TMI Blog2014 (6) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts have been specifically formulated with a pleasant fresh taste and low abrasive formula for cleaning the teeth and leaving the mouth tingling fresh. Even the said products are marketed as “No.1 toothpaste for sensitive teeth”. To our mind therefore, it is clear that though the said products of the Applicant are “medicines”, that would fall under Schedule Entry C-I-24, the same would be excluded from the said Entry by virtue of the exclusion clause therein viz. “Products capable of being used as toothpaste, tooth powders, cosmetics, toilet articles and soaps”. Even applying the common parlance test, we have no hesitation in holding that though the said products of the Applicant fall within the “medicines” Schedule Entry C-I-24, they are products capable of being used as a toothpaste and would therefore be excluded from the said Entry. Even if one were to apply the common parlance test to the said products of the Applicant, they would be “products capable of being used as toothpaste” and therefore, excluded from Schedule Entry CI- 24. In this regard, the reliance placed by Mr Sonpal, on the judgment of the Supreme Court in the case of Commissioner of Central Excise, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a tooth paste and its being covered by the exclusion in schedule entry C-I- 24 ? 2. The present dispute revolves around the interpretation of Schedule Entry C-I-24 of the BST Act, which related to medicines , and was in force from 01-05-1993 to 30-09- 1995. To understand the controversy it would be necessary to set out the necessary Entries and the amendments thereto. The Schedule Entry relating to medicines between 01-05-1993 and 30-09-1995 was C-I-24 which read as under :- 1 2 3 4 5 24(I) Drugs, being medicinal formulations or preparations and subject to the Drugs (Price Control) Order conforming to the following description - Any medical formulation or preparation ready for use internally or externally, for treatment or mitigation or prevention of diseases in human beings or animals but not including - (a) goods covered, described or specified in any other entry in this Schedule; (b) medicated goods; (c) products capable of being used as toothpaste, tooth powders, cosmetics, toilet articles and soaps. (d) mosquito repellants in any form. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MOSEAL and RA THERMOSEAL (the said products). (b) In September 1993, the Applicant, under section 52 of the BST Act, applied to the Commissioner of Sales Tax, Maharashtra State, Mumbai, seeking determination as regards the classification of the said products sold under its invoice dated 13th September 1993, and the rate at which sales tax was payable in respect of the said products. It was claimed by the Applicant that both the aforesaid products were medicines covered by the then existing Schedule Entry C-I-24 liable to tax at 4%, since the said products were specially formulated to treat mild to moderate sensitivity and severe hypersensitivity of the teeth. (c) The Commissioner however rejected the Applicant's contention, and by his order dated 8th December 1994 held that the aforesaid products of the Applicant were toothpaste covered by the then existing Schedule Entry C-II-36 liable to sales tax at 8%. According to the Commissioner, the said products were sold and used as toothpaste and therefore, stood excluded from the medicines entry by virtue of the specific exclusion appearing in Schedule Entry C-I-24. (d) Against this determination order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific exclusions that were existing in Entry CI- 24. It therefore held that in the absence of such specific exclusions, the said products under the second invoice dated 15th July, 1996 would be classified as medicines in Entry C-II-37 (after amendment) and not as toothpastes under Schedule Entry C-II-32 (after amendment). Accordingly, the MSTT allowed Appeal No.4 of 1999 filed by the Applicant and set aside the determination order dated 30th October 1998 passed by the Commissioner. (i) Being aggrieved by the dismissal of it's Appeal No.18 of 1995, the Applicant preferred Reference Application No.47 of 2001 before the MSTT and prayed that the questions of law set out earlier in this judgement, be referred to this court under section 61 of the BST Act. The MSTT allowed the Reference Application No.47 of 2001 and referred the above questions of law to this court for its decision. It is important to note that the Revenue did not prefer any Reference Application in Appeal No.4 of 1999 which was allowed in favour of the Applicant. Therefore, the Revenue has accepted the findings of the MSTT in its judgement dated 12th January, 2001. 6. Mr Surte, the learned counsel appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hexahydrate 10% due to which it has the effect of treating teeth having mild to moderate sensitivity. He submitted that a person having teeth which are prone to sensitivity, are advised to use THERMOSEAL on a permanent basis, since it's stoppage is most likely to lead to recurrence of teeth sensitivity. He therefore submitted that the said products are medicines for treating teeth sensitivity though incidentally they also help in cleaning the teeth. In view of this, Mr Surte contended that the said products of the Applicant did not fall within the exclusion clause of C-I-24 viz. products capable of being used as toothpaste as they were primarily and mainly used for treating teeth sensitivity and not for cleaning teeth. He submitted that the said products incidentally clean teeth and it is not their primary object. In light of this, he submitted that the MSTT was incorrect in holding that the said products sold under the Applicant's invoice dated 13th September 1993 were excluded from the Schedule Entry C-I- 24 that related to medicines , only on the ground of the said exclusion. 7. It is an admitted fact that the said products of the Applicant fall within the descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thpaste. Do not mix Thermoseal with any other toothpaste. Regular daily brushing with Thermoseal will keep your teeth sparkling clean, while building increasing protection against painful sensitivity to cold, heat, acids, sweets or contacts (emphasis supplied) 10. From the said advertising material, it is clear that the Applicant itself claims that the said products have been specifically formulated with a pleasant fresh taste and low abrasive formula for cleaning the teeth and leaving the mouth tingling fresh. Even the said products are marketed as No.1 toothpaste for sensitive teeth . To our mind therefore, it is clear that though the said products of the Applicant are medicines , that would fall under Schedule Entry C-I-24, the same would be excluded from the said Entry by virtue of the exclusion clause therein viz. Products capable of being used as toothpaste, tooth powders, cosmetics, toilet articles and soaps . 11. This being the position, the MSTT was fully justified in coming to the conclusion in its order dated 12th January 2001 that the said products of the Applicant were capable of being used as a toothpaste which was specifically excluded from the med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avatar Budhaiprasad v. STO [AIR 1961 SC 1325 : (1962) 1 SCR 279] the issue before this Court was whether betel leaves could be considered as vegetables in the Schedule of the C.P. Berar Sales Tax Act, 1947 for availing the benefit of exemption. While construing the import of the word vegetables and holding that betel leaves could not be held to be vegetables , the Court observed thus: (AIR p. 1326, para 4) 4. But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of everyday use it must be construed in its popular sense meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it . (emphasis supplied) What flows from a reading of the decision of the Supreme Court is that in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words, they have to be construed in the sense that the people conversant with the su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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