HIMANI LTD Vs. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES CORPORATE DIVISION

JUDGEMENT

(1.) THESE twelve applications under Section 8 of the West Bengal Taxation Tribunal Act; 1987 are in the nature of applications under articles 226 and 227 of the Constitution of India. The question to be decided is whether "Boroplus", a product of the applicant (henceforth referred to as "the company") is a Homeopathic medicine, an Ayurvedic drug, a drug, or a patent or proprietary medicine, or a cosmetic for the purpose of the West Bengal Sales Tax Act, 1954 ("the 1954 Act", for short). The company has raised the identical question in all these twelve applications which relate to twelve periods, being the periods of 12 months each ending respectively March 31, 1994 (RN -149), March 31, 1983 (RN -150), March 31, 1984 (RN -151), March 31, 1985 (RN -152), March 31, 1986 (RN -153), March 31, 1987 (RN -154), March 31, 1988 (RN -155), March 31, 1989 (RN -156), March 31, 1990 (RN -157), March 31, 1991 (RN -158), March 31, 1992 (RN -159) and March 31, 1993 (RN -160).

(2.) THE company's case is that it carries on the business of, inter alia, manufacturing drugs and medicinal preparations including "Boroplus antiseptic cream" (for short, "Boroplus") for sale. Up to October 15, 1987 Boroplus was manufactured according to Homeopathic system of medicine, but since October 30, 1987 it has been manufactured according to Ayurvedic system of medicine. Reference has been made to Notification No. 1658 -F.T. dated August 1, 1956 issued under Section 25 of the 1954 Act, wherein "drugs" and "patent or proprietary medicine" are included as defined in Section 3 of the Drugs and Cosmetics Act, 1940 (henceforth referred to as "the Drugs Act"). Reference is also made to definition of "medicinal preparation" in Section 2(g) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (in short, "the 1955 Act"). It is claimed that since Boroplus is a medicinal preparation containing rectified spirit, the company applied for and obtained a licence under the 1955 Act for manufacture of the Homeopathic product containing rectified spirit. The registration certificate of the company as a dealer under the 1954 Act and the Central Sales Tax Act, 1956 were amended by inclusion of "Boroplus (Homeopathic medicine)". The company took up the matter with the office of respondent No. 2, Commissioner of Commercial Taxes, who opined in a communication dated January 10, 1984 (annexure "H") that Boroplus was liable to sales tax under the 1954 Act as a drug. [It may be mentioned at this stage that the said communication bearing No. 502 C.T. dated January 10, 1984 was signed by the Public Relations Officer, Commercial Taxes]. But the Commercial Tax Officer (who has not been made a party to these applications) made assessments for the period of 12 months ending March 31, 1983 under the 1954 Act (we need not refer to assessments under the Central Sales Tax Act which are beyond this Tribunal's jurisdiction), holding that Boroplus was a cosmetic, not a drug. From that order of assessment, a writ application under Article 226 of the Constitution of India, being Matter No. 4884 of 1987, was filed in the High Court at Calcutta, in which an interim order dated September 16, 1987 was made, vide annexure "J", page 49. By that interim order prayers (e) and (f) of the writ application were allowed on condition that the applicant would furnish bank guarantee for Rs. 50,000 within a period of two weeks after the long vacation. Another interim order was made in the same matter on December 18, 1992 by the High Court. By the second interim order prayer (a) was allowed. It is stated in paragraph 10 of the application that prayer (a) was for staying the communication dated November 23, 1992 by Commercial Tax Officer informing the company that the Revenue was going to treat Boroplus antiseptic cream as a cosmetic, as the earlier interim order had lapsed. After this Tribunal was set up, the said writ application stood transferred to this Tribunal and was disposed of by judgment and order dated May 6, 1996 in RN -11(T) of 1995, which will be found at pages 12 to 17, annexure B to the present application. By that judgment and order dated May 6, 1996, the writ application was disposed of on consent. The assessment order of 1987 for the period of 12 months ending March 31, 1983 under the 1954 Act and also orders of assessment under the same Act for subsequent periods were quashed. Respondent No. 1, Commercial Tax Officer, Shyambazar Charge, was directed to make fresh assessments under the 1954 Act in respect of Boroplus within a period of one year from the date of the judgment and for that purpose certain directions were given.

(3.) THE applicant -company claims that Boroplus is a drug within the meaning of Section 3(b) of the Drugs Act and it fully satisfies the definition of "drug" in Section 3(b) under notification No. 1658 -F.T. dated August 1, 1956 under the 1954 Act. The Director of Drugs Control, West Bengal was fully satisfied and hence he approved Boroplus as a drug. Composition of Boroplus was also duly approved by him. When Boroplus was manufactured by the applicant -company according to Homeopathic system of medicine, the Director of Drugs Control classified it as "ointment (Homeopathic) medicine" and when it was manufactured according to Ayurvedic system, he classified it as "ointment (Ayurvedic) medicine". There is no scope according to the company to take a different view. It is contended that Boroplus is known, treated and recognised in the medical profession as a drug or medicine. This is evident from certificates and affidavits filed before respondent No. 1. In commercial parlance also Boroplus is claimed to be regarded as such. In support of this, certificates from medical shops, clubs, social organizations and actual users were filed before respondent No. 1. On each tube and carton of Boroplus medicinal properties have been emphasised. So also in the leaflet placed inside each packet or carton. Each active ingredient used in manufacture of Boroplus is covered by authoritative books on either Ayurvedic or Homeopathic system of medicine. The company has challenged the observation of respondent No. 1 to the effect that switching over from Homeopathic system to Ayurvedic system demonstrates that the product was neither a Homeopathic medicine nor an Ayurvedic drug. It is claimed to be a medicine under both the systems. Similarly, respondent No. 1's observation is criticised that Homeopathic medicine can contain only one unmixed medicine at a time. It is stated that combination of Homeopathy medicines is permissible. In paragraph 29 of the application the company pleads that respondent No. 1 erred in holding that an Ayurvedic drug or patent or proprietary medicine must be manufactured exclusively in accordance with the formula described in authoritative books on Ayurvedic system of medicine. It is contended that the aforesaid composition holds good in respect of Ayurvedic drugs defined in Section 3(a) of the Drugs Act, or in the case of patent or proprietary medicine defined in Section 3(h) of the Drugs Act. Allegedly, it was not claimed before respondent No. 1 that Boroplus satisfies the definition in Section 3(a) of the Drugs Act. It is claimed that the composition was arrived at the company's factory after extensive research and experiments. The company also pleads that combination of herbs is permitted in Ayurveda and the respondent was wrong in holding that Boroplus is a petroleum product, percentage of herbs being small. Expiry period of Boroplus is 5 years, but on that basis respondent No. 1 could not say that it was not a medicine.