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TMI Blog2014 (5) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... Case (Revision) Petition No.742 of 2006 was admitted by this Court on 17.9.2008 in respect of the assessment year 1994-95. As the substantial question of law is one and the same in respect of the assessment year 1993-94 as well, Tax Case (Revision) Petition No.301 of 2011 is also admitted on the very same substantial question of law and both the tax case revision petitions are disposed of by this common order. 2. The facts leading to the present tax case revision petitions are as follows. The respondent-assessee, Tvl.Glaxo India Limited reported total and taxable turnover of Rs.50,70,46,825/- and Rs.49,43,99,273/- for the assessment year 1994-95 and Rs.60,77,23,119/- and Rs.58,06,30,473/- for the assessment year 1993-94 for their sale of different products including the first sale of Nycil prickly heat powder respectively. The returns were processed and the assessing authority determined the total and taxable turnover at Rs.50,05,45,701/- and Rs.49,59,52,046/- and Rs.58,56,47,556/- and Rs.57,99,15,841/- respectively for the above assessment years in respect of the different products and levied tax at the rate of 16 per cent under Entry 1(iii) of Part F of the First Schedule to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athic, siddha and unani preparations. (iii) Medicinal mixtures or compounds, the components of which have not already suffered tax. (iv) Surgical dressing which expression shall include adhesive plasters, adhesive plaster dressing, gypsona plaster of paris and bandages, velroc pop bandages, elastro crape bandages, gauze, wadding gauze, lint and cotton wool poultices and similar articles impregnated or coated with pharmaceutical substances put up in forms or packings for surgical purposes which have been sterilised and conform to the accepted standards of the medical profession. (v) Pharmaceutical and surgical products of plastic and rubber including gloves, aprons and caps. Entry 1(iii) of Part-F of First Schedule reads as follows: "Entry 1(iii) of Part-F of First Schedule 1. (iii) Lipsticks, lipsalve, nail polishers, nail varnishes, nail brushes, beauty boxes, face powders, toilet powders, baby powders, talcum powders, powder compacts, powder pads and puffs, toilet sets made of all materials (with or without contents), toilet sponges, scent spray, depilatories, blemish removers, eye liners all sorts, eye shadow, eye brow pencils, eye-lash brushes, eaudecologne, solid cologne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving a pleasant smell, put on the skin to make it feel smooth or to help it stay dry." Talcum powder is mostly used as cosmetic. Collins Concise Dictionary 21stCentury Edition defines "cosmetic" as "any preparation applied to the body, esp. the face, with the intention of beautifying it." Talcum powder is used as a product serving or designed to beautify the body, esp. the face. When it is applied, it has no other function than to beautify the body. Cambridge Advanced Learner's Dictionary & Thesaurus defines "cosmetic" as "cosmetics are substances such as lipstick or powder, which people put on their face to make themselves look more attractive." The dictionary also explains that "if you describe measures or changes as cosmetic, you mean they improve the appearance of a situation or thing but do not change its basic nature, and you are usually implying that they are inadequate." The Free Online Dictionary, Thesaurus defines "cosmetic" as "a toiletry designed to beautify the body." Cosmetics are applied "serving an esthetic rather than a useful purpose." (or) "serving an aesthetic purpose in beautifying the body." 6. Per contra, Collins Concise Dictionary 21st Century Edition defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c for long. 8. Prickly heat powder: The composition of nycil prickly heat powder is as follows: Chlorphenesin IP 1% Zinc Oxide IP 16% Starch IP 51% Talc Purified IP to 100% The utility of the above ingredients in the talcum powder is as follows: "(i) Chlorphensin is anti-bacterial antifungal. This is active against various species responsible for causing "Athlete's Foot" and irritation and other bacteria. Although this content is only 1%, it is most potent and effective medicinal ingredient. (ii) Zinc Oxide is used for checking perspiration. (iii) Starch helps to absorb excessive perspiration which is responsible not only for 'prickly heat' but also for offensive body odour due to action of bacteria on sweat. (iv) Talc is used as it is useful for allaying irritation and for prevention of chafing." 9. After considering the definitions of "cosmetic", "drug", "medicine", "talcum powder" and also the relevant Entries in the Tamil Nadu General Sales Tax Act, we have to decide as to whether talcum powder includes prickly heat powder or otherwise what is the rate at which the prickly heat powder should be taxed? 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegory of medicine. On the contrary, the products under Entry I(iii) of Part 'F' of First Schedule includes, among other products, the talcum powder as well. 12. In the above background, the nycil prickly heat powder, which is used only to absorb sweat and moisture from the body and to keep away rashes in the human beings, cannot be considered to be either a "drug" or "medicine" and it would be only a "talcum powder". However, in view of the composition, the nycil prickly heat powder is nothing but a medicinal preparation used for the purpose for which the talcum powder is used. 13. Coming to the submission of the learned Special Government Pleader, we should consider the nature, scope and interpretation of the explanation to the Entry I(iii) of Part 'F' of First Schedule to the Tamil Nadu General Sales Tax Act. The Apex Court considered the object of the explanation to proviso to Section 10(2) of the Tamil Nadu Rent Control Act in the judgment in S.Sundaram Pillai and others v. V.R.Pattabiraman and others, (1985) 1 SCC 591 and held in paragraph 53 as follows: "53. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67 SC 389 at page 393 and M/s Oblum Electrical Industries Pvt.Ltd., Hyderabad v. Collector of Customs, Bombay, AIR 1997 SC 3467 at page 3471)." 15. In the present case, there is no dispute that the nycil prickly heat powder is manufactured on the basis of a drug licence issued under the provisions of the Drugs and Cosmetics Act. The price of the product is also regulated, approved and the product is stored under the drug licence. It is very pertinent to note that a similar product manufactured by another assessee, which also claimed that the nycil prickly heat powder is a drug or medicine under the relevant Entries to the Kerala General Sales Tax Act, was considered by the Kerala High Court in the judgment in Heinz India Ltd. v. State of Kerala, (2009) 19 VST 193 (Ker). Entry 79 and Entry 127 of the First Schedule to the Kerala General Sales Tax Act read as follows: "Entry 79: Medicines and drugs including allopathic, ayurvedic, homeopathic, sidha and unani preparations and glucose I.P." Entry 127: Shampoo, talcum powder including medicated talcum powder, sandalwood oil, ramacham oil, cinnamon oil, other perfumeries and cosmetics not falling under any other entry in this Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sease. The inclusion of this medicine in the composition makes all the difference. It is this addition of medicine which changes its basic character. Therefore, the product in question is not merely talcum powder in view of the presence of chlorphenesin, though in a small quantity, though the base was purified talc. 41. All this discussion would lead us to draw a distinction whether Nycil powder is merely talcum powder which is normally used for the purpose of smoothening and giving a fair look to the skin or whether it has the qualities of preventive or curative effect for ailment of skin. We would definitely say that "Nycil powder" is not an ordinary talcum powder as understood in common or commercial parlance, but has a medicinal value and is used for treatment of prickly heat and other skin ailments. But then, under which entry should we classify the commodity in question? In our view, if not for the inclusive definition under entry 127 of the First Schedule to the KGST Act, we would not have had any hesitation in classifying the commodity in question as a medicine. In our view, the Legislature consciously immediately after the expression "talcum powder" by employing the expre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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