M/s Reckitt Benckiser (India) Ltd. VERSUS Commissioner Commercial Taxes & Ors
M/s Reckitt Benckiser (India) Ltd. VERSUS Commissioner Commercial Taxes & Ors
Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1335 OF 2010
M/s Reckitt Benckiser (India) Ltd. ..Appellant
VERSUS
Commissioner Commercial
Taxes & Ors. ..Respondents
J U D G M E N T
M. R. Shah, J.
Civil Appeal No.1335 of 2010 Page 1 of 32
1. Feeling aggrieved and dissatisfied with the
impugned judgment and order dated 17.12.2008
passed by the High Court of Kerala at Ernakulam
in OT Appeal No.6 of 2006 by which the High
Court has dismissed the said appeal and has
upheld the order passed by the Commissioner
with respect to the classification of the goods in
question, the assessee has preferred the present
appeal.
2. At the outset, it is required to be noted that the
issue pertains to the classification of the
appellant’s products namely (i) Mosquito Mats,
Coils and Vaporizers; and (ii) Mortein Insect
Killers; (iii) Harpic Toilet Cleaner and Lizol Floor
Cleaners; and (iv) Dettol Antiseptic Liquid for the
purposes of Kerala VAT Act, 2003 (hereinafter
referred to as “KVAT Act”). It was the case on
behalf of the appellant that the products at (i) to
(iii) were classifiable under Entry No. 44(5) of the
III Schedule to the Kerala VAT Act as being
'pesticides, insecticides' corresponding to HSN
Civil Appeal No.1335 of 2010 Page 2 of 32
Code 3808 and therefore subject to VAT at the
rate of 4%. With respect to the product at (iv)
hereinabove, it was the case on behalf of the
appellant that 'Dettol Antiseptic Liquid' is
correctly classifiable under Entry 36(8) (h) (vi)
being medicaments corresponding to HSN Code
3004.90 of the III Schedule, and thus also
subject to tax at the rate of 4%.
2.1 However, the Commissioner of Commercial
Taxes, rejected the contention of the appellant
holding that the products (i) Mortein Mosquito
Coil, Mat and Liquid Vaporizer is classifiable
under Entry 66 of Notification SRO 82/06 dated
21.01.2006 issued under Section 6(1)(d) of the
Kerala VAT Act which covers "Mosquito
Repellants, electric or electronic mosquito
repellants, gadgets and insect repellants, devices
and parts and accessories thereof” corresponding
to HSN Code 8516 79 20; (ii) Mortein Insect Killer
is subject to tax at the rate of 12.5% under the
residuary entry i.e. under SL No.103 of the
Civil Appeal No.1335 of 2010 Page 3 of 32
Notification SRO 82/06 on the ground that they
are not specifically classifiable under the Second
and the Third Schedule; (iii) Harpic Toilet Cleaner
and Lizol Floor Cleaner are classifiable under SI
No. 27(4) of the said Notification SRO 82/06; and
(iv) Dettol Antiseptic Liquid is classifiable under
Entry 103 of the said Notification SRO 82/06 i.e.
residual entry on the ground that the said
product is not in the nature of a medicine having
therapeutic or prophylactic properties, but is
used only for cleaning purposes.
2.2 The order passed by the Commissioner of
Commercial Taxes holding the above was the
subject matter of appeal before the High Court.
The High Court by the impugned judgment and
order has dismissed the said appeal confirming
the order passed by the Commissioner of
Commercial Taxes. The impugned judgment and
order passed by the High Court is the subject
matter of the present appeal.
Civil Appeal No.1335 of 2010 Page 4 of 32
2.3 Before we consider the submissions made on
behalf of the respective parties the relevant
entries relied upon by the respective parties are
required to be referred to which are as under:
“Entry 44 of the Third Schedule reads as follows:
Sl. No. Description HSN Code
44 Fertilizers, pesticides,
weedicides, insecticides,
fungicides, herbicides,
rodenticides, antisprouting products and
plant growth regulators,
biofertilizers,
micronutrients and
similar products
5 Pesticides, weedicides,
insecticides, 3808
fungicides, herbicides,
rodenticides, antisprouting products and
plant growth regulators,
and similar products
other than micro products
3808
Civil Appeal No.1335 of 2010 Page 5 of 32
(d) Entry 36(8)(h)(vi) of the Third Schedule reads
as under:
Sl. No. Description HSN
Code
36 Drugs, Medicines and
Bulk Drugs including
Ayurvedic, Unani, and
Homoeopathic
medicine but
excluding mosquito
repellants and those
specifically mentioned
in First Schedule and
those notified under
clause (d) of subsection (1) of section
6.
8 Medicaments
(excluding goods of
HSN heading nos.
3002, 3005, or 3006)
consisting of mixed or
unmixed products for
therapeutic or
prophylactic uses, put
up in measured doses
(including those in the
Civil Appeal No.1335 of 2010 Page 6 of 32
form of transdermal
administration
systems) or in forms
or packings for retail
sale
h Other
(vi) Medicaments other
than those given in
subentries (i) to (v)
3004.90
Entry 66 of Notification No. SRO No. 82/2006,
G.O.(P) No. 4/2006/TD Dated 21st January 2006.
LIST OF GOODS
SL.NO. Description of
goods
HSN Code
(1) (2) (3)
66 Mosquito repellents,
electric or electronic
mosquito repellents,
gadgets and insect
repellents, devices
and parts and
accessories thereof
8516.79.20
Civil Appeal No.1335 of 2010 Page 7 of 32
3. Shri Siddharth Bawa, learned counsel has
appeared on behalf of the appellant and Shri C.K.
Sasi, learned counsel has appeared on behalf of
the respondents.
4. Learned counsel appearing on behalf of the
appellant has vehemently submitted that in the
facts and circumstances of the case the High
Court has materially erred in not accepting the
case on behalf of the appellant that the products
item nos.1 to 3 hereinabove shall be classifiable
under Entry 44(5) of III Schedule of KVAT Act.
4.1 It is submitted that the High Court has materially
erred in accepting the case on behalf of the
Commissioner that the aforesaid products nos. (i)
to (iii) shall fall under Item No.66 of SRO
82/2006 and therefore liable to be taxed at
12.5%
4.2 It is further submitted that the High Court has
also erred in holding that the product Dettol will
fall under the residual entry i.e. Sl.No.103 of SRO
Civil Appeal No.1335 of 2010 Page 8 of 32
82/2006 and not under Entry 36(8) (h) (vi) of III
Schedule of the KVAT Act.
4.3 Now so far as the product Mortein range &
Mortein Spray is concerned, it is vehemently
submitted by learned counsel appearing on
behalf of the appellant that even after
introduction of SRO 82/2006, Mortein range &
Mortein Spray continue to be classifiable as
insecticides, as they are manufactured under an
insecticides license issued under the Insecticides
Act. It is submitted that the Mortein Spray kills
insects, hence even according to the respondents’
interpretation, Mortein Spray cannot fall under
Item No.66 of SRO/2006, as Item no.66 deals
only with Mosquito repellants.
4.4 In support of his submissions learned counsel
appearing on behalf of the appellant has heavily
relied upon the decision of this Court in the case
of Ponds India Ltd. vs. CTT (2008) 8 SCC 369
(Para 35). He has also relied upon the following
Civil Appeal No.1335 of 2010 Page 9 of 32
decisions of the Allahabad High Court and
Karnataka High Court; Knight Queen Industries
Pvt. Ltd. vs. State of UP, 2005 SCC Online All
1214 (Para 23 to 36); Sl. No. 22 @ page 282
297; Order dated 14.07.2006 passed by this
Court in State of UP vs. Knight Queen
Industries Pvt. Ltd.; Sl. No. 23 @ page 298
300; Ashok Agencies vs. State of Karnataka
2008 SCC Online Kar 141 (Para 8 to 12); Sl.
No. 24 @ page 301307; State of Karnataka vs.
Godrej Consumer Products Ltd. (2014) 80 Kar
LJ 328 (Para 15); Sl. No. 25 @ page 308313.
4.5 It is submitted by learned counsel appearing on
behalf of the appellant that it is a case on behalf
of the respondents that from 21.01.2006 Mortein
range and Mortein Spray would fall under Sl.
No.66 (mosquito repellant), which is the specific
entry and subject to VAT at 12.5% and
insecticide (Entry 44(5) of the III Schedule) is a
general entry.
Civil Appeal No.1335 of 2010 Page 10 of 32
It is submitted that therefore the issue of
classification between two competing entries i.e.
Entry 44(5)(insecticide) and Sl. No.66 (mosquito
repellant) introduced w.e.f. 21.01.2006. It is
submitted that therefore according to Revenue,
the judgment of the High Court with respect of
Mortein repellant /Moretin range shall not be
applicable, as the entries under the other VAT
Acts, do not have a specific entry for “mosquito
repellents”.
4.6 It is submitted that however the appellant rightly
relied upon Entry 44(5) of the said Schedule
claiming the tax at 4%.
4.7 So far as the product Harpic & Lizol is concerned,
it is the case on behalf of the appellant that the
State of Kerala issued a notification dated
24.10.2006 retrospectively effective from
07.01.2006 omitting HSN Code 3808 from Entry
44(5) of III Schedule of KVAT Act. It is submitted
that Harpic & Lizol would still continue to fall in
Entry 44(5) even after deletion of HSN Code 3808,
Civil Appeal No.1335 of 2010 Page 11 of 32
as they are disinfectants under the Drugs &
Cosmetics Act/Rules and manufactured under
the licence granted as a disinfectant, under the
said act. In support of the above, he has relied
upon the decision of this Court in the case of
Ponds India Ltd. (supra) and Bombay
Chemicals Pvt. Ltd. vs. CCE 1995 Supp. (2)
SCC 646 and the decision of the Andhra Pradesh
High Court in the case of Reckitt Benckiser
India Ltd. vs. State of Andhra Pradesh in Tax
Revision Case No.10 of 2007.
4.8 Now so far as the product Dettol is concerned, it
is the case on behalf of the appellant that the
Dettol is an antiseptic liquid, manufactured
under a Drug License and it prevents infection.
It is submitted that it is considered as an
essential drug and hence its price was controlled
under DPCO and the MRP of Dettol continues to
be monitored under DPCO, 2013.
Civil Appeal No.1335 of 2010 Page 12 of 32
4.9 It is submitted that Dettol falls under HSN 3004
90 specifically incorporated in Entry 36(8)(h)(vi) of
Schedule III, therefore Dettol is classifiable as a
drug/medicine under Entry 36(8)(h)(vi) of
Schedule III. It is submitted that in Note 23 of
the Rules of interpretation under Entry 36 of
Schedule III, the only exclusion is dietary food,
diabetic food, food supplements, medicated
soaps, blood albumin etc. are not excluded.
4.10 It is further submitted that most importantly
HSN Code was not deleted from Entry 36(8)(h)(vi)
of Schedule III, even though by virtue of
notification K.G. Ext.NO.1670 dated 24.10.2006
(retrospectively effective from 01.07.2006), HSN
Code was deleted in Entry 44(5) of Schedule III
under which the appellant has classified Mortein
range, Mortein spray, Harpic & Lizol. It is
submitted that therefore the Dettol continue to
fall under Entry 36(8)(h)(vi).
4.11 It is further submitted that the active ingredients
of Dettol are Chloroxylenol IP, Terpineol BP,
Civil Appeal No.1335 of 2010 Page 13 of 32
Alcohol Absolute IP (denatured) and it is an
antiseptic having germicidal properties; it kills
germs, bacteria and it prevents infection
therefore it is applied on wounds, cuts, grazes,
bites and stings and is used in hospitals for
surgical use, medical use and midwifery, due to
therapeutic & prophylactic properties.
4.12 It is submitted that this Court in the case of ICPA
Health Products (P) Ltd. vs. CCE, Vadodara
(2004) 4 SCC 481 has held that the said
products are used for disinfecting the skin prior
to surgery. It is submitted that as per Concise
Oxford Dictionary, 9th Edition the term
“prophylactic” would mean, “intending to prevent
diseases, a preventive medicine or course of
action”. It is submitted that as the aforesaid
products are used as a cleanser for cleaning of
wounds and abrasions and minor cuts and to
disinfect the skin prior to surgery, they have
therapeutic and prophylactic properties. It is
submitted that applying the legal principles
Civil Appeal No.1335 of 2010 Page 14 of 32
enunciated by this Court qua Dettol, the Dettol is
a drug/medicine.
4.13 It is further submitted that this Court in the case
of Sujanil Chemo Industries vs. CCE &
Customs, Pune (2005) 4 SCC 189 (para 6) in
the context of Licel used for killing lice in human
hair has held that any medicine which kills
disease or is a palliative or curative is
therapeutic. It is submitted that Licel cures the
infection of lice in human hair and is thus
therapeutic. It is submitted that applying the
same the Dettol is also a medicament.
4.14 It is submitted that in the case of Ponds India
Ltd. (supra) in respect of the classification under
the Trade Tax/VAT Laws this Court has taken
into consideration the definition of ‘Drug’ as
defined under the Drugs & Cosmetics Act, 1940
and the fact that the product is sold under a drug
licence since drug or medicine is not defined
under the Trade Tax/VAT Laws. It is submitted
Civil Appeal No.1335 of 2010 Page 15 of 32
that the Dettol is manufactured under a drug
licence issued under the Drugs & Cosmetics
Rules and its price has been regulated by the
National Pharmaceutical Pricing Authority under
Drug Price Control Orders issued from time to
time including DPCO, 2013.
4.15 It is submitted that Rule 123 of the Drugs &
Cosmetics Rules provides for certain exceptions
to the drugs falling under Schedule K to the
extent provided therein. Entry 39 deals with
Liquid Antiseptics for household use. The
appellant submits that Dettol being an antiseptic
falls under Entry 39 of Schedule K provided
under Rule 123 of the Drugs & Cosmetics Rules.
It is submitted that this Court in the case of
Ponds India Ltd. (supra) has considered the
aforesaid aspect and had held that Vaseline
White Petroleum Jelly to be a drug as it falls
under Entry 28 of Schedule K provided under
Rule 123 of the Drugs & Cosmetics Act/Rules.
Civil Appeal No.1335 of 2010 Page 16 of 32
4.16 It is further submitted that the impugned
judgment fails to consider the well settled
principles of classification which are fundamental
to any matter relating to classification under a
taxing statute namely viz. (a) plain meaning to be
given to the taxing provision; (b) burden to prove
classification in a particular entry is always on
the Revenue; (c) any ambiguity has to be
resolved in favour of the assessee and in case of a
reasonable doubt, the construction most
beneficial to the assessee must be adopted; (d)
specific entry would override a residuary entry;
and (e) resort to residuary entry is to be taken as
a last measure, only when by liberal construction
the specific entry cannot cover the goods in
question.
4.17 It is further submitted that the Gawahati High
Court as well as the Rajasthan High Court in the
case of Reckitt Benckiser India Ltd. vs.
Assistant Commercial Taxes Officer & Ors.,
STR11/2012 have held Dettol to be a drug
Civil Appeal No.1335 of 2010 Page 17 of 32
under the respective entries of Assam VAT Act
and Rajasthan VAT Act and have rejected the
submission of the Revenue in those States that
the Dettol falls under the residuary entry. It is
submitted that the SLPs against the decision of
the Rajasthan High Court by the Revenue have
been dismissed by this Court.
5. Making above submissions and relying upon the
above decisions, it is prayed to allow the present
appeal.
6. While opposing the present appeal Shri Sasi,
learned counsel appearing on behalf of the
Revenue has vehemently submitted that the
product Mortein range and Mortein Spray would
not be classifiable under Entry No. 44(5) as
insecticides as contended on behalf of the
appellant. It is submitted that “Mortein Mosquito
coil, mat and liquid vaporizer” cannot be
classifiable as an insecticide and the same is
unsustainable in view of the decision of this
Court in the case of Sonic Electrochem vs.
Civil Appeal No.1335 of 2010 Page 18 of 32
STO, (1998) 6 SCC 397 wherein this Court has
held that the product ‘Jet Mat’ which is a trade
name containing ‘dAllethrin 4%’ and is
commercially known as “Mosquito Repellent Mat”
is a mosquito repellent notwithstanding the fact
that it not only repels the mosquitoes but also is
capable of killing the mosquitoes and it is difficult
to hold that it is an insecticide. It is submitted
that the product “Mortein Mosquito Coil, mat and
liquid vaporizer” would definitely come under
Entry 66 “Mosquito Repellent”.
6.1 It is submitted that the appellant – assessee is
relying Entry 44(5) in support of their case
products Mortein range and Mortein Spray shall
fall as insecticides under Entry 44(5). It is
submitted that Entry 44 related to products
which are used in agricultural operations. It is
submitted that all the products in that Entry are
used in the agricultural field in relation to
growing of agricultural products and controlling
Civil Appeal No.1335 of 2010 Page 19 of 32
of pets, insecticides etc. which attacked the
plants.
6.2 It is submitted that the product such as Harpic
Toilet Cleaner and Lizol Floor Cleaner are not
used in relation to controlling pets and
insecticides in the agricultural field. It is
submitted that the name of these products
contains the words “Toilet Cleaner and Floor
Cleaner”. It is submitted that the use of “Harpic
Toilet Cleaner” and “Lizol Floor Cleaner” is
exclusively for cleaning of toilet and floor
respectively and therefore cannot be treated as
insecticide.
6.3 It is submitted that so far as the reliance placed
upon the decision of this Court in the case of
Bombay Chemicals Pvt. Ltd. (supra) is
absolutely misplaced and shall not be applicable
in the facts of the instant case. It is submitted
that in the case of Bombay Chemical Pvt. Ltd.
(supra) this Court was dealing with Entry
Civil Appeal No.1335 of 2010 Page 20 of 32
“Insecticides, Pesticides, Weedicides and
Fungicides etc.” under the Central Exercise Salt
Act, 1944. It is submitted that the said Entry is
different from Entry 44 of the KVAT Act which are
products exclusively dealing with the products in
agricultural operations.
6.4 Now so far as the product Dettol antiseptic liquid
is concerned, it is submitted that the same
cannot be classified as an item used for
Medicament for therapeutic or prophylactic uses.
It is submitted that a medicament is an item
used for therapeutic or prophylactic treatment for
prevention and cure of diseases. It is submitted
that the High Court has specifically found that
the appellant has no case that Dettol is able to
prevent or cure any disease and therefore has
rightly held the Dettol is not a medicament. It is
submitted that therefore the Dettol would fall
under residuary Entry.
7. Making above submissions it is prayed to dismiss
the present appeal.
Civil Appeal No.1335 of 2010 Page 21 of 32
8. We have heard the learned counsel appearing on
behalf of the respective parties at length.
9. So far as the product Mosquito Mats, Coils and
Vaporizers and Mortein Insect Killers are
concerned, it is the case on behalf of the
appellant that the said products would fall in
Entry 44(5) of III Schedule of KVAT Act and
would fall under HSN Code 3808. Therefore, it is
the case on behalf of the appellant that the
aforesaid products shall be classifiable as
insecticides under Entry 44(5) and therefore
chargeable to tax at 4%. It is the case on behalf
of the appellant that as the aforesaid products
are manufactured under the licence granted
under the Insecticides Act and therefore the said
products can be said to be insecticides
classifiable under Entry 44(5). The aforesaid has
no substance. It is required to be noted that HSN
Code 3808 has been deleted from Entry 44(5)
Civil Appeal No.1335 of 2010 Page 22 of 32
w.e.f. 01.07.2006 and from 21.01.2006 the
aforesaid products would fall under Sl. No.66
namely ‘Mosquito repellant’, which is the specific
entry and subject to VAT at 12.5%. The
insecticides under Entry 44(5) therefore can be
said to be a general entry. Once there is a
specific entry the ‘Mosquito Repellant’, thereafter
one is not required to go to the definition under
another Act namely Insecticides Act. Sl.No.66 of
Notification SRO 82/06 dated 21.01.2006 issued
under Section 6(1)(d) of the Kerala VAT Act which
covers "Mosquito Repellants”.
9.1 Even otherwise it is required to be noted that
Entry 44(5) which includes insecticides relates to
products which are used in agricultural
operations. All the products in the Entry are
used in the agricultural field in relation to
growing of agricultural products and controlling
of pets, insecticides etc. which are attacking the
plants. Therefore, in view of the specific Entry 66
of Notification SRO 82/06 dated 21.01.2006 the
Civil Appeal No.1335 of 2010 Page 23 of 32
aforesaid products namely Mosquito Repellants,
electric or electronic mosquito repellants, gadgets
and insect repellants, devices and parts and
accessories thereof are rightly classified as
Mosquito repellants. Now so far as the reliance
placed upon the decision of this Court in the case
of Bombay Chemicals Pvt. Ltd. (supra) is
concerned, the said decision shall not be
applicable to the facts of the case on hand while
dealing with the specific entries under KVAT Act.
It was a case under the Central Excise Act and
the Entry corresponding to the Excise Act. In the
present case under the KVAT Act there is a
specific Entry Mosquito repellant so far as the
product electric or electronic mosquito repellents,
gadgets and insect repellents, devices and parts
and accessories thereof are concerned and
therefore the said specific entry shall be
applicable in any case, the same cannot be said
to be insecticides. We are in complete agreement
with the view taken by the High Court that
Civil Appeal No.1335 of 2010 Page 24 of 32
Mosquito Mats, Coils and Vaporizers and Mortein
Insect Killers products shall not be classifiable
under Entry 44(5) as insecticides.
9.2 Now so far as the products Harpic and Lizol is
concerned, it is the case on behalf of the
appellant that the same is classifiable under
Entry 44(5) of III Schedule of KVAT Act HSN
Code 3808 and the said products are also
classifiable as insecticides.
9.3 However, it is required to be noted that after
introduction of SRO 82/06 w.e.f. 22.01.2006 the
Harpic and Lizol would fall under Sl. No. 27(4) of
SRO 82/06. Sl. No.27(4) thus is a specific entry.
9.4 Even the High Court has also considered the use
of the aforesaid two products. The aforesaid two
products are used for cleaning the floor and
toilet. As noted by the High Court and even from
the product description and the nature of use
stated in the products, the said two items are
essentially used as stain removers and
deodorants. Merely because they kill germs as
Civil Appeal No.1335 of 2010 Page 25 of 32
well, the same cannot be said to be insecticides
classifiable under Entry 44(5). What is required
to be considered is the dominant use which is
cleaning and removal of stains of floor and the
toilet. Thereafter, the same shall not fall under
Entry 44(5) – HSN Code No.3808 as insecticides
or disinfectant. Entry 27(4) of SRO No. 82 of
2006 is with respect to stain busters, stain
removers, abir, blue and all kinds of cleaning
powder and liquids including floor and toilet
cleaning. In that view of the matter Entry 27(4)
being a specific entry the same shall be
applicable and the aforesaid two products namely
Harpic and Lizol shall not be classifiable under
general Entry 44(5) and in any case the same
cannot be classifiable under Entry 44(5) as
insecticides. We are in complete agreement with
the view taken by the High Court that the
product Harpic and Lizol shall not be classifiable
under Entry 44(5) and shall be classifiable under
Civil Appeal No.1335 of 2010 Page 26 of 32
Entry 27(4) of SRO 82/2006 chargeable to tax at
12.5%.
9.5 However, so far as the product Dettol is
concerned, it is the case on behalf of the
appellant that Dettol is an Antiseptic Liquid and
therefore is classifiable as a drug/medicine under
Entry 36(8)(h)(vi). The active ingredients of Dettol
are Chloroxylenol IP, Terpineol BP, Alcohol
Absolute IP (denatured) and it is an antiseptic
having germicidal properties and it kills germs,
bacteria and it prevents infection therefore it is
applied on wounds, cuts, grazes, bites and stings.
It is also used in hospitals for surgical use and
medical use.
9.6 Thus the Dettol is used as an antiseptic liquid
and is used in hospitals for surgical use, medical
use and midwifery, due to therapeutic &
prophylactic properties. Therefore, the same can
be said to be an item of medicament to be treated
as a drug and medicine. Here also the dominant
use is a relevant consideration.
Civil Appeal No.1335 of 2010 Page 27 of 32
9.7 In the case of Ponds India Ltd. (supra) this
Court has held that while deciding the issue
whether any particular item would be covered
under relevant entry or classification, different
tests viz. the dictionary meaning, technical
meaning, user’s point of view, popular meaning
etc. are to be applied. In paragraphs 35 & 38 it
is observed and held as under:
“35…..while interpreting an entry in a
taxing statute, the court’s role would be to
consider the effect thereof upon
considering the same from different
angles. Different tests are laid down for
interpretation of an entry in a taxing
statute, namely, dictionary meaning,
technical meaning, user’s point of view,
popular meaning, etc.”
XXX XXX XXX
“38. Whether a product would be a drug or
a cosmetic sometimes poses a difficult
question and, thus, answer thereto may
not be easy. For the said purpose, the
court may not only be required to consider
the contents thereof, but also the history
of the entry, the purpose for which the
product is used, the manner in which it
Civil Appeal No.1335 of 2010 Page 28 of 32
has been dealt with under the relevant
statute as also the interpretation thereof
by the implementing authorities.”
9.8 Thus, as per the settled position of law while
considering a particular entry the principles of
classification which are fundamental to any
matter relating to classification under the taxing
statute are:
(a) plain meaning to be given to the taxing
provision;
(b) burden to prove classification in a particular
entry is always on the Revenue;
(c) any ambiguity has to be resolved in favour of
the assessee and in case of a reasonable doubt,
the construction most beneficial to the assessee
must be adopted;
(d) specific entry would override a residuary
entry; and
(e) resort to residuary entry is to be taken as a
last measure, only when by liberal construction
the specific entry cannot cover the goods in
question.
Civil Appeal No.1335 of 2010 Page 29 of 32
9.9 At this stage it is required to be noted that the
Guwahati High Court and the Rajasthan High
Court have held the Dettol to be a drug under the
respective entries of Assam VAT Act and
Rajasthan VAT Act and have rejected the
submission of the Revenue that the Dettol falls
under the residuary entry. It is to be noted
against the decision of the Rajasthan High Court,
the Revenue had preferred the SLPs before this
Court which are dismissed by this Court.
9.10 In view of the above and considering the
dominant use of Dettol and the active ingredients
of Dettol referred to hereinabove and that the
Dettol is used as an antiseptic and is used in
hospitals for surgical use, medical use and
midwifery due to therapeutic & prophylactic
properties the same would fall under Entry 36(8)
(h) (vi) as claimed by the appellant and would not
fall under the residuary entry as claimed by the
Revenue. To that extent the impugned judgment
Civil Appeal No.1335 of 2010 Page 30 of 32
and order passed by the High Court deserves to
be quashed and set aside.
10. In view of the above and for the reason stated
above, present appeal succeeds in part. The
impugned judgment and order passed by the
High Court in so far as the products Mosquito
Mats, Coils and Vaporizers and Mortein Insect
Killers; Harpic Toilet Cleaner and Lizol Floor
Cleaners is hereby confirmed. So far as the
impugned judgment and order passed by the
High Court with respect to Dettol Antiseptic
Liquid is concerned, the impugned judgment and
order passed by the High Court is set aside and it
is held that the product Dettol would fall under
Entry 36(8) (h)(vi) of Schedule III of the KVAT Act
and shall be liable to be taxed at 4%.
Present appeal is accordingly partly allowed to
the aforesaid extent. However, in the facts and
Civil Appeal No.1335 of 2010 Page 31 of 32
circumstances of the case there shall be no order
as to costs.
…………………………………J.
(M. R. SHAH)
…………………………………J.
(KRISHNA MURARI)
New Delhi,
April 10, 2023
Civil Appeal No.1335 of 2010 Page 32 of 32
Comments
Post a Comment