State Taxation Tribunal - Rajasthan
Subh Laxmi Agencies vs Assistant Commissioner, Commercial ... on 14 March, 1996
Equivalent citations: [2003]133STC371(TRIBUNAL)
JUDGMENT
Milap Chandra Jain, J. (Chairman)
1. These revision petitions, have been filed under Section 86(1) of the Rajasthan Sales Tax Act, 1994 read with Section 7, Rajasthan Taxation Tribunal Act, 1995 against the common order of the Rajasthan Sales Tax Tribunal, Ajmer (now Sales Tax Board) (in short, "Tax Board") dated August 22, 1995 by which it has dismissed the appeals of the assessee-petitioner and confirmed the orders of the Deputy Commissioner (Appeals), Jodhpur dated September 24, 1993 and March 31, 1995, maintaining the reassessment order (relating to assessment year 1987-88) dated March 31, 1987 passed under Section 12 of the Rajasthan Sales Tax Act, 1954 (hereinafter be called "the old Act") and assessment order (relating to assessment year 1992-93) dated July 1, 1994 passed under Section 10(3) of the old Act, holding sanitary napkin as a toiletry article and cosmetic article respectively and levying tax at the rate of 10 per cent and 12 per cent respectively.
2. The revision petition No. 8 relates to the assessment year 1987-88 and revision petition No. 9 relates to the assessment year 1992-93.
3. The facts of the case giving rise to these revision petitions may be summarised thus. The assessee-petitioner carries on the business of medicines, drugs, pharmaceutical products and sanitary napkins. Assessment order in respect of the assessment year 1987-88 was passed under Section 10(3) of the old Act on November 2, 1988, levying tax on sanitary napkins at the residuary rate of 8 per cent. Notice was issued under Section 17 of the old Act on August 25, 1989. Reply was filed but no order was passed. Thereafter, notice under Section 12 was issued on June 16, 1992 stating that sanitary napkin was to be taxed at the rate of 12 per cent being a toiletory article, referring Bhilai Traders v. Commissioner of Sales Tax (1985) 12 STL 244 (MP) (Tribunal). Assessee-petitioner filed its reply that sanitary napkin is neither a toiletory nor a cosmetic article and it is a medicine. It was also stated in the alternative that the assessment order was rightly passed taxing it at the residuary rate of 8 per cent. Regular assessment order was passed in respect of the assessment year 1992-93 levying tax on sanitary napkins at the rate of 12 per cent treating it as a cosmetic article. Appeals were filed before Deputy Commissioner (Appeals), Jodhpur and they were dismissed. Thereafter, the assessce filed second appeals before the Tax Board. They were also dismissed.
4. The learned counsel for the petitioner contended that the Sales Tax Revision No. 8 of 1995 deserved to be allowed only on the ground that notice under Section 12(1) was not issued within 5 years as required under Section 12(2) of the old Act.
5. The learned counsel for the department contended that it was clear from the order dated June 2, 1993 of the assessing authority passed under Section 12(1) of the old Act that it related to the assessment year 1987-88 and the notice was admittedly issued under Section 12(1) on June 16, 1992, within five years of the assessment year 1987-88.
6. There is no substance in the aforesaid contention of the learned counsel for the petitioner. It is clear from the reassessment order dated June 2, 1993 that it related to the accounting period from April 1, 1986 to March 31, 1987 and thus the assessment year was 1987-88. The last date for issuing notice under Section 12(2) of the Act for the assessment year 1987-88 was March 31, 1993. As already said, notice under Section 12(1) was issued on June 16, 1992. Obviously, it was issued within limitation.
7. The main question of consideration in these two revision petitions is about the nature of sanitary napkins. Whether it is a toiletory article or a cosmetic article or a medicine or an article falling in the residuary entry ? Admittedly, tax was levied on sanitary napkins during the assessment years 1983-84, 1984-85, 1988-89 and 1989-90 at the residuary rate, during the assessment years 1985-86, 1986-87 and 1987-88 it was treated as a toiletory article and during the assessment year 1992-93 it was taxed as a cosmetic article, by the assessing authorities.
8. It was contended by the learned counsel for the petitioner that sanitary napkin is a medicine, it is used by the patients during and after surgical operation to absorb blood and to escape from infection, by ladies to absorb blood during menstruation period and to escape from infection and as such taxable at the rate of 4 per cent. He also contended that it is neither a toiletory article nor a cosmetic article and as such the assessing authority rightly levied tax initially at the residuary rate. He relied upon Roopkala Industries v. State of Bombay [1956] 7 STC 557 (Bom) (Trib.), C.C. Mahajan and Co. v. State of Bombay [1958] 9 STC 133 (Bom), Commissioner of Sales Tax, Madhya Pradesh v. Subhash Stores [19681 22 STC 9 (MP), State of Gujarat v. Prakash Trading Co. [1972] 30 STC 348 (SC) and State of Gujarat v. C.K. Gauze Bandage Manufacturing Company [1992] 84 STC 571 (Guj).
9. In reply, it has been contended by the learned counsel for the department that the authorities have rightly held sanitary napkins as a toiletry/cosmetic article and not as a medicine. He also contended that in common/commercial parlance, it is considered as such. The petitioner itself did not challenge the earlier assessment orders imposing tax at the residuary rate and not treating it as a medicine. He relied upon Sialkot Trading Company v. Assistant Commissioner of Sales Tax [1980] 45 STC 245 (Delhi), Bhilai Traders v. Commissioner of Sales Tax (1985) 12 STL 244 (MP) (Trib), Sarin Chemical Laboratory v. Commissioner of Sales Tax [1970] 26 STC 339 (SC), Commissioner, Sales Tax v. Sarin Chemical Laboratory [1969] 24 STC 406 (All.), State of Gujarat v. Prakash Trading Co. [1972] 30 STC 348 (SC), State of West Bengal v. Washi Ahmed [1977] 39 STC 378 (SC), Porritts & Spencer (Asia) Ltd. v. State of Haryana [19781 42 STC 433 (SC), Ramavatar Budhaiprasad v. Assistant Sales Tax Officer [1961] 12 STC 286 (SC) ; AIR 1961 SC 1325, Murari Brothers v. Assistant Commercial Taxation Officer [1981] 48 STC 286 (Raj), Commissioner of Sales Tax v. Raj & Co. [1986] 62 STC 76 (All.) and Commissioner of Sales Tax v. Vicco Laboratories [1968] 22 STC 169 (Bom).
10. Neither medicine nor cosmetic article nor toilet article was defined in the Rajasthan Sales Tax Act, 1954 or in the Rajasthan Sales Tax Rules, 1955. It is well settled law of interpretation of fiscal statutes that when the word or term is not defined by the statute, the court should try to find out the meaning in the popular parlance or in the common parlance. It has been observed in Sarin Chemical Laboratory v. Commissioner of Sales Tax, U.P. (1970) 2 SCC 403 ; [1970] 26 STC 339 (SC), para 3 (sic) as follows :
"In State of West Bengal v. Washi Ahmed [19771 39 STC 378 (SC) ; (1977) 2 SCC 246, it has been observed that, the word of every day use must be construed not in any technical sense, not from any botanical point of view, but as understood in common parlance."
The question is : How the commodity is known amongst the persons dealing with it ? Over and above the test of popular or common parlance, equally important test is about its primary use. Very often by applying the test of primary or principal use of the article in question, the courts have tried to determine the nature of the article. It is not in dispute that sanitary napkins are used to absorb blood and to protect the body from infection. The word "medicine" is comprehensive enough to include anything which is to be applied for the purpose of healing, whether externally or internally. The word "drug" is neither defined in the old Act nor in the new Act. Section 3(b)(i) of the Drugs and Cosmetics Act, 1940 defines it as follows :
"3(b)(i). All medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes."
It is not the case of the petitioner that sanitary napkins are used for the purpose of diagnosis, healing, treatment, mitigation or prevention of any disease or disorder. Person dealing with it do not treat it as medicine or a drug. It has been observed in Murari Brothers v. Assistant Commercial Taxation Officer [1981] 48 STC 286 (Raj), that mainly because three varieties of Kazal manufactured and sold by the assessee were purely Ayurvedic preparation, they cannot be held as medicines. As such it cannot be said to be a drug or medicine.
11. The term "cosmetics" is a general term. It includes all articles intended to beautify, adorn, protect or improve the skin, the human body or part thereof. It means a preparation for cleansing or protecting skin. [See State of Orissa v. Reckitt and Colman of India Limited [1995] 97 STC 279 (Orissa)]. It is connected with the idea of beauty or beautifying [See [1956] 7 STC 557 (Bom)(Trib) Roopkala Industries v. State of Bombay). Sanitary napkins are not used for such a purpose. Persons dealing with it do not consider it to be a cosmetic.
12. The expression "toilet article" is intended for a wider range of objects than is covered by the expression "cosmetics". It includes within its scope a large variety of articles and the category may not be capable of easy definition although in a given case it may not be difficult to see whether the article falls within that category or not. It has been observed in Commissioner of Sales Tax v. Subhash Stores [1968] 22 STC 9 (MP) at page 11, para 4, as follows :--
"The meaning of the word 'toilet', as given in Webster's International Dictionary, is 'act or process of dressing, especially, formerly of dressing hair, now usually cleansing and grooming of one's person'. It also means 'the process of washing, grooming and arranging one's self for the day's activities or for a special occasion'. Toilet soap, toiletry, etc., are given as illustrations. 'Toiletry' means 'an article or preparation used in making one's toilet (such as a soap, lotion, cosmetic, tooth-paste, shaving cream, cologne etc.)'. If the expression 'toilet article' is interpreted as having relation to the process of washing, grooming and arranging one's self for the day's activities or for special occasion, it will cover a large variety of articles, such as, dressing-table in the bath-room and the sanitary fittings".
As such sanitary napkins will be said to be a toiletry article. In the notification No. F.5(16)FD(CT)/69-2 dated 8th March, 1969 issued under Section 5 of the old Act, "all toilet articles" found mention in the entry No. 57 along with "cosmetics". Thereafter, "toilet article" was not included in any entry of any notification issued under Section 5 of the old Act, in supersession of all such previous notifications. Entries No. 69 of Notification dated 8th March, 1988, No. 72 of Notification dated 23rd March, 1989, No. 70 of Notification dated 27th June, 1990 and No. 71 of Notification dated 4th March, 1992 dealt with almost all articles, mentioned in entry No. 57 of the Notification dated 8th March, 1969, except "toilet articles". After the supersession of the notification dated 8th March, 1969, toilet articles were thus taxable at the residuary rate. It was thus taxable at the rate of 10 per cent during the assessment year 1987-88 (entry No. 57 dated 8th March, 1969) and at residuary rate during the assessment year 1992-93.
13. Accordingly, the revision No. 8 is dismissed. The revision No. 9 is allowed. It is held that sanitary napkins were exigible to tax as toilet articles. The orders of the assessing authority, of the Deputy Commissioner (Appeals) and of the Rajasthan Tax Board, Ajmer are accordingly modified in respect of the assessment year 1992-93. Amounts collected in excess will be refunded within three months. No order as to costs.