TMI Blog2020 (4) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... TY COMMISSIONER (COMMERCIAL TAXES) VERSUS RAM OXYGEN (PVT.) LTD. [ 2010 (6) TMI 710 - MADRAS HIGH COURT] highlight the curative and instrumental use of Medical Oxygen IP and Nitrous Oxide IP in the mitigation and prevention of disease or disorder. Nitrous Oxide is used as anesthetic agent. Medical oxygen with 99.9% purity is predominantly used in hospitals. Medical Oxygen is also used for the treatment of patients and to mitigate the intensity of disease or disorder in human beings. It is utilised to prevent a sudden collapse of patients and to aid in the recovery of health. As stated in the Counter Affidavit filed by the respondents, in order to carry out critical surgical procedures, supplemental oxygen is administered to patients. Medical Oxygen is also administered in resuscitation, major trauma, anaphylaxis, major hemorrhage, shock and active convulsions, amongst other conditions. There is no doubt that Medical Oxygen IP and Nitrous Oxide IP are medicines used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings falling within the ambit of Section 3(b)(i) of the 1940 Act. Medical Oxygen IP and Nitrous Oxide IP fall within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad 2014 VIL 339 AP , allowed the appeal filed by the respondent. The appellant s appeal before the High Court for the State of Telangana and the State of Andhra Pradesh was dismissed. Aggrieved, the appellant is in appeal before this Court. 6. The High Court was of the view that in Section 3(b)(i) of the Drugs and Cosmetics Act 1940 -1940 Act the expression drug covers within its ambit any substance which is used for or in the treatment, prevention and mitigation of a disease or a disorder. The High Court held that (i) Medical Oxygen IP is used for the treatment of patients and to mitigate the intensity of diseases and disorders; and (ii) Nitrous Oxide IP is used as an anesthetic in surgical operations and procedures of a short duration. The High Court held: Both nitrous oxide and medical oxygen are clearly identifiable, and are used as surgical aids (Indian Oxygen Ltd. State of Karnataka; Southern Gas Ltd). Going by the user test and the functional test, it is evident that medical oxygen and nitrous oxide serve as medicines. As medical oxygen IP and Nitrous Oxide IP are used in the treatment and mitigation of disorders in human beings, and as they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are expressly included in Entry 88 of the 2005 Act; (iii) Goods must be classified according to their popular meaning or as they are understood in their commercial sense. Oxygen is used widely as an emergency medicine as well as for the delivery of medical services. Nitrous Oxide is used in surgery and dentistry for anesthetic purposes. Applying the common parlance test, there is no doubt that the products in question are used in the mitigation of diseases and disorders and fall within the ambit of Entry 88 as drugs defined in Section 3(b)(i) of the 1940 Act; (iv) Several High Courts in the country have uniformly held that Medical Oxygen IP and Nitrous Oxide IP are medicines within the meaning of their respective state enactments. These include Southern Gas v State of Kerala 2005 (139) STC 504 (Ker), State of Tamil Nadu v Ram Oxygen [2011] 5 GST 87 (Mad HC), Panki Oxygen v State of Uttar Pradesh 2014 SCC Online All 2144, Chimanlal v State of Maharashtra 2004 (137) STC 68, Indian Oxygen v State of Karnataka 1990(79) STC 351, State of Kerala v Indian Oxygen 2003 (129) STC 471 and ACTO, Special Circle Jodhpur v M/s Jodhpur Gases 2009 SCC Online 2459; (v) The National Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sects like mosquitoes; (iv) such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board. Clause (i) of Section 3(b) defines a drug as all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human being, or animals , including specified preparations. Clause (iv) of Section 3(b) includes all devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals. 13. In the early decision of this Court in Chimanlal Jagjivandas Sheth v State of Maharashtra, AIR 1963 SC 665 the question before a four judge Bench was whether absorbent cotton wool, roller bandages, and gauzes would fall within the ambit of Section 3(b) of the Act of 1940. The Court held: 3. The said definition of drugs is comprehensive enough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of UP, (1969) 1 SCR 219 the central question before a three judge Bench of this Court was the interpretation of Section 3(b)(i) of the 1940 Act. This Court held: 11. Now if the expression substances is to be taken to mean something other than medicine as has been held in our previous decision it becomes difficult to understand how the word and as used in the definition of drug in Section 3(b)(i) between medicines and substances could have been intended to have been used conjunctively. It would be much more appropriate in the context to read it disjunctively. In Stroud's Judicial Dictionary, 3rd Edn. it is stated at p. 135 that and has generally a cumulative sense, requiring the fulfilment of all the conditions that it joins together, and herein it is the antithesis of or. Sometimes, however, even in such a connection, it is, by force of a contexts, read as or . Similarly, in Maxwell on Interpretation of Statutes, 11th Edn., it has been accepted that to carry out the intention of the legislature it is occasionally found necessary to read the conjunctions or and and one for the other . This Court held that as the word substances in the clause i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent meanings loses much of its relevance. Similarly, Craies on Statute Law states: One of the basic principles of interpretation of Statutes is to construe them according to plain, literal and grammatical meaning of the words. If that is contrary to, or inconsistent with, any express intention or declared purpose of the Statute, or if it would involve any absurdity, repugnancy or inconsistency, the grammatical sense must then be modified, extended or abridged, so far as to avoid such an inconvenience, but no further. The onus of showing that the words do not mean what they say lies heavily on the party who alleges it. He must advance something which clearly shows that the grammatical construction would be repugnant to the intention of the Act or lead to some manifest absurdity. The words of a statute should be first understood in their natural, ordinary or popular sense and phrases and sentences should be construed according to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary. Where a word has a secondary meaning, the assessment is whether the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lness Cambridge Dictionary defines medicine as: A drug that is used to treat illness or injury; the science dealing with the preserving of health and with preventing and treating disease or injury. The ordinary or popular understanding of the term medicine is characterized by its curative properties in general andspecifically, its use for or in diagnosis, treatment, mitigation or prevention of any disease or disorder. 19. In State of Goa v Leukoplast (India) Ltd, (1997) 4 SCC 82 the question before this Court concerned whether Zinc Oxide Adhesive Plaster BPC (Leukoplast), Surgical Wound Dressing (Handyplast), Belladona Plaster BPC, Capsicum Plaster BPC and Cotton Crape Bandages BPC (Leukocrapes) are drugs or medicine under the 1940 Act. A two judge Bench of this Court laid down the test to determine whether a product is a medicine in the following terms: 15. In our view, whether the products manufactured by the assessee can be treated as drugs or medicines cannot be answered straightaway. The medicinal content of the products, if any, has to be ascertained. Its curative function has to be found out. Can the product be called a medicament at all Is it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the identity, purity and strength of the drugs specified therein. Medical oxygen (at 99.9% purity) is included as a drug termed as Oxygen IP . Section 16, read with the Second Schedule and the specification of Medical Oxygen in the Indian Pharmacopoeia lends support to the contention urged by the respondents that Medical Oxygen IP is a drug as defined in Section 3(b)(i) of the 1940 Act. 22. Furthermore, in exercise of the powers conferred by Section 3 of the Essential Commodities Act 1955, the Central Government issued the Drug (Prices Control) Order 2013 which came into force on the date of its publication in the Official Gazette (15 May 2013). Para 2(t) stipulates that the National List of Essential Medicines means the National List of Essential Medicines 2011 published by the Ministry of Health and Family Welfare as updated and revised from time to time. It also specifies that the National List of Essential Medicines 2011 is included in the First Schedule to the order. Para 2(2) stipulates that all other words and expressions used therein and not defined, but defined in the 1940 Act shall have meanings respectively assigned in the 1940 Act. 23. The First Schedule c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medical oxygen and nitrous oxide are served as medicines. Applying the user test and functional test, the Kerala High Court noted that Medical Oxygen is administered to patients and Nitrous Oxide is used as an anesthetic agent and concluded that both are medicines. 25. In Indian Oxygen Ltd v State of Karnataka, 1989 SCC Online Kar 459 the question before the High Court of Karnataka concerned whether Medical Oxygen fell within the ambit of Entry 121 of the Karnataka Sales Tax Act 1957 which stipulated a tax rate for industrial gases. The High Court answered this in the negative and drew a distinction between industrial oxygen and medical oxygen in the following terms: The object of Entry 121 is clearly to attract an industrial gas , which cannot, on the face of it include, a gas which is not considered as an industrial gas by those who deal in it. It is clear that a person requiring medical oxygen will not be satisfied if he is supplied with the industrial oxygen and similarly an honest trader would not sell medical oxygen as industrial oxygen . 26. In State of Tamil Nadu v Ram Oxygen (Pvt.) Ltd (2010) 35 VST 478, the High Court of Madras held that medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x only at 4%/5% and not at12.5% or 14.5%. The High Court held that medical oxygen is used in the treatment and mitigation of disorders in human beings, and are generally understood in trade to be surgical aids. 29. The above judgments highlight the curative and instrumental use of Medical Oxygen IP and Nitrous Oxide IP in the mitigation and prevention of disease or disorder. Nitrous Oxide is used as anesthetic agent. Medical oxygen with 99.9% purity is predominantly used in hospitals. Medical Oxygen is also used for the treatment of patients and to mitigate the intensity of disease or disorder in human beings. It is utilised to prevent a sudden collapse of patients and to aid in the recovery of health. As stated in the Counter Affidavit filed by the respondents, in order to carry out critical surgical procedures, supplemental oxygen is administered to patients. Medical Oxygen is also administered in resuscitation, major trauma, anaphylaxis, major hemorrhage, shock and active convulsions, amongst other conditions. 30. Nitrous Oxide is used in surgery and dentistry for its anesthetic and analgesic effects. An article published in the British Medical Bulletin titled Past, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esired level of sedation assessed by constant verbal contact is obtained. This is maintained till the procedure is performed. Thereafter, N2O is switched off, but 100% O2 is continued for next 5 min. The patient is generally roadworthy in 30 60 min. The above extracts demonstrate the medical use of Nitrous Oxide as a general anesthetic as well as in operation rooms for its analgesic and anxiolytic properties. 31. In the proceedings before this Court, it was not seriously disputed that Medical Oxygen IP and Nitrous Oxide IP sub-serve a medicinal purpose. There is no doubt that Medical Oxygen IP and Nitrous Oxide IP are medicines used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings falling within the ambit of Section 3(b)(i) of the 1940 Act. We hold that Medical Oxygen IP and Nitrous Oxide IP fall within the ambit of Section 3(b)(i) of the 1940 Act and are consequently covered in Entry 88 of the 2005 Act. 32. The impugned judgment of the High Court, to the extent it held that Medical Oxygen IP and Nitrous Oxide IP fall within Entry 88 of the 2005 Act is upheld. 33. The appeals are dismissed, although for the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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