Bombay High Court
Vicco Laboratories vs The Municipal Commissioner, Mumbai And ... on 22 February, 1991
Equivalent citations: AIR1992BOM17, 1991(3)BOMCR68, AIR 1992 BOMBAY 17, (1991) 3 BOM CR 68
JUDGMENT
1. The questions involved in these Appeals is as to whether the products known as Vicco Vajradanti tooth paste, tooth powder and Vicco Turmeric Vanishing Cream, are the proprietary Ayurvedic medicinal prepartions or toilelt requisites (schedule-items) for the purpose of levy of octroi, as enumerated vide item 32(a) of Schedule H of the Bombay Municipal Corporation Act, (the Act)?
2. The Respondent-Corporation on 30th April, 1979 levied and recovered octroi on the products of the Appellant-firm on their entry being made within its municipal limits. The appellants in appeals under Section 217 of the Act before the Court of Small Causes, Bombay questioned the legality and correctness thereof. The trial Court recorded a finding that the products are schedule items and liable to the payment of octroi duty the trial Court orders dated 27th Nov. 1981 which are impugned before me, dismissed the appeals.
3. It is reiterated in the instant appeals that the products are Ayurvedic medicinal preparations. They are produced from the natural hurb and barks as prescribed by Authoritative books on Ayurveda. These products are primarily meant for the teeth ailment or diseases and the Dentists prescribe them as medicine.
The products are being manufactured under the Ayurvedic Medicine Licence dated 1st June 1972 granted under the Drugs and Cosmetics Act. Cl. (c) of S. 18 of the said Act prohibits manufacture and sale of such products in absence of licence, Moreover Sales Tax Authorities by order dated 31st July 1976 held that the tooth paste and tooth powder are the proprietary Ayurvedic medicine meant for mitigation or prevention of disease connected with teeth. It is urged that even after amendment with effect from 1st April 1984 in entry C-I-24(i) of the Bombay Sales Tax Act, excluding tooth paste and tooth powder from the category of medicine, the licence as granted on 1st June 1972 has not been withdrawn. It is further pointed out that Indian Standard Institution by its letter dated 29th May 1979 has opined that these products since manufactured under the Ayurvedic Drugs Licence and being classified as Ayurvedic medicine, cannot be covered under the existing I.S.S. It is also pointed out that the Civil Court as regards payment of excise duty has held that the products are Ayurvedic medicinal preparations and this finding is confirmed in First Appeal No. 613 of 1982 by the Division Bench of this Court vide its judgment and order dated 27th April 1988.
It is therefore submitted that the products cannot be treated differently for the purpose of sales tax or excise duty or payment of octroi, particularly when the Drugs authorities, Excise and Sales Tax authorises, treated the products as Ayurvedic medicine. They as such could not be considered as toilet requisites for the payment of octroi duty.
4. It is further submitted on behalf of the appellants that to prove a particular product is covered by the schedule items, burden lies on the Taxing Authority. However, the Corporation has not examined either any dealer or customer to substantiate that the products are used as toilet requisites. Hence the Corporation failed to discharge the burden. The Corporation principally refused to treat the products as medicinal preparations as averred in the written statement on the ground of failure on the part of the appellants to produce certificate in that behalf from the Drugs Authority. The appellants then contended that the trial court has held that the products are toilet requisites as well as medicine. As such the Assessee is entitled to classification, beneficial to them.
5. With the assistance of the learned Counsel. I have perused the record on which reliance has been placed. According to me the views taken by the Excise and Sates Tax Authority or the Civil Court and the opinion tendered by the Indian Standard Institute, are having regard to the material placed before them. They are confined to the facts and circumstances of the case. However, those views and opinion cannot have an universal application. Moreover, I may mention at this stage that the Drugs Authority initially on 16th March 1965 granted licence to the appellants for the manufacture of these products as cosmetic. It is tried to urge before me that the. products have basically been Ayurvedic medicinal preparations. However, at the relevant time, the Drugs Authority had no machinery as provided under R. 154 (2) to investigate the nature of the product. And the Appellants had to obtain a licence as a cosmetic, perforce, as there was a threat of prosecution. This submission is without any merit. Even in the absence of any such machinery to investigate the Authorities were not obliged to grant licence as cosmetic. Moreover, the products as claimed have been Ayurvedic medicinal preparations, the Appellants were not under legal obligation to seek licence as a cosmetic. Furthermore the Division Bench of this Court, as reported in (1968) 22 STC 169 Commissioner of Sales fax-Appellants v. Vicco Laboratories -- Repdt, has held the product as toilet article. In view of the divergent and inconsistent views, it will have to be ascertained on the basis of the material placed before the trial court as to what is the nature of the products.
Undispuledly as laid down in Burmah Shell Oil Storage Co. v. Belgaum Borough Mun. octroi is a tax payable on goods so as to make entry within the municipal limits, for the purposes of sale, use or consumption. Therefore the pertinent question is what has been the common and general use of the products? In the absence of any statutory definition of toilet requisites, as laid down by the Supreme Court in M/s. Sarin Chemical Laboratory v. Commissioner of Sales Tax U.P. and State of Gujarat v. Prakash Trading Company, it is obligatory to ascertain as to what the people understood in common parlance, the product, as Ayurvedic medicine on dental diseases or toilet requisites?. This would be the decisive test.
6. Mr. V. R. Manohar, the learned counsel, appearing for the appellants, made a submission that the products tooth paste and tooth powder, are capable of being used for cleaning teeth. However, that is an ancillary use. The primary use of the product, according to the learned counsel, is a medicine to cure ailments and/or dental problems. He invited my attention to a decision Ayurveda Pharmacy v. State of Tamil Nadu. Some Ayurvedic preparation described as Arishtamas and Asavas, containing high percentage of alcohol were subjected to different rates of sales tax. The Supreme Court has held it as discriminatory and violative of Art. 14 of the Constitution. It is observed, "so long as they continue to be identified as medicinal preparations they must be treated, for the purposes of the sales tax law, in like manner as medicinal preparations generally, including those containing a lower percentage of alcohol". However, the authority, in my opinion, is of no assistance for the purpose of adjudication over the question involved in these appeals.
Mr. Manohar then placed reliance upon a decision , Adhyaksha Mathur Babu's Sakti Oushada-laya Dacca (P) Ltd. v. Union of India. It is urged that the secondary use of the product has no relevance. The product before the Supreme Court was meant for health tonic and also capable of being used as ordinary alcoholic beverages. The Supreme Court has held the products cannot be treated as outside the category of medicine. Another case on which reliance is placed is reported in (1968) 21 STC 448. The State of Madras v. S. P. "Vadivel Nadar and Sons. The Madras High 'Court has observed "the medicinal preparation which is mainly used as a cure for skin diseases' but merely because its application may incidentally lend beauty will not alter the true character of the article". Keeping in view the ratio as laid down let us ascertain the primary and ordinary use of the products in question, and their identity in the public in general.
7. Mr. Dalai, the learned counsel appearing for the respondent Corporation made a submission that at the time of entry of the goods within the municipal limits, as per the relevant rules of octroi, the transporter has to make a declaration in a statutory prescribed form which is appended to the relevant rules as Form A. According to Mr. Dalai in the said declaration the appellant's agent has declared the product as tooth paste and tooth powder, and not the Ayurvedic Medicinal preparations. Tooth paste and tooth powder being articles of toilet, they have been rightly assessed and octroi was recovered. However, ongoing through the record, with the assistance of the learned counsel for both sides, I could not find any such declaration. As such this aspect would not render any guidance cither way.
Mr. Dalai then contended before me, that even if the products are medicinal preparations they do not cease to be a toilet requisite which is their basic characteristic. According to him that is the use commonly known to the people. The products are admittedly used for cleaning teeth and cleaning teeth is main and ordinary purpose and use of the products. I find substantial force in this submission.
8. It is rather difficult to conceive that the cleaning of teeth is an incidental use of the product as urged by the appellants. Cleaning of teeth is a contingence of perennial nature. The ailment of teeth or dental problems would comparatively be a contingency either occasional or temporary in nature. Cleaning teeth is also a process of hygene which may prevent dental diseases and may bring longevity. However, that would be the result of cleaning. Cleaning of teeth is primary purpose and that is the primary and ordinary use of the tooth paste and powder.
9. From the record it appears that these products are undisputedly available for sale in the General and/or provisional stores. Shri G. K. Pendharkar, partner of the appellants firm, has admitted in his deposition that the product can be purchased by anybody from the open market. This is suggestive of the nature of marketing of the product. And the same is estimated in a transaction as an article of daily need. It is urged that like allopathic medicine licence is not necessary for sale of Ayurvedic preparations. Hence they are available in open market. This aspect of sale without licence has hardly any bearing.
Mr. Pendharkar further admitted in his evidence that the word 'medicine' has not been used in advertisement of the product. Exhibits 6 and 7 are the advertisements wherein the products have been introduced as tooth paste and tooth powder. Similarly the vanishing cream has been introduced for the purpose to enhance beauty. Mr. Manohar has invited my attention to the observations made by the Division Bench of this court in a judgment dated 27th April 1988 in First Appeal No. 613 of 1982. It is observed that what is indicated by the Plaintiffs in the advertisements given for the two products would appear to be not decisive of the matter one way or the other. According to me even if the same is not decisive to ascertain the real purpose and common use of the products, still this aspect is of definite significance. The manufacturer even though claim their products as Ayurvedic medicinal preparations, introduce them to consumers as toilet requisites or articles of toilet. They propagate the use of the products as tooth paste and tooth powder. May be their business planning or a skill to promote marketing, they definitely intend that the consumer to understand the use of the products as tooth paste and tooth powder.
10. Dr. Pai a witness examined by the appellants is a Dental Surgeon. He admitted in his cross-examination that he does not prescribe this product to all the patients attending his dispensary. He further says that prescription depends upon the nature of dental ailment of each patient. He further categorically says that he does not recommend any tooth paste or tooth powder for his patients with dental problems. He claims that these two products have the effect of curing the root cause of the disease as also the preventing the disease. Even accepting his testimony it is clear that tooth paste or tooth powder is not meant to be prescribed as medicine for the dental problems. At the best it can be assumed that the products of the appellants unlike ordinary tooth paste and tooth powder, might have a distinction of having some medicinal properties. However, thereby it does not alter the nature or character of the products. The products basically being tooth paste and tooth powder even with some speciality they are meant for primary and common use of cleaning teeth. And that is the use indicated by the manufacturers and understood by the consumer.
Dr. Upasani another witness examined by the appellants is a Medical Practitioner. He was shown Exh. 12 bottle of "Leembah". He stated that it was not a medicine. The appellants also examined Mr. Fernandes, Assistant Commissioner of Drugs Administration, Bombay. He was confronted with Exh. 12 "Leembah" and Vicco Vajradanti Exh. 3. He admits that on reading the literature printed on the packing of these products with regard to their ingredients in both products are more or less the same. He stated that the department granted licence as Ayurvedic medicinal category to the appellants for product Exh. 3 (Vicco Vajradanti) whereas to "Leembah" (Ext. 12) under the category of cosmetic. He further stated that because the appellants made a claim that their products contains ingredients having a therapeutic value, licence under Ayurvedic category was granted. The aspect as revealed from the deposition of Mr. Fernandes is very reflective that the licence for Ayurvedic medicine was granted as claimed by the appellants and not on verification of the ingredients or general and common use of the products. The witness has further stated that from consumer point of view, they (products) may be used according to the claims and the use as suggested on the label of the product. It is thus crystal clear that the consumer makes use of the products as prescribed through advertisements or labels on the packages of the products which as discussed has been introduced as tooth paste and tooth powder.
11. Taking into consideration the following aspects :
A) Use of the products for cleaning teeth, which is a primary and everyday affair;
B) Availability of the products in open market and provisional stores;
C) Gesture of the manufacturer through advertisement to appraise the consumer the use of the product as a tooth paste and tooth powder (may be with some distinction); D) People in common parlance understood the use of the products for cleaning teeth;
E) Licence of Ayurvedic Medicine has been granted on the claim and not on ingredients and the general use of the products; and to similar product 'Leembah' as a cosmetics; F) Ordinarily tooth paste and tooth powder are not prescribed by Dentists for ailment of teeth, I reach a conclusion that the products are toilet requisites and that is the use understood by the people in ordinary sense. As such they are covered as the schedule item.
12. Mr. Dalai relying upon the decision of the Full Bench of this court Municipal Corporation for Greater Bombay v. Monopol Chemicals Pvt. Ltd. made a submission that the heading of the schedule is an integral part of the items mentioned therein. He invited my attention to the entry clause (v) of schedule H which refers to amongst others toilet requisites. Under this heading as per the item 32(a) toilet requisite of all kinds..... tooth powder and tooth paste.
Mr. Dalai, therefore, made a submission that the products arc being used for cleaning teeth. Whatever may be the quality or distinction or speciality of the products it is basically a toilet requisite. Mr. Dalai further relying upon a decision . The Bank of Chettinad Ltd. v. The Commissioner of income-tax, Madras, made a submission that as per the principles of fiscal Legislation, if a person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. In view of this Mr. Dalai contended before me that the products come under schedule item by its very nature, description and use in common parlance. As such it could not escape the liability of payment of octroi duty even if the products might be having some characteristics of medicinal preparation. I agree with the submission as made.
The products are covered by the schedule items. The Appeals therefore must fail and the same are dismissed.
13. Appeals dismissed.