State of Andhra Pradesh and Others Vs Himani Limited and Others (Telangana High Court)
HC held Himani Navaratan Oil, Himani Gold Turmeric Ayurvedic Cream to be ayurvedic medicine liable to GST @ 10%
Conclusion: In Tax Revision Cases, Department challenged the classification of various products under the APGST Act to hold that the two products i.e. the Himani Navaratan Oil and Himani Gold Turmeric Ayurvedic Cream to be cosmetics however, in the absence of any strong material available, the findings given by STAT holding it to be a product to be brought within the purview of Entry 36 of 1st Schedule of the Act did not seem to be proper, legal and justified, rather it was a case where there two products were products which would be one under Entry 37 of the 1st Schedule of the Act.
Held: The whole dispute revolves around six products being manufactured and marketed by the two sister concerns. Those are Navaratan Oil, Gold Turmeric Ayurvedic Cream, Nirog Dant Power Lal, Boroplus Antiseptic Cream, Boroplus Prickly Heat Powder and Sonachandi Chavanprash. The whole issue involved in the instant set of Tax Revision Cases were whether the aforementioned products manufactured by two sister concerns would fall within the purview of cosmetics or drugs under the APGST Act, 1957 on account of the fact that if the products would fall under the classification of a cosmetic, then it became leviable of GST at the rate of 20% whereas if these products were to be treated as drugs within Entry 37, then these products would be leviable of duty at the rate of only 10%. It was held that a plain reading of the definition of drugs would clearly indicate that it was a product which could be internally and externally used. Hence, Himani Sonachandi Chavanprash was one product which was only edible and was not a product which could be used externally. There was no strong case had been made out by Standing Counsel for the Department to interdict the finding so far as the product Himani Sonachandi Chavanprash was concerned. The challenge to the said finding thus stood answered in the negative affirming the finding given by the STAT. In the case of Himani Ltd. v. Comm. Of Commercial Tax3 and the common parlance test, it was clear that the public perceived products like Himan Boroplus Prickly Heat Powder as medicinal or Ayurvedic products rather than mere cosmetics. In view of these observations and legal precedents, it was concluded that Himani Boroplus Prickly Heat Powder had been rightly classified under Entry 37 in Schedule 1st of the APGST Act. This classification acknowledged the product’s medicinal properties and its role in health and healing. Conversely, the product should not be classified under Entry 36 as ‘Cosmetics or Toilet Preparations’ in the same schedule of the Act. This was because such a classification would downplay the product’s medicinal attributes and potentially misrepresent its purpose and use to the public. Thus, the challenge to the said finding of the STAT did not have any force or strength either in the form of any cogent material brought on record or in the submissions that they had tried to make to interfere with the findings of the STAT. The challenge to the findings of the STAT so far as Himani Boroplus Prickly Heat Powder not being a drug under Entry 37 Schedule 1st of the Act failed and was rejected. It was pure ayurvedic oil and under no stretch of imagination could it be termed as a perfumed hair oil. Rather, it was never sold in the market as hair oil and the said oil is an ayurvedic medicine and not medicated goods. It was contended that medicated goods were those which were intended to be used otherwise than as medicines. For example; shampoos, soaps, hand wash with medicinal contents in it. Medicated goods were those where incidental medicinal properties were incorporated in small quantity and the product need to be otherwise sold for the very same purpose for which it was otherwise manufactured and sold. Thus the finding of the STAT so far as Navaratan Oil being a cosmetic and not a Drug was liable to be set aside and it was ordered accordingly. For the product i.e. the Himani Gold Turmeric Ayurvedic Cream, assessee had manufactured the same and was marketing the same claiming it to be highly effective for curing cracked skins, pimples, boils etc. None of these actions as mentioned in the label of the product cater the definition of cosmetics or toiletry product. As in the other products, it was the contention of the assessee that Himani Gold Turmeric Ayurvedic Cream also was a product which had been licensed as an ayurvedic drug by the Drug Controller based on the composition and these compositions being from the ayurvedic texts with the intended cure for skin diseases and also as an anti-inflammatory cream, it was claimed to be a cream which helped in healing the wounds, cure heat boils, pimples, antiseptic and anti-microbial etc. What was necessary to be appreciated at this juncture was that, from the rapper in which the cream was sold, very emphatically highlights it as an ayurvedic medicine. The rapper also clearly indicated that the cream was highly effective for cracked skins, pimples, boils and numerous other skin blemishes. Nowhere did they in the rapper claim it to be a cosmetic product or a product which could enhance the complexion or fairness. The licensing authority having granted license for the said product as an ayurvedic drug, the manufacture, sale and distribution of the product as a drug and not a cosmetic was established and it was being marketed only as a drug and not as a cosmetic. Though the Standing Counsel for Department contended hard to persuade this Bench to hold that the two products i.e. the Himani Navaratan Oil and Himani Gold Turmeric Ayurvedic Cream to be cosmetics, in the absence of any strong material available, the findings given by STAT holding it to be a product to be brought within the purview of Entry 36 of 1st Schedule of the Act did not seem to be proper, legal and justified for the grounds and reasons mentioned in the preceding paragraphs, rather it was a case where there two products were products which would be one under Entry 37 of the 1st Schedule of the Act.
