TMI Blog2019 (6) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... Texts, referred to in the First Schedule to the Act, it would suffice to bring it within the ambit of an Ayurvedic medicine. While the assessee has, no doubt, been remiss in not drawing the attention of the Tribunal to the authorized texts referred to in the first schedule to the Act, to show that the active agents of Halls are referred to therein, the Tribunal has also failed to examine the petitioner s contention that the very same product Halls has been treated as an Ayurvedic medicine in the five States of Northern India (Jammu Kashmir, Punjab Haryana, Uttar Pradesh, Rajasthan and Himachal Pradesh) - appeals remanded back to the Tribunal for its re-examination in accordance with law. Revision allowed by way of remand. - Commercial Tax Revision No. 06 of 2013 - - - Dated:- 20-2-2019 - Hon ble Ramesh Ranganathan, C.J. And Hon ble R.C. Khulbe, J. ORDER Hon ble Ramesh Ranganathan, C.J. (Oral) Heard Mr. S.K. Posti, learned counsel for the revisionist, and Mr. Mohit Maulekhi, learned Brief Holder for the State. 2. This revision, under Section 55 (i) of the Uttarakhand Value Added Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the medicine is not sold by prescription, and is sold across the counter, would not denude it of its character of being an Ayurvedic medicine; the low quantum of active Ayurvedic ingredients in the said product is of no consequence; and the very fact that a drugs licence was issued would suffice to hold that the subject goods are Ayurvedic medicines falling within the ambit of Entry 41 of Schedule II (B) of the Uttarakhand VAT Act. Learned counsel would also rely on the order of the Supreme Court in Puma Ayurvedic Herbal (P) Ltd. vs Commissioner, Central Excise, Nagpur; (2006) 3 SCC 266 ; and the provisions of Drugs and Cosmetics Act, 1940. 5. On the other hand Shri Mohit Maulekhi, learned counsel appearing on behalf of the State, would submit that it is only if the ingredients of the drug are mentioned in prescribed Ayurvedic texts, can the product then be held to be an Ayurvedic medicine; no evidence was adduced by the appellant, before any of the authorities below, to show that the ingredients, of the product Halls , have been referred to in any of the prescribed Ayurvedic texts; mere grant of a licence under the Drugs and Cosmetics Act, 1940 alone, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Act and its rules to ascertain whether Halls is an Ayurvedic medicine . Section 3(a) of the Drugs and Cosmetics Act, 1940 (hereinafter called the Act ) defines an Ayurvedic drug to include all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic system of medicine, specified in the First Schedule Section 3 (h) (1) of the Act defines Patent or proprietary medicines , in relation to Ayurvedic systems of medicine, to mean all formulations containing only such ingredients mentioned in the formulae described in the authoritative books of Ayurveda systems of medicine specified in the First Schedule, but does not include a medicine which is administered by parenteral route, and also a formulation included in the authoritative books as specified in clause (a) of Section 3 of the Act. The First Schedule to the Act refers to various books of Ayuredic medicine under Sl. No. 1 to 54 (D) thereunder. Consequently an Ayurvedic medicine, falling within the ambit of the Act, wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yurvedic medicine. 14. Reliance placed, on behalf of the petitioner, on the judgment of the Madras High Court in M/s Cadbury India Limited vs. The Assistant Commissioner (CT) (order in WP No. 21346 of 2007 dated 01.07.2009) is of no avail. In the said judgment, a writ of prohibition was sought prohibiting the respondents from assessing or levying or collecting sales tax, on the sale of Halls , of more than 4%. The Madras High Court, taking into consideration the clarification dated 28.2.2003, and the order of the Assistant Commissioner, Central Excise, Bangalore dated 28.5.1999, held that the product Halls was an Ayurvedic medicine. It further held that the show cause notice issued to the assessee was inconsistent with the circulars issued by the Commissioner of commercial taxes, Chennai dated 02.01.2004 and 16.04.2004. The order issued by the Commissioner, Chennai can hardly be said to have any application in the State of Uttarakhand. The mere fact that the sales tax authorities in Tamil Nadu have held the product to be an ayurvedic medicine, matters little. Placing reliance on the conclusion arrived at by Commercial Tax authorities would require this Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and the licensing officials treat the products in question as Ayurvedic medicines and not as Allopathic medicines, that fact gives an indication that they are exclusively ayurvedic medicines or that they are used in Ayurvedic system of medicine, though it is a patented medicine. This is especially so when all the ingredients used are mentioned in the authoritative books on Ayurvedic. As rightly contended by the counsel for the appellants, the essential character of the medicine and the primary function of the medicine is derived from the active ingredients contained therein and it has certainly a bearing on the determination of classification under the Central Excise Act. As held in Amrutanjan case, the mere fact that the ingredients are purified or added with some preservatives does not really alter their character . [emphasis supplied] 16. Manufacture of Halls under an Ayurvedic Drug licence, issued by the competent authority, is one of the factors to show that the said product is an Ayurvedic medicine. The common parlance test is yet another factor. The main criterion, to determine whether the product is an Ayurvedic medicine, is if all the ingredients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition, is of no consequence, in determining whether or not Halls is an Ayurvedic medicine. 20. Since both Mr. S.K. Posti, learned Counsel for the revisionist and Mr. Mohit Maulekhi, learned Brief Holder for the State place heavy reliance on the Division Bench judgment of this Court, in Commissioner of Trade Tax v. M/s Perfetti Van Melle (India) Pvt. Ltd. , it is necessary to take note of the law laid down therein. The relevant part of the judgment, on which learned Counsel of either side place reliance upon, reads as under: - .Authoritative books of Ayurvedic and Siddha systems, are mentioned in Schedule A of First Schedule of Drugs and Cosmetic Act, 1940. Said list includes book titled Bhav Prakash . Shri Sudhanshu Dhulia, learned Counsel for the respondent referred before us, item Nos. 70 and 73 of Schedule-I of book titled Bhavprakashnighantu . Written by Ganga Sahaye Pandey and Krishnachandra Chunekar. The entries in the Schedule of said Book describe qualities of Peppermint and Pudeena (Spearmint). Our attention is also drawn to the fourth chapter of Book titled Dravyaguna Vijnana Volume-II, written by prof. P.V. Sharma, in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be purchased necessarily from the approved chemists are also medicines, provided the same are manufactured under the drugs, license, issued under Drugs and Cosmetic Act, 1940. In the present case, the items Chlormint and Happydent are manufactured by the assessee/respondent under the drug license issued to it by the Directorate of Ayurvedic Medicines of State of Haryana. As to the formulations, the quantity of Chlormint with Herbasole and Happydent are also mentioned in the covers they are sold (as is apparent from annexures filed with counter-affidavit). As to the utility of Chlormint with Harbasole , as mouth fresheners and that of 'Happdent' (white baking soda with mint flavour) to keep the teeth clean, are also not disputed. Only for the reasons these items are also purchased by some customers for taste also, does not make them confectionary items particularly when the same are manufactured under a valid drug license. As such, having heard learned Counsel for the parties and after going through the principle of Law laid down in M/s Puma Ayurvedic Herbal (Pvt.) Ltd. vs. Commissioner Central Excise, Nagpur, (2006) 3 S.C.C. 266 and Naturalle Heath Products (Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the revision petitioner, that an Ayurvedic licence is issued to manufacture a product only after the product is, on consultation with Ayurvedic experts, held to be an Ayurvedic medicine; and, therefore, grant of an Ayurvedic licence to manufacture Halls would require it to be treated as an Ayurvedic medicine. It must, however, be borne in mind that the definition of Ayurvedic medicine , under Section 3(a) of the Act, is that its ingredients should have been referred to in the Ayurvedic Texts, prescribed in Schedule-I of the Act. 25. While the assessee has, no doubt, been remiss in not drawing the attention of the Tribunal to the authorized texts referred to in the first schedule to the Act, to show that the active agents of Halls are referred to therein, the Tribunal has also failed to examine the petitioner s contention that the very same product Halls has been treated as an Ayurvedic medicine in the five States of Northern India (Jammu Kashmir, Punjab Haryana, Uttar Pradesh, Rajasthan and Himachal Pradesh). Though the assessee placed the relevant assessment orders before it, no finding has been recorded by the Tribunal in this regard. The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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