Commissioner Commercial Tax Vs Emami Ltd. (Allahabad High Court)
Boro Plus Ayurvedic Cream was medicated ointment liable to be taxed at 5% under Entry 41 Schedule II UPVAT Act
Conclusion: Boroplus Antiseptic Cream was a ‘medicated ointmnet’ and was liable to be taxed at 5% under ‘drugs and medicines’ in Entry 41 Schedule II in absence of specific evidence including expert opinions, industry standards, etc. to justify the reclassification.
Held: Boroplus Antiseptic Cream (BPAC) was assessed at the rate of 14% by AO by categorizing it as an ‘unclassified item’. Respondent-assessee, M/s Emami Ltd., filed an appeal against the order of AO which was dismissed. Subsequently, an appeal was filed before the Commercial Tax Tribunal where it was held that Boroplus Antiseptic Cream was a ‘medicated ointmnet’ and was liable to be taxed at 5% under ‘drugs and medicines’ in Entry 41 Schedule II. Challenging the order of the Tribunal, the Department argued that for a very long time BPAC had been recognized as a cosmetic and was assessed accordingly. However, the Court had earlier held it to be a medicament. It was stated that since antiseptic cream had been excluded from the entry of ‘drug and medicines’ in Entry 41 Schedule II w.e.f. 11th October 2012, BPAC was liable to be taxed as an unclassified item. It was argued that even though assesee if trying to get the product assessed as a medicated ointment, it advertised BPAC as “India’s number one antiseptic cream.” Department argued that BPAC was being purchased without any prescription whereas for medicated ointments, a doctor prescription was required. Accordingly, it was argued that BPAC was an antiseptic cream liable to be taxed at 14% as an ‘unclassified item’. It was held that though BPAC was marked as an antiseptic cream by the technical consultant of the Tribunal, a close look of the ingredients of BPAC revealed that it contained more properties than just being an antiseptic cream and more closely associated with the properties of a medicated ointment. Assesee had clearly demonstrated before Tribunal that BPAC was a medicated ointment and would come under Entry 41 for taxation. It was held that the burden to disprove the claim of Assesee was on the Department which it had failed to discharge. It was held that the Department produced no material contrary to that produced by Assesee to show that BPAC was an ‘antiseptic cream’ and was excluded from Entry 41. The Court held that when the Department sought reclassification of goods, it must show specific evidence including expert opinions, industry standards, etc. to justify the reclassification. It was held that in absence of any evidence being produced by the Department, the reclassification was bad in law. Observing that the Tribunal was the last fact-finding authority and there was limited scope of interference by the High Court in revisional jurisdiction, Justice Saraf upheld the order of the Tribunal classifying the Boro Plus Antiseptic Cream as a medicated ointment under Entry 41 Schedule II of the Uttar Pradesh Value Added Tax Act, 2008.
