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

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