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2012 (2) TMI 465 - HC - VAT and Sales Tax
Itch Guard Cream and Dermicool powder - classification - Held that - The learned counsel for the State has conceded that the item Itch Guard Cream is used only for treatment of certain medical conditions and cannot be used otherwise merely for cosmetic purposes and therefore this item would fall within the entry 11 of Part IV of Schedule II. Dermicool powder which is described as a prickly heat powder is also commonly understood to be of use in treating prickly problem and not as an ordinary talcum powder. We are of the opinion that the item Dermicool powder must be held to be a medicine taxable under entry 11 and not a medicinal preparation of a cosmetic within the meaning of those words as used in entry 41 or 49 quoted above.
Issues:
Interpretation of tax entries under the Madhya Pradesh Commercial Tax Act, 1994 for specific items manufactured by petitioners.
Analysis:
The judgment focuses on the interpretation of tax entries under the Madhya Pradesh Commercial Tax Act, 1994 for specific items manufactured by the petitioners. The key contention revolves around whether the items fall under entry 41 or 49 of Part III of Schedule II, attracting a 12% tax rate, or under entry 11 of Part IV, attracting an 8% tax rate. The items in question are Boro Natural, Borosoft Cream, Borosoft Lotion, Dermicool Powder, and Itch Guard Cream.
The court deliberates on the classification of these items based on their usage and characteristics. The petitioner argues that items like Boro Natural and Borosoft Cream can be used for medical conditions as well as for cosmetic purposes, thus falling under entry 41. Conversely, the state contends that Itch Guard Cream, used solely for medical purposes, should be classified under entry 11.
The court examines the nature of Dermicool Powder, described as a prickly heat powder, which could also be used as a substitute for talcum powder. The court emphasizes the distinction between items primarily used for medical purposes and those commonly understood as cosmetics. Referring to legal precedents, the court establishes that items like Dermicool Powder, intended for treating specific conditions, should be classified as medicines under entry 11.
Consequently, the court modifies the assessment orders for Dermicool Powder and Itch Guard Cream, directing the assessing officer to make necessary adjustments. The judgment underscores the importance of differentiating between cosmetic and medicinal products based on their intended use and common understanding in determining the applicable tax rates under the Commercial Tax Act.
In conclusion, the judgment provides a detailed analysis of the classification criteria for taxable items under the Madhya Pradesh Commercial Tax Act, emphasizing the significance of usage and common perception in determining the appropriate tax entry for specific products.