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2014 (9) TMI 299 - HC - VAT and Sales TaxDuty exemption - Rate of duty - 12.5% or 4% - Classification of Harpic and lizol under the residual items under entry No. 1 of the Fifth Schedule of the Assam Value Added Tax Act, 2003 or under specific entries provided under Schedule to the said Act - Held that:- The compositions of the products show that these are meant to be disinfectants, to kill germs and bacteria, which has not been seriously contested. The expert opinions by way of certificates from various individuals, organisation, relied upon by the petitioner have not been refuted or contradicted by the respondents. Whether, "Harpic" and "Lizol" if treated as disinfectants, can be considered as "pesticides" for the purpose of entry 19 of the Second Schedule to the Assam VAT Act - Held that:- If the word "pests" is to be given a restrictive meaning by limiting to the dictionary meaning as had been done by the Revenue in the impugned order, disinfectants which primarily kills germs and bacteria cannot be considered "pesticides". However, by giving a broader meaning to the word "pest", by including bacteria and germs within the meaning of "pests", Harpic and Lizol which are disinfectants would be clearly covered by the item "pesticide", in which event, the petitioner would be liable to be assessed only at the rate of four per cent. "Harpic" and "Lizol" which are disinfectants being "pesticides", in terms of the decision of the honourable Supreme Court in Bombay Chemical Private Limited [1995 (4) TMI 59 - SUPREME COURT OF INDIA] would be covered by entry No. 19 of Part A of the Second Schedule to the Assam VAT Act and chargeable at four per cent. Whether Dettol is an item of medicament to be treated as a drug and medicine as contended by the petitioner or is to be treated as "cosmetic" or "toilet preparation" because of its general attributes and would stand excluded from entry No. 21 of the Fourth Schedule in terms of the Explanation to it - Held that:- Revenue does not seem to controvert or deny the use of Dettol for first aid, nappy wash, shaving, uses in personal hygiene, surgical, medical, midwifery and the like. It cannot be denied that use of Dettol for the purposes mentioned above primarily to prevent infections, which is also admitted by the respondents, is only because of its prophylactic properties. The main purpose for the use of Dettol is to prevent infections which may occur due to minor cuts, injuries, abrasions, grazes, insect bites, etc. Thus, by applying the "users test", it would squarely fall under the definition of "drug" as defined under section 3(b) of the Drugs and Cosmetics Act, 1940 as well as under the definition of section of the Medicinal and Toilet Preparations (Excise Duty) Act, 1955. Dettol is definitely not used for beautifying, promoting attractiveness, or altering the appearance. It is not used for cleansing as a substitute for soap or detergent. Though it is used for cleansing, the purpose is to prevent infection and for sanitisation because of its therapeutic and prophylactic properties. Therefore, Dettol cannot be considered to be a cosmetic substance. Further, from the users point of view, it cannot also be considered a toilet preparation in terms of the definition given in the Medicinal and Toilet Preparations (Excise Duty) Act, 1955. Though it may be kept in the toilet, it is not used on human body to improve or alter the complexion, skin, hair or teeth. It is also not used as deodorant or perfume. Of course, it is also used for cleansing purpose, but only because of its prophylactic qualities, i.e., to cleanse any wound, or minor injuries or cuts, etc. It has been also noted that Dettol is manufactured and sold by the petitioner under a licence issued under the Drugs and Cosmetics Act, 1940 and the Drug Price Control Order applies to Dettol also. These are facts which had been pleaded by the petitioner before respondent No. 3, but there is neither any reference to the same in the impugned order nor was it contested by the authorities. These facts are also clearly indicative of the fact that "Dettol" is a drug and not a cosmetic item. Maintenance of hygiene is possible only when such substance is used to prevent illness or disease. Therefore, if Dettol is used for maintaining hygiene, it cannot be said that it does not have prophylactic qualities and its medicinal value cannot be ignored. Therefore, it is difficult to hold the view that Dettol is not a medicament. Products Harpic and Lizol having been declared to be pesticides as discussed above, would be liable to tax under entry No. 19 of Part A of the Second Schedule to the Assam VAT Act and Dettol would be liable to be assessed as an item under entry 21 of the Fourth Schedule to the Assam VAT Act and will not fall within the excluded category under the Explanation. - Decided in favour of assessee.
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