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TMI Blog2019 (2) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by order dated 14.08.2014 on the following substantial questions of law: "(i) Whether the goods in question are Ayruvedic Medicine of Food supplement? (ii) Whether the department was justified in taxing the goods as food supplement and not as Ayurvedic Medicine? (iii) In respect of Assessment year 2001-2002, whether the rate of tax on the imported goods is to be charged at the rate of 12% in terms of Entry 67 Part D of 1st Schedule, as demanded by the department or 4% as claimed by the assessee? (iv) In respect of Assessment Year 2002-2003 and 2003-2004, whether the rate of tax on the imported goods failing under Entry 9 of Part D and E of 11th Schedule is liable to be charged at the rate of 20% holding that the goods fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the residuary deal or on the three grounds namely, the product is imported product, secondly, it is not an Ayurvedic medicine to food supplement and thirdly, it is not sold in medical shops but is sold by multi-level marketing. 6. The petitioner started dealing with the product as a trader after May, 2002 by purchasing the capsules from one M/s.DXN Herbal Manufacturing (India) Pvt. Ltd. The said company had approached the Hon'ble Division Bench of this Court to which one of us is a party [TSSJ] in T.C.A.Nos. 341 and 342 of 2007. The question before the Division Bench was whether the said assessee was entitled to claim deduction under Section 80(I)(B) of the Income Tax Act, 1961; whether the Assessing Officer was right in denying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government of Pondicherry. Food and Drug including Sidddha and Unani Drugs. The manufacturing process has to be supervised by the technical staff as in the license and the names of the drugs are (a) Reishi Gano (RG), Capsule and (2) Ganocelium (GL), Capsule. Its packing size are 4,10,15,20,30,60,90 & 100. The license contains various conditions. There is an annexure to licence, which states the list of Ayurvedic Proprietory Preparation, which has been permitted and the composition of the capsule which is as follows: 1. Cap.REISHI GANO (RG) Each capsule contains, CHATRAKH: 250 mg (Ganoderma) BHUCHATRA :20 mg (Shitake) 2. Cap.GANOCEILIUM (GL) Each Capsule contains, CHATRAKH: 425 mg (G.Mycelium) BHUCHATRA: 25 mg (Shitake) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said approval. The petitioner has obtained the consent under Section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and Rules made thereunder for the purpose of operating their plot for manufacture of Ayurvedic drugs to the capacity of 5,00,000 capsules per day." 7. Further we examined the correctness of the stand taken by the Revenue that, what was imported is put into capsules and marketed and there is no manufacturing work. After examining the process adopted by the said assesee, we held that what has been done by the assessee is manufacturing. The decision in the case of M/s. DXN Herbal Manufacturing (India) Pvt. Ltd. is a clear answer to the first ground on which the petitioner was non-suited that the product is an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C.Nair, Department of Pathology College of Agriculture, Vellayani, Kerala. 3. Letter addressed to Vaidya Visarada Ayurveda Siromani Dr.K.S.Viswanth Sarma by Daeshan Trading T.Nagar, Chennai and reply to that letter by Dr.K.S.Viswanatha Sarma: 4. Literature about Relshi (Ganoderma Lucidum): and relevant portion of the Book Relshi Mushroom Herb of Spiritual Potency and Medical Wonder by Terry Willard, Ph.B., Research by Kenneth Jones." 9. The Kerala Sales Tax Tribunal took note of the above expert opinion, and noted that it is an Ayurvedic Proprietary Medicine and it is manufactured under Drug License and therefore will not come under Entry 141 under the Kerala Sales Tax Act of the first Schedule to be taxed at 20%. Further, the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine the rate of tax payable on the product when it is sold. The manner in which the product is sold cannot be a test to determine the nature of the product of that matter at what rate it has to be taxed. Therefore, the Tribunal misdirected itself in referring to the method of marketing as a reason for imposing a higher rate of tax. It is common knowledge that now a days all products are available through online purchaser. Therefore, the method of purchase at a stretch of imagination cannot be a reason to impose a higher rate of tax. 12. Thus, for the above reasons, the order passed by the Tribunal requires interference. Accordingly, the Tax Case Revisions are allowed and the Substantial Questions of Law are answered in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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