Orissa High Court
M/S. Dabur India Limited vs State Of Orissa Represented By on 30 November, 2021
Author: A. K. Mohapatra
Bench: A. K. Mohapatra
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV Nos.46, 47, 48 & 49 of 2010
M/s. Dabur India Limited,
Industrial Estate, Mancheswar,
Bhubaneswar ...... Petitioner
(In all the cases)
Mr. Jagabandhu Sahoo, Senior Advocate
-versus-
State of Orissa represented by
Commissioner of Sales Tax, Orissa,
Cuttack ...... Opposite Party
(In all the cases)
Mr. S.S. Padhy, A.S.C.
CORAM:
THE CHIEF JUSTICE
JUSTICE A. K. MOHAPATRA
ORDER
Order No. 30.11.2021
Dr. S. Muralidhar, CJ
10. 1. These four Revision Petitions filed by the same assessee M/s.
Dabur India Limited arise from a common set of facts involving the same question of law. Therefore, they are disposed of by this common order.
2. Although the Petitioner Assessee urged two questions of law in the petitions, Mr. Sahoo at the outset stated that he was pressing only question (i) which reads thus:
Page 1 of 7Whether Hajmola candy is exigible to tax as an Ayurvedic medicine under list A of the Orissa Sales Tax Act, 1947 ('OST Act')?
3. The background facts are that the Petitioner Assessee is a public limited company engaged in manufacturing and selling of a variety of products including ayurvedic medicines. During the relevant periods i.e., 1993-94, 1994-95, 1997-98 and 1998-99, the Petitioner was initially assessed under Section 12 (4) of the OST Act. Subsequently, as per the objection raised by the A.G. audit, the Sales Tax Officer (STO) reopened the assessments under Section 12 (8) of the OST Act. The objection mostly concerned payment of sales tax by the Petitioner @ 4% by treating its products, including Hajmola candy as Ayurvedic medicines. The STO however in the assessment order dated 29th July, 1996 treated the products as residual goods taxable @ 12% sales tax. Accordingly, a demand was raised in the sum of Rs.7,24,802/- for the period 1993-94. Likewise, the demand for the period 1994-95 was Rs.7,03,361/-, for 1997-98 Rs.7,31,717/- and for 1998-99 Rs.13,14,901/-.
4. Being aggrieved by the above order of re-assessments, appeals were filed by the Petitioner, which were disposed of on various dates by the Assistant Commissioner of Sales Tax (ACST) holding that Hajmola candy is an Ayurvedic medicine and needs be taxed at the prevailing rate of tax under Entry-37 of the list of goods.
Page 2 of 75. Against the order of the ACST, further appeals were filed by the Assessee before the Orissa Sales Tax Tribunal (Tribunal) in Second Appeals. Cross-objections were filed by the Department. The sole question of law framed by the Tribunal for consideration was, "whether Hajmola candy is exigible to tax as an Ayurvedic medicine."
6. The appeals filed by the State were allowed and those of the Assessee were dismissed and the order of the ACST was set aside by the Tribunal. It was held that Hajmola candy is not an Ayurvedic medicine and as such the same is liable to be taxed at the rate at which confectionary items are taxed. The re-assessment orders of the STO were accordingly restored.
7. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Counsel appearing for the Petitioner and Mr. S.S. Padhy, learned Additional Standing Counsel for the Department.
8. A perusal of the impugned order of the Tribunal reveals that the tribunal primarily relied on the decision of the West Bengal taxation Tribunal (WBTT) in Dabur India Limited v. ACCT/Corporate Division (2007) 5 VST 190 (WBTT). In the said decision, the WBTT took note of the decision of the Special Bench of the CEGAT, New Delhi in Dabur India Ltd. v. Collector of Central Excise, Meerut 1994 (71) ELT 1069 (Tri) holding that Hajmola candy does not fall in the entries of drugs and medicines and it is taxable as a confectionery.
Page 3 of 79. A perusal of the decision of the CEGAT in Dabur India Ltd. v. Collector of Central Excise, Meerut reveals that the question involved there was as under:
"Whether the product 'Hajmola Candy' manufactured by the appellants is classifiable under sub-heading 3003.30 as medicaments as claimed by the appellants or under sub-heading 1704.90 of the Central Excise Tariff Act as per the revenue?"
The question was answered by the CEGAT, after referring to the decision of the Madhya Pradesh High Court in Panama Chemical Works v. Union of India 1992 (62) ELT 241 (M.P.) as under:
"On a careful consideration of the submissions made by both sides with reference to the facts and case law, we find that this issue has been covered by the decision of the Madhya Pradesh High Court in the case of Panama Chemical Works as it was rightly pointed out by the appellants' counsel. Since the ingredients of 'Swad' and 'Hajmola' are one and the same, we are not inclined to take different view on this issue. It is not even the case of the Department that ingredients of Hajmola are different from Swad. The Hon'ble High Court after examining the ingredients of the item with reference to the provision of Drugs & Cosmetics Act, authoritative Ayurvedic text books, and experts' opinion arrived at the conclusion that it was an Ayurvedic medicine. No contrary decision of any High Court or of Apex Court with reference to the item in question or of identical goods having similar ingredients placed before us. The position would have been different if it was so. In the absence of any contrary decision respectfully we are following the decision of Madhya Pradesh High Court on this issue. Accordingly, we hold that Hajmola Candy is classifiable under heading 3003.30 of C.E.T."Page 4 of 7
Clearly therefore the Tribunal in the instant case committed a fundamental error in omitting to notice what was actually decided in Panama Chemical Works v. Union of India (supra).
10. There is also the decision of the CEGAT, New Delhi in Commissioner, Central Excise, Chandigarh-I v. Dabur India Ltd. 2002 (144) ELT 365 (Tri-Del.). There again the question was of exigibility of Hajmola Tablets to excise duty. Following the earlier decisions, the CEGAT reiterated that Hajmola Tablets are Ayurvedic medicines. Similar appeals filed by the Department against the said decision were dismissed by the Supreme Court vide order dated 6th September, 2002 in Civil Appeal No.5172-77 of 2002.
11.1 In Dabur India Ltd. v. Commissioner of Central Excise, Jamshedpur (2005) 4 SCC 9, the dispute involved classification of 2 items manufactured by the Appellants, namely (1) 'Lal Tail'; and (2) 'Janam Ghunti'. The assessee's case was that 'Lal Tail' had all the ingredients mentioned in Ayurvedic Text Books and had therapeutic properties. However, the Department contended that it could not be considered as a drug. The Supreme Court noticed that, apart from showing that the popular meaning attached to it by use of the product supported the case of the appellants, they had shown that, "they have a Drug Controller's Licence for the product and they have also produced evidence by way of prescriptions of Ayurvedic doctors, who have prescribed these for treatment of rickets."
Page 5 of 711.2 The Department, on the other hand, did not produce any evidence to show that in common parlance the product was not treated as a medicament. After referring to the decisions in Shrre Baidyanath Ayurved Bhavan Ltd. v. CCE (1996) 9 SCC 402 and CCE v. Vicco Laboratoties (2005) 4 SCC 17, it was held by the Supreme Court as under:
"The product must be classifiable according to the popular meaning attached to it by those using the product. As stated above, in this case the appellants have shown that all the ingredients in the product are those which are mentioned in Ayurvedic textbooks. This by itself may not be sufficient but the appellants have shown that they have a Drug Controller's licence for the product and they have also produced evidence by way of prescriptions of Ayurvedic doctors, who have prescribed these for treatment of rickets. As against this, the Revenue has not made any effort and not produced any evidence that in common parlance the product is not understood as a medicament."
12. In the present case as well the assessee had satisfactorily demonstrated that the product in question was an Ayurvedic Medicine, for which the assessee possessed a trade licence.
13. To the same effect is the decision in Sunny Industries (P) Ltd. v. Collector of Central Excise, Calcutta (2003) 4 SCC 280.
14. For the aforementioned reasons, the question of law framed by this Court is answered in the affirmative, i.e. in favour of the Petitioner Assessee and against the Department, by holding that Hajmola Candy is exigible to tax as Ayurvedic Medicine in terms of the List-A of the OST Act.
Page 6 of 715. The impugned orders of the Tribunal and the STO are hereby set aside.
16. The revision petitions are disposed of accordingly.
17. An urgent certified copy of this order be granted as per rules.
(Dr. S. Muralidhar) Chief Justice (A. K. Mohapatra) Judge S.K.Parida Page 7 of 7