Madhya Pradesh High Court
Commissioner,Commercial Tax ... vs M/S Reliance Medical Agency,Indore on 14 August, 2025
Author: Vivek Rusia
Bench: Vivek Rusia
NEUTRAL CITATION NO. 2025:MPHC-IND:21637
1 MCC 905-2007, 906-2007 & 907-2007
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI
MISC. CIVIL CASE No. 905 of 2007
COMMISSIONER,COMMERCIAL TAX M.P.,INDORE
Versus
M/S SETH MEDICAL AGENCY,INDORE
..........................................................................................................................
Appearance:
Shri Sudeep Bhargava, learned Deputy Advocate General for the
applicant/State.
.............................................................................................................................
WITH
MISC. CIVIL CASE No. 906 of 2007
COMMISSIONER, COMMERCIAL TAX M.P., INDORE
Versus
M/S RELIANCE MEDICAL AGENCY,INDORE
..........................................................................................................................
Appearance:
Shri Sudeep Bhargava, learned Deputy Advocate General for the
applicant/State.
.............................................................................................................................
WITH
MISC. CIVIL CASE No. 907 of 2007
COMMISSIONER,COMMERCIAL TAX M.P.,INDORE
Versus
M/S RELIANCE MEDICAL AGENCY, INDORE
Signature Not Verified
Signed by: SOUMYA
RANJAN DALAI
Signing time: 14-08-2025
16:59:59
NEUTRAL CITATION NO. 2025:MPHC-IND:21637
2 MCC 905-2007, 906-2007 & 907-2007
..........................................................................................................................
Appearance:
Shri Sudeep Bhargava, learned Deputy Advocate General for the
applicant/State.
.............................................................................................................................
Reserved on : 08/08/2025
Pronounced on : 14/08/2025
ORDER
Per: Justice Binod Kumar Dwivedi Regard being had to the similitude of controversy involved in the aforementioned petitions, they are being heard analogously and disposed of by this common order. For the sake of convenience, the facts of MCC No. 905/2007 are taken.
02. This petition has arisen out of order dated 16.12.2004 passed in MCC No. 216/1999 (Commissioner of Commercial Tax, Indore vs. M/s. Seth Medical Agency) whereby the Division Bench of this Court has given direction to the Board of Revenue to draw a statement of case and refer the following question of law said to arise out of the order dated 26.12.1995 passed by Board in Appeal No. 7-2/5/279/94 within 3 months from the date of this order under Section 44(1) of the Act:-
"Whether under the facts and circumstances of the case, the Board of Revenue was justified in holding that "Isabgol Husk" is covered under medicines and, therefore, is taxable at the rate of 3% under Entry 16 of Part IV of Schedule II and Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637
3 MCC 905-2007, 906-2007 & 907-2007 not taxable under Entry 13 under Part VI of Schedule II of M.P.G.S.T. Act as Kirana goods?"
03. Facts in background of this reference are that assessee dealing in veterinary medicines, observant cotton and Sat. Isabgol in compliance of notice for assessment along with their books of accounts and other relevant documents appeared before the assessing authority. During scrutiny of declaration forms, it was found that assessee has imported Sat. Isabgol of Rs.60,949/- from Siddhpur along with other medicines. On this considering it as medicine, tax @ 3% was deposited. Assessing authority referring memo No. Vik/1/1028/A, Indore, dated 09.10.1967 and Circular No. A-3-26-90/ST-5/63 dated 31.07.1990 found that Isabgol has been mentioned as grocery (Kirana) item at serial No. 13 of the aforesaid memo and circular which is taxable @ 12%, therefore, a show cause notice was given to the assessee for false declaration under Section 43(1) M.P. General Sales Tax Act, 1958 (hereinafter for short referred 'the Act') why penalty be also not imposed. The assessee filed explanation offered in writing mentioning that Sat. Isabgol used as medicine, therefore, it comes in the category of medicine leviable tax @ 3%. Assessee relied upon the definition given under Drugs & Medicines. Assessing officer finding explanation as not satisfactory, assessed taxable sales to the tune of Rs.3,75,720/-. Ultimately total tax amount Rs.13,974/- was fixed and after adjusting the tax amount of Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637
4 MCC 905-2007, 906-2007 & 907-2007 Rs.7,527/- already paid, rest amount along with penalty amount as fixed was ordered to be paid. This order of the assessing officer was challenged before the Deputy Commissioner Sales Tax under Section 38(5) of the Act, who vide order dated 28.03.1994 (Annexure A/2) upheld the order passed by Additional Sales Tax Officer, Indore and dismissed the appeal. Order in appeal No. 7-2/5/379/94 dated 28.03.1994 was put to challenge in Second Appeal under Section 38(2) of the Act before the Board of Revenue, who vide order dated 26.12.1995 (Annexure A/3) allowing the Second Appeal, set aside the order of Appellate Deputy Commissioner holding that Sat. Isabgol is separate item mainly used as laxative and assessing officer and 1st Appellate Court have erred in considering it as the same as Isabgol which is mentioned in the list of Kirana items in Memo and Circular mentioned herein-above. The penalty of Rs.6000/- under Section 43(1) of the Act was also waived as no malafides were found to have been proved on the part of appellant/assessee.
04. The applicant by application Annexure A/5 applied to the Board of Revenue for making the reference to this Court of Law as to whether Isabgol / Sat. Isabgol which are two names of the same item is a Kirana item liable to be taxed @ 12 per cent or is a medicine subject to levy of tax @ 3% on the ground that this question of law is of considerable importance and involves a sizeable amount of Sales Tax. However, the Tribunal by an order passed on 14.01.1999 Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 5 MCC 905-2007, 906-2007 & 907-2007 (Annexure P/6) refused to make a reference on the ground that it would be wasting valuable time of this Court in dealing with irrelevant issues which are decided earlier. Being aggrieved by refusal to make a reference MCC No. 216/1999 was preferred wherein the Division Bench of this Court directed Board of Revenue to draw a statement of case and refer it on the question mentioned herein-above. In compliance of the direction, reference was made which is registered as instant MCC.
05. Learned Deputy Advocate General appearing for the applicant/State submits that Sat. Isabgol and Isabgol are the same items which are mentioned as Kirana items in memorandum No. fod/1/10028 ¼d½ Indore, dated 09.10.1967 in serial No. 13 and Notification F. No. A-23-26-90-ST-V(63), dated the 31st July, 1990 (Annexure P/1) in serial No. 13. This item is sold on Kirana shops without any prescription. As per general use, Sat. Isabgol is Kirana item and not a medicine. Learned Assessing Officer in its order dated 20.10.1952 (Annexure A/1) and First Appellate Authority vide order dated 28.03.1994 had rightly concluded that Isabgol is a Kirana item, taxable @ 12% and it is not a medicine and it cannot be treated medicine to be charged @ 3%.
06. Learned Deputy Advocate General further submits that Board of Revenue vide order dated 26.12.1995 (Annexure A/3) passed in second appeal has wrongly interfered with the finding given by the Assessing Officer and First Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 6 MCC 905-2007, 906-2007 & 907-2007 Appellate Authority, therefore, urges the Court to answer the reference accordingly.
07. Heard and considered the submissions raised by learned counsel for the appellant and perused the record.
08. It is not in dispute that in Memorandum No. fod/1/10028 ¼d½ Indore, dated 09.10.1967, Isabgol has been mentioned at serial No. 13 as grocery item. For ready reference, the aforesaid memo is reproduced as under:-
विषय :- किराना तथा स्टे शनरी में सम्ममलऱत होने िाऱे माऱ िी मूची िे समबन्ध में ऩथ ृ ि आगम विभाग अधधसूचना क्रमाॊि 2741 1 1 789/ऩाॉच। विि, ददनाॊि 29-08-67 द्िारा मध्य प्रदे श सामान्य विक्रय िर अधधननयम, 1 958 िी अनुसूची 2, भाग 6 िी प्रविम्टट में सम्ममलऱत समस्त5 मान ऩर िर िी दर बढािर 7 प्रनतशत ददनाॊि 01 -09-67 से िी गई है । ऩरन्तु मध्य प्रदे श सामान्य विक्रय िर अधधननयम, 1 956 िी धारा 1 2 िे अधीन प्रसाररत ऩथ ृ ि आगम विभाग अधधसच ू ना क्रमाॊि 27421 1 789/ऩाॉच। विि , ददनाॊि 29-08-67 िे सॊऱग्न अनुसूची िे िाऱम 9 में ननददि टट माऱों ऩर 1 लसतमबर, 1 967 से 21 -03-68 ति िर िी दर 6 प्रनतशत िी गई है । उक्त अनुसूची िे िाऱम 9 िे क्रमाॊि 2 तथा 5 में ननददि टट स्टे शनरी िी िस्तुएॉ तथा किराना में सम्ममलऱ होने िाऱे माऱ िी सूची सूचनाथि सॊऱग्न है ।
स्टे शनरी में सम्ममलऱत होने िाऱी िस्तुओॊ िो
िर्िक्रमानस
ु ार सच
ू ी:-
Signature Not Verified
Signed by: SOUMYA
RANJAN DALAI
Signing time: 14-08-2025
16:59:59
NEUTRAL CITATION NO. 2025:MPHC-IND:21637 7 MCC 905-2007, 906-2007 & 907-2007 ...............
किरानामाऱ सम्ममलऱत िस्तुH ओॊ िी िर्िक्रमानुसार सूची:-
1. ......
2. ......
3. ......
4. ......
5. ......
6. ......
7. ......
8. ......
9. ......
10. ......
11. ......
12. ......
13. इसबगोल
09. Similarly, Notification F. No. A-3-26-90-ST-V(63), dated the 31st July, 1990 (Annexure P/1) is also reproduced hereunder for ready reference wherein at serial No. 13 Isabgol has been mentioned as Kirana goods.
―In pursuance of the requirement made in item No. 13 of the Schedule to this department notification No. A-3-26-90-ST- V(50), dated 28th June, 1990 the State Government hereby specifies the following goods to be kirana goods for the purposes of the said item.
1. ........
2. ........
3. ........
4. ........
5. ........
6. ........
7. ........
8. ........
9. ........
10. ......
Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 8 MCC 905-2007, 906-2007 & 907-2007
11. ......
12. ......
13. Isabgol
10. It is not dispute that at the relevant time Isabgol as grocery item was a taxable @ 12% and as per contention raised on behalf of assessee, it was a medicinal item, therefore, it was taxable only @ 3%. Board of Revenue in its order dated 24.12.1995 passed in second appeal has gone into the nuances of the rival contentions advanced on behalf of the parties for treating Sat. Isabgol (Husk) as medicine or a Kirana item. From perusal of Entry No. 13 in aforementioned memo dated 09.10.1967 and Notification dated 31.07.1990, it is apparent that item mentioned at serial No. 13 is Isabgol, but Assessing Officer and First Appellate Authority have failed to keep in mind distinction with regard to the fact that Sat. Isabgol is Isabgol Husk which is distinct from Isabgol itself which is listed at item No. 13 in the Schedule as Kirana item. There is no dispute with regard to the fact that Isabgol is a seed grain grown in the fields whilst Isabgol Husk and Sat. Isabgol is a distinct product which is obtained after processing and removing the grain. It is also of common knowledge that Sat. Isabgol or Isabgol Husk is not treated as culinary item for preparing dishes. Pharmacopoeia of India V.I, 3rd Edition published in 1985 by government of India, Ministry of Health and Family Welfare has been referred in the order of Board of Revenue (Annexure A/3) which lays down official standards and strength applying to articles for medicinal use but not necessarily to articles Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 9 MCC 905-2007, 906-2007 & 907-2007 which may be sold under the same name for other purposes. In the aforesaid publication, it has been mentioned that Isabgol Husk (Bhusi) has laxative property which is officially recognised under the Drugs and Cosmetics Act, 1940 as it is listed in the Pharmacopoeia of India (supra). The relevant portion of Pharmacopoeia of India (supra) describing its laxative property is reproduced as under:-
"Ispaghula Husk Ispagol Husk Category : Laxative.
Dose: 3 to 5 g.
Standards : Ispaghula Husk consists of the epidermis and collapsed adjacent layers removed from the dried ripe seeds of Plantago ovate Forsk.
Description : Odourless; taste, bland and
mucilaginous
Macroscopical - Pale buff, brittle flakes, more or less lanceolate, upto 2 mm long and 1 mm wide at the centre, much broken into smaller fragments; many of the flakes having a small, brownish, oval spot, about 0.8 to 1.0 mm long, in the centre; the drug swells rapidly in water, forming a stiff mucilage.
Microscopical - Mounted in cresol, the particles are transparent and angular, the edges straight or curved and sometimes rolled. They are composed of polygonal cells with straight or slightly curved walls; the cells vary in size in different parts of the seed-coat. When mounted in alcohol and irrigated with water, the mucilage in the outer part of the epidermal cells swells rapidly and goes into solution, while the two inner layers of mucilage are more resistant and swell to form rounded papillae. When mounted in a 0.25 per cent w/v solution of iodine occasional single and 2 to 4 compound starch granules, about 2 to 10 gm. can be seen in some of the cells. Occasional fragments of thick walled, reddish brown Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637
10 MCC 905-2007, 906-2007 & 907-2007 endosperm, and elongated fragments of grey embryo may be present.
Swelling power: 1 g. agitated gently and occasionally for four hours in a 25 ml stoppered cylinder filled to the 20 ml mark with water and allowed to stand for one hour, occupies a volume of not less than 20 ml and sets to a jelly.
Ash : Not more than 4.5 per cent, Appendix 3.3.22. Acid-insoluble ash : Not more than 0.45 per cent. Appendix 3.3.22.
Loss on drying : Not more than 12.0 per cent, determined on 1.0g by drying in an oven at 105 for five hours. Appendix 5.8.
Storage : Store in well-closed containers protected from moisture and against attack by insects and rodents.‖
11. Sales Tax Act does not define Drugs or Medicines and, therefore, to determine whether an item is a medicine, the definition given under Drugs and Cosmetics Act, 1940 will apply. Section 3(b) of the Act runs as under:-
―(b) ―drug‖ includes--
(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;
(ii) .......
(iii) .......
(iv) .........‖
Signature Not Verified
Signed by: SOUMYA
RANJAN DALAI
Signing time: 14-08-2025
16:59:59
NEUTRAL CITATION NO. 2025:MPHC-IND:21637 11 MCC 905-2007, 906-2007 & 907-2007
12. In catena of judgments of various Courts, it has been held that to ascertain the nature and functional character of a use of an item, it is to be seen for what purpose, the product is generally used. Isabgol Husk (Bhusi) is not a food supplement and is used only as a laxative to treat the stomach disorders and hence it satisfies the above tests laid down by the Supreme Court in Atul Glass Industries (P) Ltd. vs. Collector of Central Excise, 1986 (63) STC Page
322. The relevant portion of para-8 is reproduced as under:-
―8. ...........In determining the meaning or connotation of words and expressions describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted........‖
13. In case of Annapurna Carbon Industries Co. vs. State of Andhra Pradesh, 1976 (37) STC page 378, the Apex Court has held in para - 11 as under:-
―11. It will be noticed that the entry we have to interpret includes ―parts‖ as well as ―accessories‖ which are required for use in projectors or other cinematographic equipment. We think that the Andhra Pradesh High Court correctly held that the main use of the arc carbons under consideration was duly proved to be that of production of powerful light used in projectors in cinemas. The fact that they can also be used for searchlights, signalling, stage lighting, or where powerful lighting for photography or other purposes may be required, could not detract from the classification to which the carbon Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 12 MCC 905-2007, 906-2007 & 907-2007 arcs belong. That is determined by their ordinary or commonly known purpose or user............‖
14. In the case of C.S.T. vs. Jaswant Singh Charan Singh 1967 19 STC page 469, it has been held that whilst interpreting statutes, resort should be had not to the scientific or technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them. The relevant para is reproduced as under:-
―....... ―that if a statute contains language which is capable of being construed in a popular sense such statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words ‗popular sense', that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it.‖ But ―if a word in its popular sense and read in an ordinary way is capable of two constructions, it is wise to adopt such a construction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary for carrying out the objections of the Act and not to give any unnecessary powers. In other words, the construction of the words is to be adopted to the fitness of the matter of the statute.‖ On the other hand, as Fry, J., said in Holt & Co. V. Collyer(3), ―If it is a word which is of a technical or scientific character then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning.........‖
15. Similar view has been taken by the Apex Court in the case of Ramavatar Budhaiprasad vs. The Assistant Sales Tax Officer, Akola & Anr.
1961 (12) STC Page 286, wherein the Apex Court has held as under:-
―The Schedule was amended by the C.P. & Berar Sales Tax (Amendment) Act (Act XVI of 1948) by which item No. 36 Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 13 MCC 905-2007, 906-2007 & 907-2007 was omitted. It is contended that in spite of this omission they were exempt from sales tax as they are vegetables. The intention of the legislature in regard to what is vegetables is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from sales tax. Subsequently betel leaves were removed from the schedule which is indicative of the legislature's intention of not exempting betel leaves from the imposition of the tax. But it was submitted that betel leaves are vegetables and therefore they would be exempt from sales tax under item 6. Reliance was placed on the dictionary meaning of the word ―vegetable‖ as given in Shorter Oxford Dictionary where the word is defined as ―of or pertaining to, comprised or consisting of, or derived, or obtained from plants or their parts.‖ But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning ―that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it.‖ It is to be construed as understood in common language.....‖
16. In case of Leukoplast (India) Ltd. Vs. State of Goa & Ors. 1988 (71) STC Page 180, the Apex Court has held in para-15 as under:-
―15. In our view, whether the products manufactured by the assessee can be treated as ―drugs or medicines‖ cannot be answered straightway. The medicinal content of the products, if any, has to be ascertained. Its curative function has to be found out. Can the product be called a medicament at all? Is it used to cure or alleviate or to prevent disease or to restore health or to preserve health? Are these products treated as drugs or medicines in common parlance? These are basically questions of fact. There was no reason for the assessee- Company to bypass the statutory remedy and come to the court with a writ petition. These questions basically of fact should be agitated before the statutory appellate authority.‖ Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59 NEUTRAL CITATION NO. 2025:MPHC-IND:21637 14 MCC 905-2007, 906-2007 & 907-2007
17. Similar view has been taken by the Apex Court in the case of Commissioner of Commercial Taxes, West Bengal & Anr. Vs. West Bengal Commercial Taxes Tribunal & Anr, 1993 (89) Page 355, wherein the Apex Court has held in para-9 as under:-
―9. ........ It is now well-settled that where an item is not defined in a taxing statute, its popular meaning or the meaning ascribed to it in the common parlance should be followed, rather than its scientific meaning. The common parlance meaning is that meaning which is attributed to the item by those who sell and buy the same. .........‖
18. In the light aforesaid, if we go through the item Isabgol mentioned on serial No. 13 of the aforesaid notification and memo, it is only Isabgol and not Isabgol Husk (Bhusi) which is obtained after removing grain and after removal of grain, it becomes a different product. Merely because Isabgol Husk is sold on Kirana shop does not change its character from medicine to Kirana item. In common parlance Isabgol is a medicine and used as such for removing constipation and other stomach disorders. Since this is a separate item mainly used as a laxative, therefore, ‗Isabgol Husk' is covered under medicines and, therefore, is taxable @ 3% under Entry 16 of Part IV of Schedule II and not taxable under Entry 13 under Part VI of Schedule II of M.P.G.S.T. Act as Kirana goods.Signature Not Verified Signed by: SOUMYA RANJAN DALAI Signing time: 14-08-2025 16:59:59
NEUTRAL CITATION NO. 2025:MPHC-IND:21637 15 MCC 905-2007, 906-2007 & 907-2007
19. In the light of aforesaid, we are of the considered view that Board of Revenue vide its order dated 26.12.1995 (Annexure A/3) has rightly concluded that Isabgol Husk is a medicine and as such is taxable at the rate of 3% under Entry 16 of Part IV of Schedule II of M.P.G.S.T. Act. The reference is answered accordingly.
20. With the aforesaid, the present MCCs stand disposed off. Let a copy of this order be placed in the record of all the connected petitions.
(VIVEK RUSIA) (BINOD KUMAR DWIVEDI)
JUDGE JUDGE
Soumya
Signature Not Verified
Signed by: SOUMYA
RANJAN DALAI
Signing time: 14-08-2025
16:59:59