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TAXAPO/1191/2009 10/ 10 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No.1191 of 2009
===================================================
M/S.
SHALIBHADRA AGENCIES - Appellant(s)
Versus
STATE
OF GUJARAT - Opponent(s)
===================================================
Appearance
:
MR
TANVISH BHATT for M/S
WADIA GHANDY & CO for Appellant(s) : 1,
None for Opponent(s) :
1,
===================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 09/04/2010
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE H.N.DEVANI)
The
appellant, a proprietary concern, holding Sales Tax registration
under the Gujarat Sales Tax Act, 1969 (the Act) as well as the
Central Sales Tax Act, 1959, has challenged order dated 17.12.2008
made by the Gujarat Value Added Tax Tribunal, Ahmedabad (the
Tribunal) proposing the following question, stated to be a
substantial question of law:
Whether
on the facts and in the circumstances of the case, the Appellate
Tribunal was right in law in holding that products sold by the
Appellant viz. Swad Awla
and Swad Khajoor would not fall within Entry no.94 relating to
medicines and would fall under Entry No.195 of Schedule II A of the
Gujarat Sales Tax Act, 1969?
The
appellant is a sole proprietary concern engaged in the business of
trading of ayurvedic drugs. The appellant also sells products called
Swad Awla and Swad Khajoor as an agent of Penjon India Ltd. ,
which, according to the appellant, are ayurvedic medicines. The
appellant has also obtained licence from the Food and Drug Control
Authorities. For the period 01.01.1992 to 31.03.1002, the Sales Tax
Officer, Ahmedabad, vide order dated 23.04.1997 framed assessment
under section 41(3) of the Act holding that the products sold by the
appellant are not Ayurvedic medicines and would fall under the
residuary Entry 195 of Schedule-II A of the Act. The appellant
carried the matter in appeal before the Assistant Commissioner of
Sales Tax (the first appellate authority) who, vide order dated
26.02.2001, dismissed the appeal and confirmed the order of the
Sales Tax Officer. The appellant carried the matter in second appeal
before the Tribunal, which came to be dismissed.
Mr.Tanvish
Bhatt, learned advocate has assailed the impugned order of the
Tribunal submitting that the essential character of the medicines in
question and its primary function are derived from the active
ingredients contained therein. It is further submitted that Awla and
Khajoor are predominantly the main ingredients of the products and
that Awla and Khajoor are recognized as ayurvedic products by
authentic ayurvedic books like Bhavprakash Nighantu . It is
submitted that the products sold by the appellant are very useful in
digestion and are at times even prescribed by medical practitioners
to patients ailing from digestive problems. It is submitted that the
products in question have been manufactured on a scientific formula
based on ayurvedic principles and that the combination of the
ingredients of the products in question are based upon an ayurvedic
text book titled ‘Bhavprakash Nighantu and that the prescribed
dose is indicated on the product itself. It is further submitted
that the products in question would directly fall within the ambit
of Entry 94 of Schedule-IIA of the Act; hence it was not permissible
for the authorities to classify the said products under residuary
Entry 195.
Next is
its submitted that the Tribunal has overlooked the certificate
issued by the Food and Drug Control Authorities which inter alia
provides that the products of the appellant are ayurvedic medicines
and has failed to appreciate that the certificate issued by Food and
Drug Control administration authorities is conclusive evidence for
classifying the products as ayurvedic medicines. In support of his
submissions, learned advocate has placed reliance upon a decision of
the Madhya Pradesh High Court in Panama Chemical Works and Anr.
Vs. Commissioner, Sales Tax, [2000] 120 STC 64 (M.P.)
From the
facts noted hereinabove, it is apparent that the dispute involved in
the present case is a classification dispute as to whether the
products sold by the appellant viz. Swad Awla and Swad Khajoor are
ayurvedic medicines so as to fall within the purview of Entry 94 of
Schedule IIA of the Act viz. drugs and medicines (other than those
specified in Entry 92 in Schedule I and Entry 153 in the said
Schedule) or whether the same would fall under residuary Entry 195.
A perusal of the impugned order of the Tribunal shows that as
regards obtaining licence from Food and Drugs Control
Administration, the Tribunal was of the view that simply because a
dealer obtains licence from the said authorities does not mean that
the products sold by the dealer are medicines. On merits the
Tribunal, has recorded that the appellant had produced some material
from certain books to show the medicinal value of Awla and Khajoor.
The Tribunal has then noted that the appellant does not sell Awla as
Awla and Khajoor as Khajoor and that both the products have
undergone some process whereby other ingredients have been added to
Awla and Khajoor which may be of some medicinal value, but are not
sufficient to call the products medicines. The Tribunal has further
recorded that except for the carton and packing the appellant has
not produced any material to suggest that the products in question
contain certain other ingredients like Kala Namak, Kali Mirch,
Sendha Namak, Elaichi, Jeera, Sugar, Ajwan, Nimbu ka Amrat, etc. The
Tribunal has found that there is no authentic opinion to suggest
that the above ingredients are required to be added in Awla and
Khajoor in the preparation of the products in question; that there
is no scientific data produced on record to suggest that the above
ingredients have actually been added in the preparation as suggested
by some authentic materials or by experts. The Tribunal was of the
opinion that the ingredients added to Awla and Khajoor may have some
medicinal value, however, that by itself would not make the products
in question Ayurvedic medicines. Before a product can be considered
to be a medicine, there must be scientific proof that the said
product contains Ayurvedic or other medicines. According to the
Tribunal several foods like milk, fruits, onions and garlic etc. may
have some medicinal value, however that by itself does not mean that
they are to be considered as ayurvedic medicines. The Tribunal was
of the view that before a product can be considered as a medicine
there must be some scientific proof that the said product contains
ayurvedic or other medicines. On facts the Tribunal found that the
appellants have not shown as to how the appellant has fixed the
proportions of different ingredients in the ultimate products viz.
Swad Awla and Swad Khajoor and has held that if the products have
not been manufactured in accordance with some scientific formula
then such products cannot be accepted as ayurvedic medicines. The
Tribunal has also referred to the proportions of the ingredients
used in the manufacture of the products in question and has found
that there is no material on record to suggest that the said
proportions are drawn from some authoritative ayurvedic books.
From the
findings of fact recorded by the Tribunal after appreciation of the
evidence on record, it is apparent that there is no material on
record to indicate that the ingredients used in the manufacture of
Swad Awla and Swad Khajoor find mention in the authoritative text
books of Ayurveda. There is also nothing to show that the proportion
of the ingredients used in manufacture of the products in question
is based upon any scientific formula or that the products in
question are in fact considered to be ayurvedic medicines. The
Tribunal was, therefore, justified in holding that merely because
there are some medicinal qualities in the product in question, which
even otherwise may be found in several food articles, is no reason
to hold that the products in question are ayurvedic medicines. The
decision of the Madhya Pradesh High Court in Panama Chemical
Works and Anr. (supra), on which reliance has been placed by
the learned advocate for the appellant, does not carry the case of
the appellant any further inasmuch as the said decision does not lay
down any proposition of law. The Court has merely recorded that the
question as to whether the tablet manufactured and sold in the
market under the name Swad would be confectionery or any
ayurvedic medicine, has to some extent been already decided by a
Division Bench of that Court in the matter of Panama Chemical Works
v. Union of India; and has thereafter remanded the matter for
deciding the question afresh in the light of the said decision.
In the
light of fact that the conclusions arrived at by the Tribunal are
based upon findings of fact recorded after appreciation of the
evidence on record, it cannot be stated that the impugned order of
the Tribunal suffers from any legal infirmity so as to warrant
interference.
In
absence of any question of law, much less any substantial question
of law, the appeal is dismissed.
Sd/-
[D. A.
MEHTA, J]
Sd/-
[
H.N.DEVANI, J]
***
Bhavesh*
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