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TMI Blog2008 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... dule appended thereto by notification No.ST-II-1233/X - 10(1)-1974 dated 14.04.1974 includes petroleum jelly for the purpose of levy of sales tax. It was however, substituted by notification dated 7.9.1981. We would deal with effect thereof on the issue involved herein a little later. 3. We may at the outset notice the provisions of the Drugs and Cosmetics Act, 1940 (for short, "the Act"). Section 39(aaa) defines "cosmetic" as:- "Section 3(aaa) "cosmetic" means any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic." `Drug' has been defined in Section 3(b) in the following terms; "Section 3(b) "drug" includes - [(i) 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 beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. (b)Drugs not included in the Indian Pharmacopoeia but which are included in the official Pharmacopoeia of any other country. Standards of identity, purity and strength specified for drugs in the edition of such official Pharmacopoeia of any other country for the time being in force and such other standards as may be prescribed. In case the standards of identity, purity and strength for drugs are not specified in the edition of such official Pharmacopoeia for the time being in force, but are specified in the edition immediately preceding the standards of identity, purity and strength shall be those occurring in such immediately preceding edition of such official Pharmacopoeia and such other standards as may be prescribed." 6. The Central Government, in exercise of the power conferred upon it under Sections 6(2), 12, 33 and 33(N) of the Act, made Rules, known as the Drugs and Cosmetics Rules, 1945 (for short, "the Rules"). Rule 123 of the Rules provides for exemption from Chapter IV of the Act stating; "123. The drugs specified in Schedule K shall be exempted from the provisions of Chapter IV of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, after the aforesaid judgment, the tax assessing officer has no jurisdiction to make amendment in the tax assessment order and in such cases only the appellate authority, who has passed the last judgment has jurisdiction to make amendments. In the light of aforesaid facts in all the above three years the action taken by the Tax Assessing Officer under Section-22 is not just and proper in the eye of law cannot be supported. Therefore, orders passed under Section 22 in all the above three years are set aside." The said judgment of the Tribunal has been affirmed by the Allahabad High Court. However, relying on Balaji (supra), the authorities changed the basis of the assessment from the assessment year 1989-90 onwards without producing any new material or proof to establish that the product was not a medicinal preparation and should be classified as a cosmetic. In respect of the assessment years 1990-91, 1991-92, 1992-93 when the matter reached the appellate tribunal, it however opined that the product of the petitioner being 'Vaseline White Petroleum Jelly' should be taxed at the rate of 12 per cent as "cosmetics and toilet preparation". The revision petition filed by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning. (ii) The product being applied for care of skin, it comes within the purview of the definition of "cosmetics" and not within the definition of "medicine". (iii) Entry 5, as inserted in 1981 would clearly show that all drugs and cosmetics would come within the purview thereof except those which are specifically excluded, and in that view of the matter, Vaseline manufactured by the appellant in a cosmetic. (iv) Vaseline having no curative value and merely being used for taking care of one's skin, it cannot be a drug within then meaning of the provisions of the U.P. Trade Tax Act. 15. Indisputably, a license has been granted to the appellant under the provisions of the Act. A drug as defined in Section 3(b) thereof would not only include a medicine which is used for external use of human beings, but if used for prevention of any disease or disorder in human being, shall also come within the purview thereof. The said definition is an extensive one. It even applies to preparations applied on human body for the purpose of killing insects like mosquitoes, which per se does not have any medicinal or any value for curing any disease or disorder in human beings. We may furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Technology.) On the other hand, when the word "includes" is used in the definition, the legislature does not intend to restrict the definition: it makes the definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which in its ordinary meaning may or may not comprise. Therefore, the use of the word "means" followed by the word "includes" in Section 2( bb ) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover only those banking companies which fall within the purview of the definition and no other." Yet again in Commercial Taxation Officer, Udaipur Vs. Rajasthan Taxchem Ltd. [(2007) 3 SCC 124], it was held; "22. We have already extracted the definition of raw material under Section 2(34) which specifically includes fuel required for the purpose of manufacture as raw material. The word includes gives a wider meaning to the words or phrases in the statute. The word includes is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute When the word include is used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exhaustive explanation of the meaning which for the purposes of the Act must invariably be attached to those words or expressions". Thus, the word include may in certain contexts be a word of limitation." There cannot be any dispute with regard to the bare principles of law stated therein. Each question posed in each case has to be determined having regard to the purport and object for which the same had been enacted. 18. Reference to Carter v. Bradbeer [(1975) 3 All ER 158], has been made in the aforementioned treatise. The House of Lords was dealing therein with a case where one word "bar" had more than one meaning and in that context, it was opined: "It may well be that the contention advanced on behalf of the appellant sought to derive from the interpretation section a measure of support which that section does not yield. By s. 201(1) of the 1964 Act it is provided that in the Act, unless the context otherwise requires, '"bar" includes any place exclusively or mainly used for the sale and consumption of intoxicating liquor'. It is important to note the word 'includes'. As used in s. 201, I regard the word 'includes' as denoting that the word 'bar' may refer to and may compr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Schedule were exempt from Sales Tax and articles not so specified were taxable. In the Schedule applicable there were originally two items which are relevant for the purposes of the case. They were items Nos. 6 and 36. Item 6 Vegetables - Except when sold in sealed containers. Item 36 Betel leaves. The Schedule was amended by the C.P. & Berar Sales Tax Amendment Act (Act XVI of 1948) by which item No. 36 was omitted. It is contended that in spite of this omission they were exempt from Sales Tax as they are vegetables. The intention of the legislature in regard to what is "vegetables" is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from Sales Tax. Subsequently betel leaves were removed from the Schedule which is indicative of the legislature's intention of not exempting betel leaves from the imposition of the tax. But it was submitted that betel leaves are vegetables and therefore they would be exempt from Sales Tax under item 6." 21. It is therefore, difficult to agree with Mr. Dwivedi that a medicinal preparation must be one which has the effect of curing a disease. While interpreting an entry in a taxing statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rademark." 24. Contention of Mr. Dwivedi is that it is merely a skin protectant and remains widely used in cosmetic skin care and thus it does not have any curative value. Wikipedia, like all other external aids to construction, like dictionaries etc, is not an authentic source, although the same may be looked at for the purpose of gathering information. Where an express statutory definition of a word exists, a Wiki definition cannot be preferred. It cannot normally be used for the purpose of interpreting a taxing statute or classification of a product vis-a-vis an entry in statute. However, as a source of authority, Wikipedia is frequently cited by judges around the world. This is not restricted to India alone. The New York Times reports that beginning in 2004, more than 100 opinion in the States have cited Wikipedia, including 13 from federal appeals courts. Is this a good thing? There's a split of authority. Let us notice some. * Said the Seventh Circuit's Judge Posner, who recently cited the online encyclopedia in this opinion: Wikipedia is a terrific resource . . . Partly because it so convenient, it often has been updated recently and is very accurate. He added: It would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing other than medicines but which are used for treatment. The part of the definition which is material for the present case is "substances intended to be used for or in the treatment". The appropriate meaning of the expression "substances" in the section is "things". It cannot be disputed, and indeed it is not disputed, that absorbent cotton wool, roller bandages and gauze are "substances" within the meaning of the said expression. If so, the next question is whether they are used for or in "treatment". The said articles are sterilized or otherwise treated to make them disinfectant and then used for surgical dressing; they are essential materials for treatment in surgical cases. Besides being aseptic these articles have to possess those qualities which are utilized in the treatment of diseases. Thus, for instance, in the case of gauze - one of the articles concerned in this appeal - it has to conform to a standard of absorbency in order that it might serve its purpose: otherwise the fluid which oozes is left to accumulate at the site of the wound or sore. The Legislature designedly extended the definition of "drug" so as to take in substances which are necessary aids for treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inary meaning of `medicine' cannot be read into the taxing statute while interpreting an Entry made therein. It is interesting to note that in Leukoplast (supra), this Court itself observed; "12. Lord Reid pointed out that in the Purchase Tax Act, "medicine" had not been defined. So it had to be understood as an ordinary word of English language. Lord Reid observed: "As with so many English nouns there is no clear limit to the denotation of the word medicine. All the circumstances must be considered and there may be cases where it is extremely difficult to decide whether or not the term medicine is properly applicable. But here I think that however one approaches the matter it would be a misuse of language to call Ribena a medicine and I would therefore allow the appeal." 13. Lord Morris who delivered a dissenting judgment tried to define the term "medicine" in the following manner: "What then is a medicine? The learned Judge (1969) 1 WLR at p. 1527 pointed to a dictionary definition of medicine (when used in a sense other than a substance) as 'the science and art concerned with the cure, alleviation, and prevention of disease, and with the restoration and preservation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finds place in Indian Pharmacopeia; and it does not contain any perfume. A cosmetic ordinarily would contain some perfume. 31. Reliance has also been placed by Mr. Dwivedi on Alpine Industries Vs. Collector of Central Excise, New Delhi [(2003) 3 SCC 111], wherein this Court was considering a product known as "Lip Salve". It was principally to be used by the soldiers stationed at a high altitude. It was, however, found to be used as protection from dry, cold weather or sun rays. It was noticed that it is neither prescribed by any doctor nor obtained from the chemist or pharmaceutical shops in the market. This Court, categorically noticed that under Chapter 30 of the Central Excise Rules, pharmaceutical product was a "medicament" under Heading 30.03, what was covered, having regard to the provisions contained in the Chapter Note, that even if they have "therapeutic or prophylactic properties", are excluded therefrom. "Medicament" was defined in Note 2 as item in "goods which are either products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic use". It is on the aforementioned premise this Court opined; "13. Reading th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006) 3 SCC 266], wherein it was stated: "20. It will be seen from the above definition of "cosmetic" that the cosmetic products are meant to improve appearance of a person, that is, they enhance beauty, whereas a medicinal product or a medicament is meant to treat some medical condition. It may happen that while treating a particular medical problem, after the problem is cured, the appearance of the person concerned may improve. What is to be seen is the primary use of the product. To illustrate, a particular Ayurvedic product may be used for treating baldness. Baldness is a medical problem. By use of the product if a person is able to grow hair on his head, his ailment of baldness is cured and the person's appearance may improve. The product used for the purpose cannot be described as cosmetic simply because it has ultimately led to improvement in the appearance of the person. The primary role of the product was to grow hair on his head and cure his baldness." 35. The authorities referred to hereinbefore clearly show that there does not exist difference of opinion on legal principles. What is however required is the application thereof to the fact of each case and the statute in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smetic and toilet preparation. This Court in The Commissioner of Sales Tax, Madhya Pradesh, Indore Vs. M/s. Jaswant Singh Charan Singh [AIR 1967 SC 1454], clearly held; "....There were two items in the Schedule, namely, item 6, "vegetables", and item 36, "betel leaves", and subsequently item No. 36 was deleted by an amendment of the Act. This Court held that the use of two distinct and different items, i.e., "vegetables' and "betel leaves" and the subsequent removal of betel leaves from the Schedule were indicative of the Legislature's intention of not exempting betel leaves from taxation." 40. Even if the Tribunal or the High Court did not apply the common parlance test, what should necessarily be applied is the commercial meaning test or the meaning in common parlance test. It is interesting to note that application of common parlance test was applied in M/s. Jaswant Singh (supra) stating that only because "charcoal" contains the word `coal', the same would not mean to be a species of coal. 41. Reliance has rightly been placed for the said proposition on His Majesty the Kind v. Planters Nut and Chocolate Co. Ltd. [1951 CLR (Ex) 122] wherein it is stated: "It will be noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in " Two Hundred Chests of Tea " emphasised that commercial understanding in respect of the tariff items should be preferred. It was observed that the legislature does not suppose our merchants to be naturalists or geologists, or botanists." {See also Shri Bharuch Coconut Trading Co. and Others Vs. Municipal Corporation of the City of Ahmedabad and Others [1992 Supp. (1) SCC 298]. } 42. The assessee had filed a large number of affidavits. The deponents of the said affidavits have not been cross-examined. It is even from that point of view the application of common parlance test stood satisfied in the instant case. 43. Furthermore, an expert in the field has also given his opinion in favour of the appellant. This Court in Quinn India Ltd. Vs. Commissioner of Central Excise, Hyderabad [(2006) 9 SCC 559], classified a product relying, inter alia, on the report of the clerical examiner as under : "7...The Tribunal has completely ignored the report of the Chemical Examiner dated 6-10-1981 and the final opinion of the Chief Chemist dated 2-4-1992 coupled with the classification issued by the Department regarding use of wetting agents in the textile industries falling under Sub-Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rushing aside the evidence before it. The technical knowledge of members of the Tribunal makes for better appreciation of the record, but not its substitution." Yet again in Union of India and Others Vs. Garware Nylons Ltd. and Others [(1996) 10 SCC 413], this Court opined : "...The burden of proof is on the taxing authorities to show that the particular case or item in question is taxable in the manner claimed by them. Mere assertion in that regard is of no avail..." 44. If an entry had been interpreted consistently in a particular manner for several assessment years, ordinarily it would not be permissible for the Revenue to depart therefrom, unless there is any material change. {See Bharat Sanchar Nigam Ltd. and Another Vs. Union of India and Others [(2006) 3 SCC 1].} 45. Applying the dominant intention test, vis-a-vis, the Aspect Theory, this Court in M/s. United Offset Process Pvt. Ltd. Vs. Asst. Collector of Customs, Bombay and Others [1989 Supp.(1) SCC 131], opined : "If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are use ..... X X X X Extracts X X X X X X X X Extracts X X X X
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