ST-II-1233/X - 10(1)-1974 dated 14.04.1974 includes petroleum jelly for the purpose of levy of sales tax. It was however, substituted by notification dated 7.9.1981. We would deal with effect thereof on the issue involved herein a little later. 3. We may at the outset notice the provisions of the Drugs and Cosmetics Act, 1940 (for short, "the Act"). Section 39(aaa) defines "cosmetic" as:- "Section 3(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be prescribed. In case the standards of identity, purity and strength for drugs are not specified in the edition of the Indian Pharmacopoeia for the time being in force but are specified in the edition of the Indian Pharmacopoeia immediately preceding the standards of identity, purity and strength shall be those occurring in such immediately preceding edition of the Indian Pharmacopoeia and such other standards as may be prescribed. (b)Drugs not included in the Indian Pharmacopoeia but which are included in the official Pharmacopoeia of any other country. Standards of identity, purity and strength specified for drugs in the edition of such official Pharmacopoeia of any other country for the time being in force and such other standards as may be prescribed. In case the standards of identity, purity and strength for drugs are not specified in the edition of such official Pharmacopoeia for the time being in force, but are specified in the edition immediately preceding the standards of identity, purity and strength shall be those occurring in such immediately preceding edition of such official Pharmacopoeia and such other standards as may be pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r re-opening of the assessment for the years 1986-1987 to 1988-1989 which was denied, despite its attention having been drawn to a decision of the learned Single Judge of the Allahabad High Court in M/s. Balaji Agency, Gorakhpur Vs. CST [1994 UPTC-184], stating; "Therefore, in the above circumstances since against all the above three years judgments have been passed in the Appeals. Therefore, after the aforesaid judgment, the tax assessing officer has no jurisdiction to make amendment in the tax assessment order and in such cases only the appellate authority, who has passed the last judgment has jurisdiction to make amendments. In the light of aforesaid facts in all the above three years the action taken by the Tax Assessing Officer under Section-22 is not just and proper in the eye of law cannot be supported. Therefore, orders passed under Section 22 in all the above three years are set aside." The said judgment of the Tribunal has been affirmed by the Allahabad High Court. However, relying on Balaji (supra), the authorities changed the basis of the assessment from the assessment year 1989-90 onwards without producing any new material or proof to establish that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, the Tribunal and the High Court committed an error in relying thereupon despite the amendment made by reason of the notification dated 7.9.1981. 14. Mr. Dinesh Dwivedi, learned senior counsel appearing on behalf of the respondent, on the other hand, would contend: (i) As Entry 5 contains an elusive definition, it cannot be said to have a fixed meaning but an extended meaning. (ii) The product being applied for care of skin, it comes within the purview of the definition of "cosmetics" and not within the definition of "medicine". (iii) Entry 5, as inserted in 1981 would clearly show that all drugs and cosmetics would come within the purview thereof except those which are specifically excluded, and in that view of the matter, Vaseline manufactured by the appellant in a cosmetic. (iv) Vaseline having no curative value and merely being used for taking care of one's skin, it cannot be a drug within then meaning of the provisions of the U.P. Trade Tax Act. 15. Indisputably, a license has been granted to the appellant under the provisions of the Act. A drug as defined in Section 3(b) thereof would not only include a medicine which is used for external use of human bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite to say that when in the definition clause given in any statute the word "means" is used, what follows is intended to speak exhaustively. When the word "means" is used in the definition, to borrow the words of Lord Esher, M.R. in Gough v. Gough it is a "hard-and-fast" definition and no meaning other than that which is put in the definition can be assigned to the same. (Also see P. Kasilingam v. P.S.G. College of Technology.) On the other hand, when the word "includes" is used in the definition, the legislature does not intend to restrict the definition: it makes the definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which in its ordinary meaning may or may not comprise. Therefore, the use of the word "means" followed by the word "includes" in Section 2( bb ) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover only those banking companies which fall within the purview of the definition and no other." Yet again in Commercial Taxation Officer, Udaipur Vs. Rajasthan Taxchem Ltd. [(2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions occurring in the well known treatise of Justice G. P. Singh titled "Principles of Statutory Interpretation": "...But the word 'include' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions used. It may be equivalent to 'mean and include' and in that case it may afford an exhaustive explanation of the meaning which for the purposes of the Act must invariably be attached to those words or expressions". Thus, the word include may in certain contexts be a word of limitation." There cannot be any dispute with regard to the bare principles of law stated therein. Each question posed in each case has to be determined having regard to the purport and object for which the same had been enacted. 18. Reference to Carter v. Bradbeer [(1975) 3 All ER 158], has been made in the aforementioned treatise. The House of Lords was dealing therein with a case where one word "bar" had more than one meaning and in that context, it was opined: "It may well be that the contention advanced on behalf of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81. While doing so, it is necessary to consider that with a view to attract the applicability thereof, it must not only be a kind of cosmetic but also be the one which is used for the care of the face, skin, nails, eyes or brows. What would be the effect of such a provision came up for consideration before this Court in Ramavatar Budhaiprasad Etc. Vs. Assistant Sales Tax Officer, Akola [1962 1 SCR 279], wherein it was held; "Thus under the Act all articles mentioned in the Schedule were exempt from Sales Tax and articles not so specified were taxable. In the Schedule applicable there were originally two items which are relevant for the purposes of the case. They were items Nos. 6 and 36. Item 6 Vegetables - Except when sold in sealed containers. Item 36 Betel leaves. The Schedule was amended by the C.P. Berar Sales Tax Amendment Act (Act XVI of 1948) by which item No. 36 was omitted. It is contended that in spite of this omission they were exempt from Sales Tax as they are vegetables. The intention of the legislature in regard to what is "vegetables" is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with carbon numbers mainly higher than 25), originally promoted as a topical ointment for its healing properties. Its folkloric medicinal value as a "cure-all" has since been limited by better scientific understanding of appropriate and inappropriate uses (see Uses below). However, it is recognized by the U.S. Food and Drug Administration (FDA) as an approved over-the-counter (OTC) skin protectant and remains widely used in cosmetic skin care. It is commonly referred to as Vaseline as a genericized trademark." 24. Contention of Mr. Dwivedi is that it is merely a skin protectant and remains widely used in cosmetic skin care and thus it does not have any curative value. Wikipedia, like all other external aids to construction, like dictionaries etc, is not an authentic source, although the same may be looked at for the purpose of gathering information. Where an express statutory definition of a word exists, a Wiki definition cannot be preferred. It cannot normally be used for the purpose of interpreting a taxing statute or classification of a product vis-a-vis an entry in statute. However, as a source of authority, Wikipedia is frequently cited by judges around the world. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drug. If the submission of Mr. Dwivedi is taken to its logical conclusion, even a Plaster of Paris or other ingredients used for setting a fractured right bone may not be treated to be coming within the purview of the definition of "drug". 26. This Court in Chamanlal Jajjivandas Sheth Vs. State of Maharashtra [(1963) Supp. 1 SCR 344], opined that even absorbent, cotton wool, roller bandages and gauze would be drugs within the meaning of the provisions of the Act, stating : ".....The expression "substances", therefore, must be something other than medicines but which are used for treatment. The part of the definition which is material for the present case is "substances intended to be used for or in the treatment". The appropriate meaning of the expression "substances" in the section is "things". It cannot be disputed, and indeed it is not disputed, that absorbent cotton wool, roller bandages and gauze are "substances" within the meaning of the said expression. If so, the next question is whether they are used for or in "treatment". The said articles are sterilized or otherwise treated to make them disinfectant and then used for surgical dressing; they are essential mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, therefore, in our opinion, cannot be held to be of any assistance for determining the issue involved herein. For the purpose of finding out the definition of `drug', within the meaning of the Sales Tax Act, this reference to the statutory meaning contained in the Act would be permissible. However, if the definition contained therein does not fit in with the object and purport for which an entry had been introduced under the local Sales Tax Act, the matter would be different. It has not been suggested nor could it be that even the ordinary meaning of `medicine' cannot be read into the taxing statute while interpreting an Entry made therein. It is interesting to note that in Leukoplast (supra), this Court itself observed; "12. Lord Reid pointed out that in the Purchase Tax Act, "medicine" had not been defined. So it had to be understood as an ordinary word of English language. Lord Reid observed: "As with so many English nouns there is no clear limit to the denotation of the word medicine. All the circumstances must be considered and there may be cases where it is extremely difficult to decide whether or not the term medicine is properly applicable. But here I th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a toiletary preparation. No evidence on record therein was produced to prove that common man who uses 'dant manjan' daily to clean his teeth consider it as a medicine and not as a toilet requisite. It does not have a limited use for a limited time. The said decision, in our opinion having regard to the entry contained in the Schedule "K" appended to the Drugs and Cosmetics Rules cannot be said to have any application in the instant case. The product, in question, however, is treated to be a "drug". For its production, a license is required. Further, it finds place in Indian Pharmacopeia; and it does not contain any perfume. A cosmetic ordinarily would contain some perfume. 31. Reliance has also been placed by Mr. Dwivedi on Alpine Industries Vs. Collector of Central Excise, New Delhi [(2003) 3 SCC 111], wherein this Court was considering a product known as "Lip Salve". It was principally to be used by the soldiers stationed at a high altitude. It was, however, found to be used as protection from dry, cold weather or sun rays. It was noticed that it is neither prescribed by any doctor nor obtained from the chemist or pharmaceutical shops in the market. This Court, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case, this Court was dealing with "after shave lotion" which has been considered as a cosmetic and toilet preparation by the Excise Commissioner who was an expert in the field. It is in that view of the matter, the decision of the Excise Commissioner was not interfered with. Answer to the questions posed therein, therefore, must be found having regard to the facts and circumstances of the cases noticed supra. 34. In the context of Ayurvedic Products, vis-a-vis their medicinal value came up for consideration in Puma Ayurvedic Herbal (P) Ltd. Vs. Commissioner, Central Excise, Nagpur [(2006) 3 SCC 266], wherein it was stated: "20. It will be seen from the above definition of "cosmetic" that the cosmetic products are meant to improve appearance of a person, that is, they enhance beauty, whereas a medicinal product or a medicament is meant to treat some medical condition. It may happen that while treating a particular medical problem, after the problem is cured, the appearance of the person concerned may improve. What is to be seen is the primary use of the product. To illustrate, a particular Ayurvedic product may be used for treating baldness. Baldness is a medical p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture itself, the same meaning may be attributed even in the changed situation. Entry 5 relates to "cosmetics" and "toilet preparation". If the common parlance test is to be applied, vaseline must come within the purview of cosmetic or toilet preparation. With a view to satisfy the requirements of the said definition, it must be held to be used for beautification or care of the skin in the normal circumstances. If the product, in question does not satisfy the aforementioned twin tests, it is difficult to presume any legislative intention in this behalf despite the fact that Vaseline had been deleted from the entry relating to cosmetic and toilet preparation. This Court in The Commissioner of Sales Tax, Madhya Pradesh, Indore Vs. M/s. Jaswant Singh Charan Singh [AIR 1967 SC 1454], clearly held; "....There were two items in the Schedule, namely, item 6, "vegetables", and item 36, "betel leaves", and subsequently item No. 36 was deleted by an amendment of the Act. This Court held that the use of two distinct and different items, i.e., "vegetables' and "betel leaves" and the subsequent removal of betel leaves from the Schedule were indicative of the Legislature's inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter with which the statute is dealing, would attribute to it. See CIT v. Taj Mahal Hotel . This Court observed in Indo International Industries v. CST that in interpreting items in statutes like the Excise Act or Sales Tax Acts, whose primary object was to raise revenue and for which purpose to classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. 9. Justice Cameron of the Canadian Exchequer Court in King v. Planter's Co. and the decision of the United States Supreme Court in " Two Hundred Chests of Tea " emphasised that commercial understanding in respect of the tariff items should be preferred. It was observed that the legislature does not suppose our merchants to be naturalists or geologists, or botanists." {See also Shri Bharuch Coconut Trading Co. and Others Vs. Municipal Corporation of the City of Ahmedabad and Others [1992 Supp. (1) SCC 298]. } 42. The assessee had filed a large number of affidavits. The deponents of the said affidavits have not been cross-ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantamount to the evidence that the party before it has failed to lead. Other than supposition, there is no material on record that suggests that a small-scale or medium-scale manufacturer of brake linings and clutch facings "would be interested in buying" the said rings or that they are marketable at all. As to the brittleness of the said rings, it was for the Revenue to demonstrate that the appellants' averment in this behalf was incorrect and not for the Tribunal to assess their brittleness for itself. Articles in question in an appeal are shown to the Tribunal to enable the Tribunal to comprehend what it is that it is dealing with. It is not an invitation to the Tribunal to give its opinion thereon, brushing aside the evidence before it. The technical knowledge of members of the Tribunal makes for better appreciation of the record, but not its substitution." Yet again in Union of India and Others Vs. Garware Nylons Ltd. and Others [(1996) 10 SCC 413], this Court opined : "...The burden of proof is on the taxing authorities to show that the particular case or item in question is taxable in the manner claimed by them. Mere assertion in that regard is of no avail..." 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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