# M/S Bundelkhand Health Care v. State of U.P. & Ors. 406 INDIAN LAW REPORTS ALLAHABAD SERIES

- **Citation:** (2020) 1 ILRA 405
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-02-28
- **Case number:** Writ Tax No. 850 of 2017
- **Bench:** Bharati Sapru, Piyush Agrawal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-bundelkhand-health-care-v-state-of-u-p-ors-406-indian-law-reports-allahabad-45072
- **Pages:** 32

## Headnote

Uttar Pradesh Value Added Tax Act, 2008:
Section 28, 29(7), Schedule II, Part A,
Entry 20; Drugs and Cosmetics Act, 1940:
Section 3(b)(ii); Drugs and Cosmetics
Rules: Rule 126; HSN Explanatory Notes,
2002 - Reports of experts certify the
nature of the products in question, which
ought to be taken as sufficient evidence
in support of classification. (Para 13)

The goods in question i.e. Harpic and
Mortein are squarely covered under Entry 20,
Part A of Schedule II of UPVAT Act. Harpic is
a 'disinfectant' and Supreme Court has held
that disinfectants which destroy/kill germs
are in the nature of pesticides. Mosquito
Coils including Mortein Coils would fall within
the Entry "Pesticides and Insecticides" as the
chemical
composition
used
in
the
manufacturing of is allethrin which is an
insecticide. No new material has been put
forward by the respondents to show that the
goods in question will be classifiable under
Schedule V. (Para 8 to 22, 49)

B. In absence of no new material brought
on record, the completed assessment
cannot be reopened merely on the basis
of change of opinion - Discovery of an
inadvertent mistake or non-application of mind
during assessment would not be justified
ground to initiate reassessment proceedings.
(Para 26, 43, 46 to 48)

Writ Petition allowed. (E-4)

Precedent followed: -

## Text

_Characters 0–39,878 of 106,831. This is a partial read: ask again with offset=39878 for what follows._

1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
405

41. Further reliance placed by
counsel for revenue on the decision of
Addison and Company (supra), wherein it
was held that recovery under Section 11A
can be made where excise duty was
refunded erroneously, but the Apex Court
had also held that where the incidence of
duty was not passed on and the assessee
had borne burden of duty, thus he was
entitled for the refund. Thus, both the
cases relied upon by the department are
not applicable in the present case, as it is
neither a case of fraud, nor where
incidence of duty was passed on.

42. Secondly, the argument of
alternative remedy under Section 35 is
concerned, the said fact is of no rescue to
the department as specific case of
petitioner is that show-cause notice dated
17.08.2017 was issued after more than two
years from finalisation of assessment order
dated 24.07.2015, and where there is
change of opinion by issuance of showcause notice, writ petition is maintainable
as held in Shahnaaz Ayurvedics (supra),
Simplex Concrete Piles (supra) and
Samsung India Electronics Pvt. Ltd.
(supra).

43. As seen above that Section 35E
and 11A operate in different fields and are
invoked for different purposes, we are
merely concerned in this case with the
interplay between Sections 11A and 35E.
We
are
also
concerned
with
what
happened in the form of an adjudication
under Section 11B. What happens in a
case wherein adjudication takes place
under Section 11B and authorities do not
take recourse available to them, whether
after having allowed adjudication under
Section 11B to attain finality, was there
any remedy available to department at all
under Section 11A to proceed.

44. This question was considered and
decided in Eveready Industries (supra),
wherein the Court held that two valuable
rights, one in the form of right of appeal
and another in form of order of refund, are
now sought to be taken away indirectly by
taking recourse to Section 11A. What
cannot be done directly cannot be done
indirectly also.

45. Thus, the department, once the
adjudication has taken place under Section
11B cannot proceed to recover on the basis
of "erroneous refund" under Section 11A
so as to enable the refund order to be
revoked, as the remedy lied under Section
35E for applying to the Appellate Tribunal
for determination and not invoking Section
11A.

46. In view of the above, we are of
the considered opinion that the issuance of
show-cause notice dated 17.08.2017 and,
thereafter, order dated 30.11.2017 passed
by respondent authority for repayment of
refund pursuant to orders under Section
11B are unsustainable and are hereby
quashed.

47. The writ petition stands allowed.
----------
(2020)1ILR 405

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.02.2019

BEFORE
THE HON'BLE BHARATI SAPRU, J.
THE HON'BLE PIYUSH AGRAWAL, J.

Writ Tax No. 850 of 2017

M/S Bundelkhand Health Care
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents
406 INDIAN LAW REPORTS ALLAHABAD SERIES
Counsel for the Petitioner:
Manjari Singh, Sri Kunal Ravi Singh

Counsel for the Respondents:
C.S.C., Sri C.B. Tripathi

A. Tax - Reassessment/Classification -
Uttar Pradesh Value Added Tax Act, 2008:
Section 28, 29(7), Schedule II, Part A,
Entry 20; Drugs and Cosmetics Act, 1940:
Section 3(b)(ii); Drugs and Cosmetics
Rules: Rule 126; HSN Explanatory Notes,
2002 - Reports of experts certify the
nature of the products in question, which
ought to be taken as sufficient evidence
in support of classification. (Para 13)

The goods in question i.e. Harpic and
Mortein are squarely covered under Entry 20,
Part A of Schedule II of UPVAT Act. Harpic is
a 'disinfectant' and Supreme Court has held
that disinfectants which destroy/kill germs
are in the nature of pesticides. Mosquito
Coils including Mortein Coils would fall within
the Entry "Pesticides and Insecticides" as the
chemical
composition
used
in
the
manufacturing of is allethrin which is an
insecticide. No new material has been put
forward by the respondents to show that the
goods in question will be classifiable under
Schedule V. (Para 8 to 22, 49)

B. In absence of no new material brought
on record, the completed assessment
cannot be reopened merely on the basis
of change of opinion - Discovery of an
inadvertent mistake or non-application of mind
during assessment would not be justified
ground to initiate reassessment proceedings.
(Para 26, 43, 46 to 48)

Writ Petition allowed. (E-4)

Precedent followed: -

1. Ponds India Ltd. Vs. Commissioner Trade
Tax, Lucknow, 2008 (8) SCC 369 (Para 13)

2. Bombay Chemicals Vs. Collector of Central
Excise, (1995) Supp. 2 SCC 646 (Para 16 & 17)
3. Knight Queen Industries Vs. State of UP,
2006 (145) STC 226 (Para 18 & 19)

4. M/s Reckitt Benckiser (India)Ltd. Vs. State of
Andhra Pradesh, Tax Revision No. 10 of 2007
(Para 20 & 30)

5. Reckitt Benckiser India Pvt. Ltd. Vs. State of
Assam, W.P. (C) No. 1377 of 2010 (Para 20 &
31)

6. Reckitt Benckiser (India) Ltd. Vs. Assistant
Commercial Taxes Officer Anti Evasion and
others, S.B. Sales Tax Revision/Reference No.
11 of 2012 (Para 20 & 32)

7. State of A.P. Vs. Reckitt Benckiser India Ltd.,
Special Leave to Appeal (C) No. 18473 of 2014
(Para 20, 34 & 38)

8. M/s Bombay Chemicals Pvt. Ltd. Vs.
Collector of Central Excise, 1995 (2) Supp. SCC
646 (Para 20)

9. The Commissioner Commercial Tax Vs. M/s
Reckitt Benckiser (India) Ltd., Sales/Trade Tax
Revision No. 91 of 2014 (Para 21, 35 & 41)

10. Bharat Heavy Electricals Ltd. Vs. State of
U.P. and others, 2017 UPTC 205 (Para 24 &
44)

11. Rathi Industries Ltd. Vs. State of U.P., 2014
UPTC 960 (Para 24)

12. Varun Beverages Ltd. Vs. State of U.P. and
others, (2017) 99 VST 393 (All.) (Para 24 & 47)
13. Vikrant Tyres Ltd. Vs. State of U.P., (2006)
148 STC 122 (All.) (Para 24)

14. State of U.P. and others Vs. Aryaverth
Chawal Udyog and others, (2015) 17 SCC 324
(Para 24 & 46)

15. CIT Vs. Kelvinator India Limited, (2010)
320 ITR 561 (SC) (Para 44)

Notification referred/cited: -
1. Notification No. S.O. 1335 dated 02.06.1961

2. Notification No. X. 11013/2/72-D dated
09.07.1975
1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
407
Petition
challenges
reassessment
proceedings
initiated
vide
order
24.11.2017,
passed
by
Assistant
Commissioner, Grade-1, Commercial Tax,
Jhansi Division, Jhansi, Uttar Pradesh for
the AY 2009-10.

(Delivered by Hon'ble Piyush Agrawal, J.)

1. By means of the present writ
petition, the petitioner has challenged the
reassessment proceeding initiated against
it granting permission vide order dated
24.11.2017 passed by respondent-3 which
reopened the completed assessement for
assessment year 2009-10 under UPVAT
Act.

2. Brief facts of the case are that the
petitioner is a registered firm engaged in
business of purchase and sale of cosmetic
goods,
soap,
glucose,
edible
oils,
pesticides etc.

3. It has been avered that the
petitioner has been appointed as distributor
of several products manufactured by
Reckitt Benckiser (India) Pvt. Ltd. which
manufactures various household products
including insecticides such as Mortein,
Pesticides such as Harpic and Lizol, Drugs
and medicines including Disprin, Dettol
etc.
The
petitioner
has
obtained
registration
under
the
UPVAT
Act,
bearing TIN No. 09132601751.

4. It has been averred that while
passing the original assessment order
dated 8.3.2013 the assessing authority has
righly imposed the tax on the goods in
question i.e. sale of Harpic and Mortein
coil at the rate of 4% -5% treating the
same as pesticide. It is further averred that
the reassessment proceeding has been
initiated under Section 29 (7) of UPVAT
Act for which notice was issued, the
petitioner has submitted the detailed reply
bringing on record that items sold by it,
have righly been imposed tax at the rate of
4 % as the commodity in question has
been decided not only by Full Bench of
Trade Tax Tribunal, Lucknow Bench in
the case of Neha Trading, but also various
other High Courts have treated Harpic and
Mortein coil as pesticides. The proceeding
initiated against the petitioner treating the
items in question classifiable as under
Schedule V of UPVAT Act at the rate of
12.5 %, is not correct. Being dissatisfied
with the reply the impugned order dated
24.11.2017 has been passed extending the
period of limitation.

5. On the contrary, the respondents
has taken the stand that the goods in
question i.e. Harpic and Mortein coil have
not specifically been mentioned in the
taxing Schedule-I, II, III, IV, of UPVAT
Act, therefore, the goods in question have
to be taxed at the rate of 12% under
Schedule -V of UPVAT Act. The
assessing authority had without application
of mind had allowed the claim of the
petitioner at the rate of 4 % and therefore,
the goods in question have been under
assessed,
hence,
justifying
the
reassessment
proceeding
and
the
impugned order.

6. Heard learned counsel for the
petitioner Sri Kunal Ravi Singh and Sri
C.B. Tripathi, learned Special Counsel for
State of UP.

7. The counsel for the petitioner has
submitted that the petitioner is carrying on
the business of trading. In due course of
business, Harpic and Mortein coil have
been purchased and sold and accordingly
tax at the rate of 4 % were charged and
deposited with the department treating the
408 INDIAN LAW REPORTS ALLAHABAD SERIES
same to be covered under Schedule-II, Part
A, Entry 20 of UPVAT Act at the rate of
4% -5%. The assessing authority while
passing the original assessment order
under Section 28 of UPVAT Act, treating
the goods in question taxable as part of
Schedule -II, Part A, Entry 20 of UPVAT
Act and accordingly, imposed tax at the
rate of 4% - 5 % and same was deposited
by the petitioner.

8. Learned counsel for the petitioner
submits that the active ingredient of
Harpic is Hydrochloric Acid, which is a
well-known disinfectant and in addition, it
has
other
ingredients
like
Bis/2
Hydroxyethyl
Oleylamine,
Alkyl
Trimethyl Ammonium Chloride, Butylated
Hydroxy Toluene, Methyl Salicylte and
other chemicals, used for disinfecting, the
surface on which it is applied. Harpic is
effective
in
killing
various
Microorganisms (germs/ bacteria) like S. aurus,
E.coli,
S.
flexnari,
S.
faecalis,
K.
pneumoniae, and C. albicans, which are
generally found in toilet bowls that cause
Skin, soft tissue and mucous membrane
infections, Gastroenteritis, Inflammation
of colon, bacillary dysentery, Diarrhoea;
etc. Hence, it is apparent that the function
of Harpic is disinfectant and it has
additional
function
of
completely
removing tough stains from the surface on
which
it
is
applied.
Hence,
it
is
recommended for disinfecting (primary
function) and cleaning toilets (additional
function) and other porcelain surfaces.

9.
He
further
submitted
that
Government
recognizes
Harpic
as
disinfectants.

10. Harpic being disinfectant is
considered as a ''drug' under Section 3(b)
of the Drugs and Cosmetics Act, 1940 read
with Rule 126 of the Drugs & Cosmetics
Rules. Section 3 (b) (ii) of D&C Act
defines drug to include such substances
(other than food) intended to affect the
structure or any function of the human
body or intended to be used for the
destruction of vermin or insects which
cause disease in human beings or animals,
as may be specified from time to time by
the Central Government by notification in
the Official Gazette. In terms of Section 3
(b) (ii) of the D&C Act, Government of
India is required to notify such goods and
Government of India by its Notification
No. S.O. 1335 dated 02.06.1961 read with
Notification No. X. 11013/2/72-D dated
09.07.1975 has notified "Disinfectant
fluids
from
synthetic
or
naturally
occurring substances by virtue of their
composition
possessing
disinfectant
properties or with claim to possess
disinfectant properties" as drugs.

11. Learned counsel for the petitioner
further submits that for manufacture of
Harpic, a drug license is required to be
obtained under D&C Act as it is a
substance used for the destruction of
vermin or insects which cause disease in
human beings. The manufacturer has
accordingly obtained drug licence under
the D&C Act. Even the label of Harpic is
required to comply with the provisions of
the Drugs & Cosmetics Rules framed
under the Drugs and Cosmetics Act, 1940.
Accordingly, the manufacturing license
number as obtained is mentioned on the
label along with other requirements such
as batch number etc. Further as per
Schedule K of the Drugs and Cosmetics
Act, 1940, "substances intended to be used
for destruction of vermin or insects which
cause disease in human beings or animals"
are
considered
as
"insecticides
and
disinfectants" and such products are
1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
409
exempted from the requirement of sale
license. Hence, in terms of the provisions
of D&C Act, Harpic is disinfectants.

12. Leraned counsel for the petitioner
furhter submits that the Government lab
certifies Harpic as Disinfectant.

13. The Indian Institute of Chemical
Technology,
Hyderabad
("IICT")
a
premier Institute under the Government of
India by its Report dated 06.08.2010 has
certified that Harpic has very high
capability to kill bacteria and germs
(99.999999%) and they are disinfectants.
In the case of Ponds India Ltd., the
Hon'ble Supreme Court laid stress on the
fact that reports of experts certify the
nature of the products in question, which
ought to be taken as sufficient evidence in
support
of
classification.
Relevant
paragraphs of the Judgment in Ponds India
Ltd
Vs.
Commissioner
Trade
Tax,
Lucknow, 2008 (8) SCC 369 is extracted
below for ease of convenience:-

"72. Furthermore, an expert in
the field has also given his opinion in
favour of the appellant. This Court in
Quinn India Ltd. v. CCE classified a
product relying, inter alia, on the report of
the clerical (sic chemical) examiner as
under: (SCC p. 563, para 7).

"7.
..
The
Tribunal
has
completely ignored the report of the
Chemical Examiner dated 6-10-1981 and
the final opinion of the Chief Chemist
dated
2-4-1992
coupled
with
the
classification issued by the Department
regarding use of wetting agents in the
textile industries falling under SubHeading 3402.90. Test reports of the
Chemical Examiner and Chief Chemist of
the Revenue unless demonstrated to be
erroneous, cannot be lightly brushed
aside. The Revenue has not made any
attempt to discredit or to rebut the
genuineness and correctness of the report
of the Government, Chemical Examiner
and Chief Chemist. Thus, the reports are
to
be
accepted
along
with
other
documentary evidence in the form of
classification issued by the Department
regarding use of wetting agents in the
textile industries to hold that the product
Penetrator 4893 possessed surface active
properties and, therefore, is covered by
Exemption Notification No. 101/66 dated
17-6-1966 as amended from time to time."

73. In this case also, the report
of the chemical examiner is in favour of
the assessee. Furthermore, in a case of
this nature, where the Revenue itself has
been holding the assessee to be a producer
of a pharmaceutical product, the burden
would be on the Revenue to establish that
the goods cease to fall under a given entry.
For the said purpose, no material was
placed by the Revenue
which was
imperative."

14. Learned counsel for the petitioner
further submits that the classification of
tax entries worldwide are based on
Harmonized System of Nomenclature,
Brussels and even India has adopted the
same for Customs and Central Excise
Entries. The Sales Tax/VAT Entries are
based on Customs/Central Excise Entries.
Therefore,
the
HSN
Entries
and
Explanatory Notes have relevance for
understanding entries under Sales Tax/
VAT Acts. As per the HSN Explanatory
Notes 2002, based on which Central
Excise & Customs Entries are made in
India, HSN Explanatory Notes 2002
provides as:

"Disinfectants are agents which
destroy
or
irreversibly
inactivate
410 INDIAN LAW REPORTS ALLAHABAD SERIES
undesirable bacteria viruses or other
micro-organisms generally on inanimate
objects.

Disinfectants
are
used
for
example in hospitals for cleaning walls
etc. or sterilizing instruments. They are
also used in agriculture for disinfecting
seeds.

The group includes sanitisers
bacteriostats and sterilisers."

15. Further, even as per the HSN
Explanatory Notes it is provided that
"Disinfectants are used in hospitals for
cleaning walls". Thus, such disinfectants
may also be used for cleaning and merely
because they are also used for cleaning, it
cannot be said that it is not a disinfectant.

16. Learned counsel for the petitioner
has relied upon Bombay Chemicals vs.
Collector of Central Excise (1995) Supp 2
SCC 646); wherein, the Supreme Court
had
an
occasion
to
consider
the
classification of phenyl, which is held to
be classifiable as insecticides/pesticides. In
paragraph 8, the Supreme Court held that
disinfectants
are
in
the
nature
of
pesticides. It was held by the Supreme
Court that a disinfectant which, therefore,
is used for killing may broadly be covered
in the word "pesticide". Disinfectants may
be of two types; one to disinfect and other
to destroy the germs, the former, i.e., those
products which are used as disinfectant for
instance lavender, etc., may not be covered
in the expression "pesticide". But those
products which are used for killing insects
by use of substances such as high boiling
tar acid have the same characteristic as
"pesticide".

17. Learned counsel for the petitioner
further submits that the Harpic sold by the
petitioner is squarely covered by the
judgement of the Bombay Chemicals
(supra), which is disinfectant and has very
high capability to kill bacteria and germs
(99.999999%) as is clear from the Test
Reports.

18. Mortein is an insecticide and the
primary/active ingredient of Mortein is the
insecticide d-trans allethrin. This Court on
a consideration of the various judgements
of the Hon'ble Supreme Court as well as
the High Courts has held that Mosquito
Coils including Mortein Coils would fall
within
the
Entry
"Pesticides
and
Insecticides" as the chemical composition
used in the manufacturing of Mosquito
Coil is allethrin which is an insecticide.
This Hon'ble Court in Knight Queen
Industries Vs. State of UP, 2006 (145)
STC 226 has held as under:

19. The principles that emerge
from the decisions referred to above are
that while interpreting statues like the
Trade Tax Act, the primary object of which
is to raise revenue and for which purpose
various products are differently classified,
resort should not be had to the scientific
and technical meaning of the terms and
expressions used but to their popular
meaning, that is to say the meaning
attached to them by those using the
product;
that
merely
because
the
percentage of medicament in a product is
less does not also ipso facto mean that the
product is not a medicament; that the main
criterion for determining classification is
normally the use it is put to by the
customers who use it that there is a mental
association in the mind of the consumer in
respect of certain products keeping in view
the utility of the product and also the
reputation the name of the product has
acquired in the market and amongst the
consumers: that when a consumer buys an
1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
411
article, he buys it because it performs a
specific function for him; and that it is not
for the Court to determine for itself under
which item a particular article falls, and it
should be best left to the authorities.
entrusted with the subject, but where the
very basis for including the article under a
residuary head in order to charge higher
duty is foreign to a proper 'determination
of this kind, the Court will be loath to hold
that it will hot interfere.

24. ........Having considered the
submissions advanced by learned Counsel
for the parties, the material on record and
examination of the facts of these petitions,
we
find
from
the
pleadings
that
Articles/goods sold by the petitioners,
though used as household articles, is never
the less house hold 'insecticide' which fact
is also mentioned on their products. The
chemical
composition
used
in
manufacturing the goods in question
(though widely known and popularly
understood as Mosquito Repellent) is
allethrin which is an 'insecticide. The
petitioners
are
using
chemicals
for
manufacturing the finished goods which
have been treated as 'insecticides' and
under the provisions of the Incecticides
Act, 1968 a certificate has been issued by
Government
of
India,
Ministry
of
Agriculture which leave no scope of doubt
that allethrin which is used in the product
sold by the petitioners is 'insecticide'.
Insecticides Rules, 1971 provides for the
manner of labelling. Labelling/packing of
the products of the petitioner is as per the
afore-quoted Rule 19(4) of the Rules.

25.
D-Trans
'allethrin'
and
'pallethrin' are used in manufacturing the
goods which have been described as
household 'insecticides' on their products
as per the statutory requirement under
Insecticides Act. In the absence of any
specific
entry
relating
to
Mosquito
Repellent/Mosquito Destroyer and at the
same time there being an entry mentioning
'insecticides', it can reasonably be said
that an ordinary person will ordinarily
understand the product of the petitioners
falling under category of the insecticides.

26. These facts coupled with the
Principles enunciated in the decisions
referred to above leave us in no doubt that
the products sold by the petitioners are
basically in the categories of 'insecticides'
particularly in the absence of any
indication in the Notification in question.

27. It has, however, been urged
by Sri Kesarwani, learned Counsel for the
Revenue that the petitioner applied for
registration under Section 8A of the Act
''Form 14" wherein in column 7 it has
been mentioned that the commodity traded
is "Mosquito Repellent Mats/Coils etc.".
Similarly under Section 7 of the Central
Sales Tax Act, 1956, the petitioner applied
for registration in Form-A wherein in
column 16 it has been mentioned that the
purchase and sales of "Mosquito Repellent
Mats/Goils etc".

28. We are, however, unable to
persuade ourselves to hold that merely
because the petitioners have at various
stages contended that the product is
described
or
commonly
traded
as
'Mosquito Repellant' it should not fall in
the category of insecticides'. We would
have accepted such a contention if there
was separate or specific exclusion entry of
Mosquito Repellant in the existing entry of
'Pesticide & Insecticide'. In that case there
would have been no difficulty but in the
absence of specific mention as indicated
above, the product in question falls under
the entry insecticides'. The percentage of
'allethrin' used in the product is of no
consequence at all, since it is admittedly
an 'insecticide'.
412 INDIAN LAW REPORTS ALLAHABAD SERIES

29. We entirely agree with the
view taken by the Madras High Court in
Transelektra Domestic Products Pvt. Ltd.
(supra), and by Kerala High Court in
Transelektra Domestic Products Private
Ltd. (supra) The learned Judge in M/s.
Priya Distributor (supra) had also placed
reliance upon the said decisions.'

19. In the case of Knight Queen
Industries (supra), wherein this Hon'ble
Court has held that Mortein Coil is
classifiable under "insecticide". Against
the judgment of this Hon'ble Court, State
preferred an Special Leave Petition. i.e.
S.L.P. (CC) 4803 of 2006, which was
dismissed by Hon'ble the Apex Court. The
order of aforesaid S.L.P. is on record as
Annexure-11 to the writ petition. Thus the
judgment given by this Court in case of
Knight Queen (supra) has attained the
finality and is binding on all the
authorities.

20. The counsel for the petitioner
relied upon the various judgements on
disputed items of various High Courts i.e.
High Court of Andra Pradesh in Tax
Revision No. 10 of 2007 (M/s Reckitt
Benckiser (India) Ltd. Vs. State of
Andra Pradesh, The Guwahati High
Court in W.P. (C) No. 1377 of 2010
(Reckitt Benckiser India Pvt. Ltd. Vs.
State of Assam, High Court of Rajasthan
Bench at Jaipur in S.B. Sales Tax
Revision/ Reference No. 11 of 2012
(Reckitt Benckiser (India) Ltd. Vs.
Assistant Commercial Taxes Officer
Anti Evasion and others and judgment of
Supreme Court in Special Leave to
Appeal (C) No. 18473 of 2014 (State of
A.P. Vs. Reckitt. Benckiser India Ltd.)
and M/s Bombay Chemicals Pvt. Ltd.
Vs. Collector of Central Excise, 1995 (2)
Supp. SCC 646.

21. The counsel for the petitioner has
further relied upon the judgment and order
of this Court passed in Sales/Trade Tax
Revision
No.
91
of
2014,
(The
Commissioner Commercial Tax Vs. M/s
Reckitt Benckiser (India) Ltd., wherein
this Hon'ble Court after referring the
various judgements of Supreme Court and
High Court have come to the conclusion
that goods in question is covered under
Schedule-II, Part A under Entry 20 of
UPVAT Act.

22. Learned counsel for the petitioner
further submits that in the case of M/s
Reckitt Benckiser (India) Ltd., itself on
whose behalf the petitioner is selling the
goods in the State of Uttar Pradesh,
various High Courts have decided the
issue that Harpic and Mortein coil as
insecticide and hence, no higher rate of tax
can be levied and therefore re-assessment
proceeding should be dropped.

23. The counsel for the petitioner
further
submits
that
re-assemment
proceeding under Section 29(7) of the Act,
has been initiated illegally as there is no
new material on the basis of which the
impugned order could be passed. There is
as such no cogent reason warranting
invocation of powers under Section 29 (7)
of the Act by respondent-3.

24. The counsel for the petitioner has
relied upon various judgements passed
under Section 21 (2) of UP Trade Tax Act,
which is analogous of Section 29 (7) of
UPVAT Act. Few of the references are as
under; Bharat Heavy Electricals Limited
Vs. State of UP and others, 2017 UPTC
205, Rathi Industries Ltd. Vs. State of
UP, 2014 UPTC 960, Varun Beverages
Ltd. Vs. State of UP and others (2017)
99 VST 393 (All), Vikrant Tyres Ltd.
1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
413
Vs. State of UP (2006) 148 STC 122
(All), State of UP and others Vs.
Aryaverth Chawal Udyog and others
(2015) 17 SCC 324. He further submits
that re-assemment proceeding initiated
against the petitioner may be quashed.

25. The counsel for the petitioner
further
submits
that
re-assessement
proceeding initiated against the petitioner
is illegal and arbitrary in nature, as there is
no case of escaped assessment, under
assessment of being assessed to tax at the
lower rate, than which, it has been
assessable under UPVAT Act.

26. Rebutting the submissions of the
counsel for the petitioner, Sri C.B.
Tripathi, Special Counsel has submitted
that re-assessement proceeding against the
petitioner has righly been initiated as the
goods sold by the petitioner have no
specific entry regarding taxability of
Harpic and Mortein coil and therefore the
same was liable to be taxed under
Schedule -IV of UPVAT Act at the rate of
12.5 % because the commodity is not
covered under Schedule-I, II, III, IV of
UPVAT Act. Learned Special Counsel
further argued that assessing authority
while passing the original assessment
order has not applied its mind judicially
and the claim of the petitioner has been
accepted at the rate of 4%-5%. He further
submits that under Section 29 of UPVAT
Act, if the goods are being taxed at the
lower rate than that which it is assessable
under
the
Act,
then
re-assessement
proceeding is justified. In view of the
submissions, he submits that the writ
petition is not at all maintainable and is
liable to be dismissed.

27. The Court has perused the record
and heard learned counsels for the parties.

28. For proper consideration of the
matter relevant entries of Schedule II, Part
A Entry 20 and Schedule V of UPVAT
Act, are quoted below :-

Entry 20 of Part -A of Schedule
II to the UPVAT Act reads as under:

"Chemical
fertilizers,
except
those which are described in entry No. 26
of the Schedule-I; micro-nutrients and also
plant growth promoters and regulators,
herbicides,
rodenticides,
insecticides,
weedicide and pesticides."

Schedule V to the UPVAT Act
reads as under:

1. All goods except goods
mentioned or decsribed in Schedule-I,
Schedule-II, Schedule-III and Schedule-V
of this Act.

29. Schedule-II, Part A, Entry 20 of
UPVAT Act provides levy of 4%-5% tax
on the sale of goods mentioned therein
which includes all all kind of insecticides
and pesticides. Schedule-V provides levy
of tax at the rate of 12% on those goods
which are not mentioned in any of the
Schedule-I,II, III, IV.

30. The High Court of Andhra
Pradesh in Tax Revision No. 10 of 2007
(M/s Reckitt Benckiser (India) Ltd. Vs.
State of Andra Pradesh held Harpic as
insecticide/pesticides. The relevant part is
quoted below:

1. M/s. Reckitt Benckiser (India)
Limited (hereafter, the manufacturer) is
engaged in the manufacture and sale of
Lizol
(floor
cleaner),
Harpic
(toilet
cleaner) and Mortein mosquito repellents.
Whether these goods are exigible to value
added tax @ 4% under entry 20 of
Schedule IV to the Andhra Pradesh Value
Added Tax, 2005 (the VAT Act)? This
414 INDIAN LAW REPORTS ALLAHABAD SERIES
question falls for consideration in the tax
revision case filed under Section 34 of the
VAT Act and in all the Writ Petitions filed
under Article 226 of the Constitution of
India.

......

4. The Tax Revision Case, in the
circumstances, against the order of the
STAT, would not lie. The manufacturer,
therefore, filed two Writ Petitions being
W.P. Nos. 143 and 145 of 2011 assailing
the order of the STAT and also seeking
declaration that Harpicand Lizol are
exigible to VAT @ 4%. Thus, TREVC. No.
10 of 2007 and W.P. Nos. 143and 145 of
2011 are filed by the manufacturer
assailing the order of the STAT confirming
the decision of ARA. W.P. Nos. 2652,
18288 and 23875 of 2009, W.P.Nos. 2443,
7202 and 2408 of 2010 are filed assailing
the order of the ARA for declaration as
above. W.P. No. 11613 of 2009, W.P. Nos.
31010, 31012, 14521, 14522,. 14523,
14525, 14526, 14530, 27457, 27519,
27470 of 2011 are filed seeking a
declaration that the good are liable to tax
@ 4% under entry 20 to Schedule IV to the
VAT Act. The Writ Petitions being W.P.
Nos. 4033, 11272, 11301 and 11703 of
2009 are filed by the manufacturer or the
distributors/dealers
challenging
assessment orders as well as orders
imposing penalty, where the officials
applied rate of tax at 12.5% under
Schedule V. While doing so, needless to
mention, the assessing officers relied on
the ruling of ARA. In W.P. No. 27470 of
2011, M/s. Raghu Agencies, a dealer seeks
a declaration that Mortein spray and
Mortein Rat Kill are goods exigible to tax
@ 4% under entry 20 of Schedule IV of the
VAT Act.

....

26. ...... we hold that Harpic and
Lizol
are
disinfectants
capable
of
destroying germs and microorganisms like
Escheriachia coli, Staphylococcus aureus,
Enterococcus
hirae,
Pseudomonas
aeruginosa and Candida albicans etc.
Being disinfectants they fall within the
category of pesticides covered by entry 20
of IV Schedule. We also conclude that even
though Harpic Lizol are manufactured
under drug licence issued in Form-25
issued under Rule 70 of the Drug Rules,
they do not fall under entry 88 and,
therefore, the question of these goods
coming within the excluded category
under entry 88(b) does not arise. Both the
goods in question, therefore, are exigible
to tax at 4% but not at 12.5%.

31. Guwahati High Court in the case
of W.P. (C) No. 1377 of 2010 (Reckitt
Benckiser (India) Pvt. Ltd. Vs. State of
Assam held the following observations:

1. By this batch of writ petitions,
W.P. (C) No. 1377 of 2010, W.P. (C) No.
1378 of 2010, W.P. (C) No. 1379 of 2010
and W.P. (C) No. 1377 of 2010, the
petitioner company, registered under the
Companies
Act
and
engaged
in
manufacturing, sale and marketing of
various household products including
insecticides such as Mortein mosquito
coils, mats, vaporizers and disinfectants
like "Harpic" and "Lizol" dispirit and
Dettol antiseptic liquid, cherry blossom
shoe polish, etc., has challenged the
assessment of the respondents authorities
of the products of Harpic, Lizol and Dettol
at the higher rate of these products at 12.5
per cent VAT charges classifying under the
residual items under entry No. 1 of the
Fifth Schedule of the Assam Value Added
Tax Act, 2003 (hereinafter referred to as,
"the Assam VAT Act"), contrary to the
claim of the petitioner that the petitionercompany would be liable to pay only at
1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
415
rate of four per cent as these items are
covered by specific entries provided under
Schedule to the said Act at the said rate.
As all these writ petitions challenge
similar orders and under similar factsituations, these writ petitions are heard
together and disposed of by this common
judgment.

2. According to the petitioner,
the petitioner had been paying taxes at the
rate of four per cent in respect of the
aforesaid products as these (Harpic and
Lizol) are covered under entry No. 19 of
Part A of the Second Schedule to the
Assam Value Added Tax Act chargeable at
four per cent and Dettol is covered under
entry No. 21 of the Fourth Schedule to the
Assam
Value
Added Tax
Act
also
chargeable at the same rate of four per
cent.

3. Entry No. 19 of Part A of the
Second Schedule to the Assam Value
Added Tax Act reads as follows:

Chemical fertilizers, pesticides,
weedicides and insecticides excluding
mosquito repellents including electric or
electronic mosquito repellents gadgets and
insect repellents, devices and parts and
accessories thereof.

4 . The petitioner claims that the
products Harpic and Lizol fall under the
aforesaid entry No. 19 as these are
disinfectants
and
covered
by
the
expression "pesticides".

........

21
.
The
petitioner
has
contended that the products "Harpic" and
"Lizol"
are
disinfectants
and
since
disinfectants are also covered by the
expression "pesticides", these products
would be covered by entry 19 of Part A of
the Second Schedule.

22. The petitioner states that the
active ingredient of Harpic is hydrochloric
acid, which is a well known disinfectant
and in addition, it has other ingredients
like Bis/2 hydroxyethyl oleylamine, alkyl
trimethyl ammonium chloride, butylated
hydroxy toluene, methyl salicylte and other
chemicals, used for disinfecting the
surface on which it is applied and is
effective
in
killing
various
microorganisms (germs/bacteria) like S. Aurus,
E. Coli, S. Flexnari, S. Feacalis, K.
Pneumoniae, and C. Albicans, which are
generally found in toilet bowls that cause
skin, soft tissue and mucous membrane
infections, gastroenteritis, inflammation of
colon, bacillary dysentery, diarrhoea, etc.
Before respondent No. 3, the petitioner
had
also
furnished
supporting
documents/certification from experts, viz.,
SGS India Private Limited which is an
affiliate
of
Societe
Generale
de
Survellience S. A V Geneva, the world's
independent
international
testing,
verification and certification organisation,
which hold accreditation from National
Accreditation Board for Testing and
Calibration Laboratories, Ministry of
Science and Technology, New Delhi and is
approved, among others, by the Bureau of
Indian Standards, New Delhi and the
Ministry of Environment and Forests,
Government of India (under Environment
Protection Act, 1986), New Delhi, to
substantiate the contention that Harpic is
a disinfectant.

23. The aforesaid contention of
the petitioner that Harpic is a disinfectant
was not doubted or contradicted by the
Revenue.
Similarly,
the
primarily
disinfectant quality of "Lizol", supported
by
expert
opinion
also
remained
unrebutted.

24
.
The
petitioner
also
contended that similarly, "Lizol" has the
active ingredient benzalkonium chloride
solution
I.P.
and
other
ingredients
fragrance-BBA P 2062 M, propylene
416 INDIAN LAW REPORTS ALLAHABAD SERIES
glyeel
LP,
sodium
bicarbonate
I.P,
tartazine yellow, fatty alcohol ethoxylate,
lsoprpyl alcohol I.P. and other chemicals,
used
for
disinfecting
floor,
cooking
platform, sink and similar hard surfaces. It
is effective in killing microorganisms like
S.
Aurus
E.
Coli
(MTCC
1687)
Pseudomonas Aeruginosa (MTCC-741)
which are generally found on hard
surfaces like floors that cause urinary
tract
infections,
respiratory
system
infections,
dermatitis,
soft
tissue
infections, bone and joint infections,
infections to patients with severe burns,
cancer and AIDS, etc.

25.
Accordingly,
it
was
submitted that the petitioner, through the
product labels, had been publicly and
commercially representing "Harpic" and
"Lizol" as disinfectants and the consumers
purchase
the
products
for
their
disinfectant properties apart from the
cleansing utility. The consumers purchase
and use the same for mainly disinfectant
purpose while keeping their toilets/homes
clean. Thus, the primary purpose of the
products is disinfectant and is not the
secondary as held by the Revenue.

26. As regards the aforesaid
contention, it is noticed that the product
labels of both the products clearly indicate
that
the
petitioner
has
made
representation
of
their
disinfectant
property as the primary purpose. In the
impugned order, though the label has been
referred to, the representation about the
disinfectant property has been glossed
over, not highlighted and has held the
disinfectant property to be only the
secondary one. The products labels of both
the products indicate that the said
products are in the nature of disinfectant
which prominently display the potential of
the products to kill germs. In the product
label of Lizol, it is clearly stated thereon
that the product is a "disinfectant surface
cleaner". Moreover, it is prominently
stated on the face of the product that it
"Kills 99.9 per cent germs". Even on the
reverse of the product label the name of
the
product
is
shown
as
"Lizol
disinfectant". There is also a logo of a
house with a commonly used medical sign
of "+" whereunder it is written "Kills 99.9
per cent germs". The same logo is
prominently embossed on both the front
and back of the bottle to indicate that the
said
product
kills
germs,
thereby
emphasizing that it is a disinfectant.

.....

82. In the light of the above
discussions, we are of the view that these
petitions should be allowed and the
products Harpic and Lizol having been
declared to be pesticides as discussed
above, would be liable to tax under entry
No. 19 of Part A of the Second Schedule to
the Assam VAT Act and Dettol would be
liable to be assessed as an item under
entry 21 of the Fourth Schedule to the
Assam VAT Act and will not fall within the
excluded category under the Explanation.

32. In S.B. Sales Tax Revision/
Reference No. 11 of 2012 (Reckitt
Benckiser (India) Ltd. Vs. Assistant
Commercial Taxes Officer Anti Evasion
and others, the High Court of Rajasthan
has held as follows:-

3 . The brief facts noticed are
that a survey came to be conducted at the
business premises of the assessee on
03.05.2007 by the Anti Evasion Wing of
the revenue wherein, it was noticed that
the assessee is manufacturing/producing
Anti- Mosquitoes devices and "repellents",
"Dettol Soap", "Brasso", "Harpic Toilet
Cleaner", "Lizol Floor Cleaner", "Manson
Polish",
"Robin
Blue",
"Ret
Kill",
1 All. M/S Bundelkhand Health Care Vs. State of U.P. & Ors.
417
"Teenapole", Drugs & Medicines etc.