# The Commissioner, Commercial Tax, U.P. Lucknow Revisionist v. M/S Emami Ltd

- **Citation:** (2024) 8 ILRA 1286
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-08-06
- **Case number:** Sale/Trade Tax Revision No. 274 of 2018
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-commissioner-commercial-tax-u-p-lucknow-revisionist-v-m-s-emami-ltd-52294
- **Pages:** 32

## Headnote

A. Tax Law - Classification - The Uttar
Pradesh Value Added Tax Act, 2008-
Section 58 - All the revision petitions
involve the common question of law as to
whether,
under
the
facts
and
circumstances of the case, the Commercial
Tax Tribunal was legally justified in
holding that Boro-Plus Antiseptic Cream
(hereinafter referred to as the 'BPAC') is a
medicated ointment and covered under
entry no. 41 of Schedule II Part (A).

There is a stark difference between
chargeability and exemption. It is to be
noted that in the event of chargeability,
the interpretation favouring the Assessee
needs to be adopted, while in the case of
exemption, the position is the opposite. If
two views are possible in interpreting a charging
section, the one favouring the Assessee needs
to be adopted. (Para 24, 27)

The onus to prove the chargeability of a
particular item in a provision other than
the provision chosen by the Assessee falls
squarely on the revenue. The burden of
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1287
proof shifts on the Revenue to show a particular
item is taxable in the manner claimed by them.
(Para 25, 28)

In present case, the revenue's argument that
the inclusion of medicated ointment as a drug
and cosmetic under Entry 41 of Schedule 11 of
the Act is an exemption is completely misplaced.
It is to be noted that whether BPAC falls within
Entry 41 is in relation to chargeability in a
particular
schedule
and
not
that
of
an
exemption. It is trite law that an item would be
classified as a residuary item only when it does
not fall in any other classification. In the present
case, using tools of interpretation, the Tribunal
has categorically held that BPAC would fall
within Entry 41 of Schedule II. The burden of
proof was upon the revenue to indicate that the
said classification made by the Tribunal was
absolutely incorrect and without any basis in
law. (Para 28)

In legal and administrative proceedings,
the burden of proof is a fundamental
principle that ensures fairness. When the
Revenue seeks to reclassify goods, it must
provide evidence that substantiates its
position. Here, the Department's inability to
produce any evidence suggests either a lack of
basis for their claim or a failure in their
administrative
processes.
Thereby,
the
Department's claim for reclassification lacks
credibility and cannot be upheld. (Para 29)

B. Marketing or advertising cannot dictate
tax classification. Objective assessment is
placed over subjective interpretation. It is
not on the basis of what the petitioner
advertises to attract customers that its liability
to pay duty under a particular tariff item be
fastened. The same can only be set on the facts
and the circumstances and determination on the
basis of those facts and circumstances as
disclosed by the records. (Para 35)

In the present case, the Revenue's argument
that the Respondent itself

## Text

_Characters 0–39,873 of 99,878. This is a partial read: ask again with offset=39873 for what follows._

1286 INDIAN LAW REPORTS ALLAHABAD SERIES
that inevitably would lead to an
enquiry
as
to
whether
the
appointment of the alleged usurper
has been made in accordance with
law or not. For issuance of writ of
quo warranto, the Court has to
satisfy that the appointment is
contrary to the statutory rules and
the person holding the post has no
right to hold it. (Vide University of
Mysore v. C.D. Govinda Rao,
Kumar Padma Prasad v. Union of
India, B.R. Kapur v. State of T.N.,
Mor
Modern
Coop.
Transport
Society Ltd. v. State of Haryana,
Arun Singh v. State of Bihar, Hari
BanshLal v. Sahodar Prasad Mahto
and Central Electricity Supply
Utility of Odisha v. Dhobei Sahoo."

27 A Division Bench of this Court
in the case of Anil Kumar Verma Vs. U.P.
State
Industrial
Development
Corporation Ltd. 2014 (8) ADJ 152 had
exercised its jurisdiction while issuing a
writ of quo warranto setting aside the
appointment/promotion of a Chief Engineer
in U.P. State Industrial Development
Corporation.

28. Nevertheless we are of the firm
opinion that the selection, appointment and
promotion of the fifth respondent on the
post
of
Engineer,
Deputy
Director,
Superintending Engineer and Additional
Charge as Chief Engineer is in consonance
and conformity with the Statutory Rules
and the Government Orders issued from
time to time and the writ petitioner has
miserably failed to show any illegality
committed by the respondents.

29. Accordingly, the writ petition
being devoid of merits is liable to be
dismissed and is dismissed.
----------
(2024) 8 ILRA 1286
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.08.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Sale/Trade Tax Revision No. 274 of 2018
With other connected cases

The Commissioner, Commercial Tax, U.P.
Lucknow ...Revisionist
Versus
M/S Emami Ltd. ...Respondent

Counsel for the Revisionist:
Mr. Manish Goyal, Addl. A.G. assisted by Mr.
Bipin Kumar Pandey, Addl. C.S.C.

Counsel for the Respondent:
Mr. S.K. Bagaria, Sr. Advocate assisted by Mr.
Kumar Ajit Singh & Mr. Rahul Agarwal

A. Tax Law - Classification - The Uttar
Pradesh Value Added Tax Act, 2008-
Section 58 - All the revision petitions
involve the common question of law as to
whether,
under
the
facts
and
circumstances of the case, the Commercial
Tax Tribunal was legally justified in
holding that Boro-Plus Antiseptic Cream
(hereinafter referred to as the 'BPAC') is a
medicated ointment and covered under
entry no. 41 of Schedule II Part (A).

There is a stark difference between
chargeability and exemption. It is to be
noted that in the event of chargeability,
the interpretation favouring the Assessee
needs to be adopted, while in the case of
exemption, the position is the opposite. If
two views are possible in interpreting a charging
section, the one favouring the Assessee needs
to be adopted. (Para 24, 27)

The onus to prove the chargeability of a
particular item in a provision other than
the provision chosen by the Assessee falls
squarely on the revenue. The burden of
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1287
proof shifts on the Revenue to show a particular
item is taxable in the manner claimed by them.
(Para 25, 28)

In present case, the revenue's argument that
the inclusion of medicated ointment as a drug
and cosmetic under Entry 41 of Schedule 11 of
the Act is an exemption is completely misplaced.
It is to be noted that whether BPAC falls within
Entry 41 is in relation to chargeability in a
particular
schedule
and
not
that
of
an
exemption. It is trite law that an item would be
classified as a residuary item only when it does
not fall in any other classification. In the present
case, using tools of interpretation, the Tribunal
has categorically held that BPAC would fall
within Entry 41 of Schedule II. The burden of
proof was upon the revenue to indicate that the
said classification made by the Tribunal was
absolutely incorrect and without any basis in
law. (Para 28)

In legal and administrative proceedings,
the burden of proof is a fundamental
principle that ensures fairness. When the
Revenue seeks to reclassify goods, it must
provide evidence that substantiates its
position. Here, the Department's inability to
produce any evidence suggests either a lack of
basis for their claim or a failure in their
administrative
processes.
Thereby,
the
Department's claim for reclassification lacks
credibility and cannot be upheld. (Para 29)

B. Marketing or advertising cannot dictate
tax classification. Objective assessment is
placed over subjective interpretation. It is
not on the basis of what the petitioner
advertises to attract customers that its liability
to pay duty under a particular tariff item be
fastened. The same can only be set on the facts
and the circumstances and determination on the
basis of those facts and circumstances as
disclosed by the records. (Para 35)

In the present case, the Revenue's argument
that the Respondent itself markets BPAC as an
'antiseptic cream' is not a sound argument.
Marketing or advertising of a product,
while influential in shaping consumer
perceptions and driving sales, cannot and
should not determine the classification of
a product for taxing purposes. Taxation
laws and regulations have been designed
to categorise products based on their
intrinsic properties, intended use, and the
benefits they provide rather than the
promotional
strategies
employed
by
manufacturers. Advertising, by nature, is
aimed at emphasising certain attributes of a
product to attract consumers, which may
include both factual information and marketing
hyperbole. Thereby, relying on advertising alone
to classify a product would lead to inconsistent
and potentially misleading tax categorisations,
as
marketing
strategies can
vary
widely
between companies and over time.

The Respondent successfully demonstrated
before
the
authorities
that
BPAC
is
fundamentally a medicated ointment. This
conclusion
was
reached
through
detailed
evidence that relied upon the composition,
properties, and therapeutic benefits of BPAC.
This left no room for doubt about BPAC's
classification as a medicated ointment, which is
essential for its appropriate tax treatment under
Entry 41. These details go on to establish BPAC
as a medicated ointment because they offer a
factual basis for its classification, independent of
any advertising claims. (Para 21, 34)

C. Scope of revisional jurisdiction - The
scope
of
revisional
jurisdictional,
is
primarily focused on questions of law,
jurisdictional
errors,
or
procedural
irregularities. The High Court, in a revision
petition, must refrain from engaging in a
de novo inquiry into factual matters
already adjudicated upon by the Tribunal
unless compelling grounds warranting
such intervention are made. It is well settled
that the Tribunal is the last fact-finding body
and that this Court, in revision, would not go
into an enquiry with regard to the factual
aspects that have been decided by the Tribunal.
In the exercise of revisional jurisdiction, the
High Court has a Ltd. mandate, which is
confined to only the questions of law and not
the questions of fact. (Para 39, 40, 42)

The concept of perversity in legal contexts
refers to a situation where a decision or
finding is so unreasonable or contrary to
the evidence that no reasonable person
could have arrived at it. When dealing
1288 INDIAN LAW REPORTS ALLAHABAD SERIES
with administrative and judicial reviews,
including tax and regulatory matters,
perversity is a crucial ground upon which
decisions can be challenged or revised.
However, for perversity to be successfully
invoked, certain legal thresholds and evidentiary
standards must be met. Here, the Revenue has
not
articulated
any
specific
grounds
of
perversity in its pleadings or submissions. (Para
43)

D. Simply disagreeing with the Tribunal's
decision
without
substantiating
such
disagreement with concrete evidence or
legal arguments does not meet the
threshold for invoking perversity. Perversity
would require demonstrating that the Tribunal's
findings
were
not
based
on
a
rational
assessment of the evidence or that they ignored
relevant legal principles or material facts.
Neither was any evidence produced by the
Department
before
the
assessing
officer,
Commissioner, Commercial Tax and the Tribunal
nor was any evidence produced before this
Court to controvert the evidence produced by
the respondents. (Para 43)

E. Importance of interpreting legislative
provisions as a whole, ensuring that both
inclusive
and
exclusive
clauses
are
harmonised. This aspect in particular is
indispensable when it comes to understanding
20 Entry 41, where the conjunction "but"
introduces an exception, which specifically
includes medicated ointments regardless of the
exclusion of other similar products. (Para 9)

F. Words and Phrases - (1)"but" - The
conjunction "but" serves as an important
tool to ensure certain items remain within
the regulatory framework despite general
exclusions. In the instant case, Entry 41
delineates the scope of products classified under
drugs and medicines, specifically excluding
certain items such as medicated soap, shampoo,
antiseptic cream, face cream, massage cream,
eye gel, and hair oil. However, it explicitly
includes "medicated ointments", among other
items like vaccines, syringes, and dressings. A
careful construction of Entry 41 showcases a
deliberate legislative intent to classify products
based on their medicinal properties and usage,
establishing that specific therapeutic items are
included for beneficial tax treatment. The clear
separation of excluded and included items
brings out the distinct nature and purpose
of
the
products,
with
"medicated
ointments" being recognised for their
essential therapeutic roles. (Para 10)

The term "but" is used to place forward an
exception to the preceding exclusions,
implying that although several items have
been excluded, medicated ointments are
specifically included here. "But", in Entry 41,
is
parallel
with
terms
like
"expect",
"nevertheless", and "however," which indicate
an exception to the list of exclusions preceding
the same. (Para 11, 12)

(2) Principle of noscitur a sociis - This
expression
simply
means
that
"the
meaning of a word is to be judged by the
company
it
keeps."
This
principle
suggests that the meaning of a word is
known from the accompanying words,
implying that the context provided by
surrounding terms can clarify ambiguous
expressions. In Entry 41, the inclusion of
items like medicated soaps, shampoos, face
creams, and massage creams, all of which are
cosmetics and toilet preparations, provides a
clear context for interpreting "antiseptic
cream."
This
interpretation
ensures
consistency and avoids any arbitrary or
inconsistent classification that might arise
from
interpreting
"antiseptic
cream"
in
isolation. (Para 13)

Taking into consideration on the above rules of
interpretation, specifically in relation to taxing
statutes, it can be St.d that even though
antiseptic creams are excluded from Entry 41,
medicated ointments would be included due to
the use of the word "but". The word "but" is a
clear indication that the legislature intended to
include, as an exception, medical ointment,
even though certain medicated ointments may
be categorised as antiseptic creams. If a
product is more than just an antiseptic cream
and qualifies as a medicated ointment, it will be
included in Entry 41. (Para 15)

Revision petitions dismissed. (E-4)

Precedent followed:
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1289
1. Commissioner Commercial Taxes U.P. Vs
Singhal Bros. Hathras, 2006 (43) STR 579 (Para
4(a))

2.
Godrej
Sara
Lee
Ltd.
Vs
Assistant
Commissioner (CT) INT LTU Secunderabad
Division, Hyderabad & anr., 2017 (106) VST 97
(Para 4(d))

3. Commissioner of Central Excise, Nagpur Vs
Sri Baidyanath Ayurved Bhawan Ltd., 2009 (12)
SCC 419 (Para 4(d))

4. CTT Vs Kartos International Ltd., 2011 NTN
(Vol 146) 17 (Para 4(j))

5. Commissioner of Customs (Import) Mumbai
Vs M/s. Dilip Kumar & Co. & ors., 2018 (9) SCC
1 (Para 4(k))

6. Heinz India Pvt. Ltd. Vs St. of Kerala & ors.,
(2017) 104 VST 292 (Ker.) (Para 4(nn))

7.
M/s.
Hamdard
Waqf
Laboratories
Vs
Commissioner of Commercial Tax, 2018 NTN
(67) 160 (Para 4(o))

8.
M/s.
Johnson
and
Johnson
Ltd.
Vs
Commercial Tax Officer, (2017) 105 VST 227
(Para 4(p))

9. Triveni Glass Ltd. Vs Commissioner of
Trade Tax, U.P., 2023 SCC OnLine SC 1295
(Para 4(z))

10. Heinz India Ltd. Vs St. of Kerala, 2023 SCC
OnLine SC 561 (Para 4(z))

11. Collector of Customs Vs Swastic Woollens
(P) Ltd., 1988 Supp SCC 796 (Para 5(i))

12. Sardar Gurmej Singh Vs Sardar Pratap Singh
Kairon, AIR 1960 SC 122 (Para 5(j))

13. Rohit Pulp and Paper Mills Vs CCE, (1990) 3
SCC 447 (Para 5(l))

14. HPL Chemicals Ltd. Vs CCE, (2006) 5 SCC
208 (Para 5(m))

15. St. of M.P. Vs Marico Industries, (2016) 14
SCC 103 (Para 5(m))

16. Hindustan Ferrodo Vs CCE, (1997) 2 SCC
677 (Para 5(m))

17. Union of India Vs Garware Nylons, (1996)
10 SCC 413 (Para 5(m))

18. Commissioner, Trade Tax, UP Vs National
Cereal, (2005) 3 SCC 366 (Para 5(n))

19. Commissioner of Customs Vs Dilip Kumar &
Co., (2018) 9 SCC 1 (Para 5(o))

20. M/s Blue Star Vs U.O.I., 1980 (6) ELT 280
(Para 5(r))

21. Hindustan Unilever Ltd. Vs Collector of
Central Excise, 2000 (121) ELT 451 (Para 36)

22. The St. of Andhra Pradesh & ors. Vs M/s
Himani Ltd. & ors., TRC 166/2004 (Para 38)

23. Hindustan Petroleum Corp. Ltd. Vs Dilbahar
Singh, (2014) 9 SCC 78 (Para 41)

Precedent distinguished:

1.
Cadbury India Ltd. Vs Commissioner,
Commercial Tax, Uttarakhand, 2019(65) GSTR283 (Para 4(ag))

2. Kantaru Rajeevaru (Sabarimala Temple
Review - 5J) Vs Indian Young Lawyers Assn.,
(2020) 2 SCC 1 (Para 4(ae), 33)

3. Spencer & Co. Ltd. Vs Vishwadarshan
Distributors (P) Ltd., (1995) 1 SCC 259 (Para
4(ae), 33)

4. St. of Karnataka Vs St. of T.N., (2016) 10
SCC 617 (Para 4(ae), 33)

5. M.T. Khan & ors. Vs Govt. of A.P. & ors.,
(2004) 2 SCC 267 (Para 4(w), 32)

6. U.O.I. & anr. Vs Hansoli Devi & ors., (2002) 7
SCC 273 (Para 4(w), 32)

7. St. of Gujarat Vs Patel Ramjibhai Dana,
(1979) (3) SCC 347 (Para 4(w), 32)

8. Balram Kumawat Vs U.O.I. & ors., (2003) 7
SCC 628 (Para 4(w), 32)
1290 INDIAN LAW REPORTS ALLAHABAD SERIES
9. Quebec Railway, Light Heat and Power Co.
Ltd. Vs Vandry & ors., AIR (1920) PC 181 (Para
4(w), 32)

10.
M/s.
Paras
Pharmaceuticals
Ltd.
Vs
Commissioner, Trade Tax, U.P. Lucknow, 2007
NTN (Vol. 33) 313 (Para 4(a), 31)

11. N M/s. Balaji Agency Vs Commissioner of
Sales Tax, U.P., 1994 (19)-STJ-150 (Para 4(a),
30)

Present revision petitions have been
preferred
by
The
Commissioner,
Commercial Tax (hereinafter referred to
as the 'Revisionist') u/s 58 of the
U.P.V.A.T., 2008 (hereinafter referred to
as 'the Act') against the orders dated June
8, 2018, October 8, 2018, October 8, 2018,
July 17, 2020, November 1, 2022, and
April 28, 2023, passed by the Commercial
Tax Tribunal, U.P., Lucknow (hereinafter
referred to as the 'Tribunal').

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. The instant revision petitions have
been preferred by The Commissioner,
Commercial Tax (hereinafter referred to as
the 'Revisionist') under Section 58 of the
Uttar Pradesh Value Added Tax, 2008
(hereinafter referred to as 'the Act') against
the orders dated June 8, 2018, October 8,
2018, October 8, 2018, July 17, 2020,
November 1, 2022, and April 28, 2023,
passed by the Commercial Tax Tribunal, U.P.,
Lucknow (hereinafter referred to as the
'Tribunal'). All the revision petitions involve
the common question of law as to whether,
under the facts and circumstances of the case,
the Commercial Tax Tribunal was legally
justified in holding that Boro-Plus Antiseptic
Cream (hereinafter referred to as the 'BPAC')
is a medicated ointment and covered under
entry no. 41 of Schedule II Part (A).

2. As the issue involved in all the
revision petitions is common, the said
petitions are being decided by a common
order.

3. The factual matrix in all the
revision
applications
is
also
similar.
Accordingly, I have outlined the factual
matrix of only one case (STRE No. 274 of
2018) below:

a.
The
instant
revision
petition pertains to the rate of tax to
be levied on the sale of BPAC.
b. The Assessing Authority
in the instant case had levied tax on
BPAC at the rate of 14% after
categorising it as an 'unclassified
item'.
c. Being aggrieved by the
aforesaid assessment order passed by
the Assessing Authority, M/s Emami
Ltd. (hereinafter referred to as the
'Respondent') preferred an appeal
before the First Appellate Authority
which was dismissed vide order
dated July 26, 2016.
d. The Respondent then filed
an appeal before the Tribunal which
was allowed vide order dated June 8,
2018. The Tribunal held that BPAC
falls
within
the
category
of
'medicated ointment' and hence is
liable to be taxed at the rate of 5%
under
the heading
'drugs
and
medicines' in Entry 41 Schedule II.
e. Hence, the instant revision
petition has been preferred by the
Revisionist against the order dated
June 8, 2018, passed by the Tribunal.

CONTENTIONS
BY
THE
REVISIONIST

4. Learned counsel appearing on
behalf of the Revisionist has made the
following submissions:
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1291
a. BPAC has been sold by
the Respondent for a long time, and
prior to 2018, it has always been
assessed as a cosmetic by this
Court. Reliance is placed upon the
judgments of this Court in M/s.
Balaji Agency -v- Commissioner
of Sales Tax, U.P. reported in
1994 (19)-STJ-150, M/s. Paras
Pharmaceuticals
Limited
-v-
Commissioner, Trade Tax, U.P.
Lucknow reported in 2007-NTN-
(Vol-33)-313, and Commissioner
Commercial
Taxes
U.P.
-v-
Singhal Bros. Hathras, reported
in 2006 (43) STR 579.
b. The instant matter relates
to the assessment year 2012-13.
With effect from October 11, 2012,
antiseptic cream has been excluded
from the entry of 'drug and
medicines' in Entry 41 Schedule II.
Therefore, it is liable to be
classified
and
taxed
as
an
'unclassified item'.
c. This Court on a previous
occasion has held that BPAC is a
medicament. The commodity is
being sold by the Respondent as an
antiseptic cream and the legislature
has excluded antiseptic cream from
the
category
of
'drugs
and
medicines'.
d. The Hon'ble Supreme
Court in Godrej Sara Lee Ltd. -v-
Assistant
Commissioner
(CT)
INT LTU Secunderabad Division,
Hyderabad and Anr. reported in
2017 (106) VST 97 has held that
the goods referred to in an
'exclusion
clause'
are
to
be
excluded from the ambit of that
entry. Furthermore, the Hon'ble
Supreme Court in Commissioner
of Central Excise, Nagpur -v- Sri
Baidyanath
Ayurved
Bhawan
Ltd., reported in 2009 (12) SCC
419, has held that a specific entry
must prevail over a general entry.
e. In the instant case, BPAC
has been specifically excluded from
Entry No. 41 and hence it is liable
to be taxed as an 'unclassified
item'.
f. Efforts of the Respondent
are to reduce the rate of tax by
arguing that BPAC is to be
classified
as
a
'medicated
ointment'.
However,
the
Respondent itself sells BPAC as an
antiseptic cream and advertises the
same on electronic media as an
antiseptic cream.
g. The
respondent
has
specifically
advertised
that
"Millions of users believe in
Boroplus-
India's
number
one
antiseptic cream...". According to
the respondent, the fact that BPAC
is a 'medicated ointment' is not
advertised or mentioned.
h.
The
Tribunal
has
wrongly
concluded
that
the
authorities below have ignored the
contents mentioned in the drug
licence and have decided the
classification of BPAC based on the
prescription on the packet.
i. Common parlance has
always been accepted by the
Hon'ble Supreme Court for the
determination
of
nature
and
character of goods. BPAC is being
purchased by the consumers for its
regular
use
without
any
prescription
of
the
doctor.
Consumers never use it to cure any
disease. On the other hand, a
'medicated ointment' is always
used for an ailment and its use
1292 INDIAN LAW REPORTS ALLAHABAD SERIES
comes to the end when the ailment
comes to the end. Hence, BPAC
cannot be held to be a 'medicated
ointment'.
j. The Hon'ble Supreme
Court
in
CTT
-v-
Kartos
International Ltd. reported in
2011 NTN (Vol 146) 17 has held
that
classification
of
any
commodity cannot be made on its
scientific and technical meaning. It
is only the common parlance
meaning of the commodity which
should be taken into consideration
for the purpose of determining the
tax liability.
k. The Tribunal has held
that if the Revenue wants to
classify any product in a particular
entry, the burden of proof lies with
the Revenue. This observation is
against the law laid down by the
Hon'ble
Supreme
Court
in
Commissioner of Customs (Import)
Mumbai -v- M/s. Dilip Kumar and
Company and Ors., reported in
2018 (9) SCC 1, wherein it was
propounded that if any exemption
or reduction is claimed, the burden
shifts on the Assessee to prove the
basis
for
claiming
the
said
exemption or reduction. Therefore,
the burden of proof falls on the
Respondent in the instant case.
l. Once the legislature had
consciously
excluded
antiseptic
cream from the category of 'drugs
and medicines' then the fact that
the
commodity
has
been
manufactured after obtaining a drug
license does not matter. Consumers
purchase a good after looking at its
use and consumption, not the
conditions mentioned in the drug
license.
m. The First Appellate
Authority has rightly pointed out
that
survey
report
has
been
obtained by the Respondent on his
own from a little local area despite
the
fact
that
BPAC
is
sold
throughout the State. At the time of
survey, no information was given to
the Department.
n. In Heinz India Pvt. Ltd.
-v- State of Kerala and Ors.
reported in (2017) 104 VST 292
(Ker), the Kerala High Court has
held that since medicated talcum
powder has been included in the
category of cosmetic, it is to be
taxed as a cosmetic and not as a
medicine although it is a medicated
talcum powder.
o. This Court in M/s.
Hamdard Waqf Laboratories -v-
Commissioner
of
Commercial
Tax reported in 2018 NTN (67)
160 has held that at the time of
determining
the
rate
of
tax,
common parlance test as well as
trade understanding and popular
meaning of goods is a determining
factor.
p. The High Court of
Rajasthan in M/s. Johnson and
Johnson Ltd. -v- Commercial Tax
Officer reported in (2017) 105 VST
227 has held that for the purpose of
levy of tax under sales tax law or
value added tax law, classification
under central excise is not binding
nor the manufacturing of goods
under drug license is binding.
q. The Hon'ble Supreme
Court in Baidyanath Ayurved
(supra) held that 'Baidyanath Dant
Manjan' is liable to be taxed as an
unclassified item even though the
same was manufactured under a
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1293
drug
license
issued
by
the
competent authority.
r. In the instant case,
antiseptic cream has been excluded
from the schedule and hence the
same is liable for taxation as an
'unclassified item'.
s. Once the product that is
'antiseptic cream' stood excluded
from Part-A of Schedule - II and
did not fall either in Schedule - I or
Schedule - III or Schedule - IV or
in any other entry of Schedule - II
in either Part-A or Part-B, the
product 'antiseptic cream' was thus
classified under Schedule - V in
terms of Section 4(1)(d) of the Act
by the Revenue.
t. There is a clear diversion
made by the legislature which is for
a
definitive
purpose.
The
classification entry was amended in
terms of Section 4 of the Act
whereby 'antiseptic cream' was
specifically
excluded.
The
Revisionist discharged its burden
by placing on record the fact that
there has been amendment in the
schedule and this fact was duly
noted by the Assessing Officer,
Appellate
Authority
and
the
Tribunal.
The
Revisionist
has
established that it has taken the
product out from the ambit of a
particular
classification.
The
burden of the Revisionist thus
stood discharged, and therefore, all
the
authorities
cited
by
the
Respondent to the effect that the
Revisionist did not discharge its
burden of classification are of no
relevance.
u. It is also necessary to
note that exclusion is of a specific
product that is 'antiseptic cream'
which is not being considered by
the legislature as a drug or
medicine. 'Antiseptic cream' is a
specialised entry, which has been
excluded from the entry of drugs
and medicines and hence it cannot
be included in the general entry of
medicated ointment. 'Medicated
ointment' is a term of general
import whereas the term 'antiseptic
cream' is very specific. The term of
general import then will give way
to the term of specific import.
Tested on the touchstone of the
principle 'generalia specialibus non
derogant', 'antiseptic cream' will
prevail over the general term
'medicated ointment' and under the
circumstances the whole entry is to
be read and cannot be dissected in
the manner the Respondent wants it
to be read. Therefore, drugs and
medicines
exclude
'antiseptic
cream' even though there are other
medicated ointments on the market
that may be included under drug or
a medicine.
v. It is a settled principle of
law that no word of legislature can
be made otiose through judicial
interpretation. If the legislature has
employed a certain term it is to be
given its due meaning and the entry
has to be read plainly as it stands.
The
cardinal
principle
of
interpretation is that words are to
be given their clear and plain
meaning as they stand in the
statute.
w. If the Respondent's
argument is accepted then the term
'antiseptic cream' will become
redundant as it will be included in
'medicated ointment'. Under the
circumstances,
applying
the
1294 INDIAN LAW REPORTS ALLAHABAD SERIES
principles of interpretation, Entry
41 of Part-A of Schedule-II of the
Act is to be read as it stands and
'antiseptic cream' stands excluded
from Entry 41 even though it
includes
other
medicated
ointments. Reliance is placed upon
the judgments of the Hon'ble
Supreme
Court
in
Balram
Kumawat -v- Union of India and
Ors. reported in (2003) 7 SCC 628,
M.T. Khan and Ors. -v- Govt. of
A.P. and Ors. reported in (2004) 2
SCC 267, Union of India and
Anr. -v- Hansoli Devi and Ors.
reported in (2002) 7 SCC 273, and
State
of
Gujarat
-v-
Patel
Ramjibhai Dana reported in
(1979) (3) SCC 347 and the
judgment of the Privy Council in
Quebec Railway, Light Heat and
Power Co. Ltd. -v- Vandry and
Ors. reported in AIR (1920) PC
181.
x. In the instant case, the
Respondent is claiming to be
classified
under
Part-A
of
Schedule-II of the Act and is
claiming to be covered under
Entry-41 whereas it stands already
classified under Schedule-V of the
Act.
As
a
consequence,
the
Respondent is claiming to be
entitled to pay a reduced rate of tax
by taking aid of the fact that it falls
under a different head. Where the
Assessee claims to pay a lower rate
of tax, the burden falls on the
Assessee to establish that they are
liable to pay a lower rate of tax
under a different head. Therefore,
the primary burden is to be
discharged by the Respondent in
the instant case and not by the
Revenue.
y. The Respondent never
put to challenge the amendment
introduced by the notification dated
October 10, 2012 by filing a
separate writ petition. Therefore,
the notification dated October 10,
2012 by which the amendment was
made by the state legislature
remains operative and is binding on
the Respondent.
z. There is a difference
between
exemption
and
classification. Under Section 7 of
the
Act,
the
provisions
for
exemption are contained and the
goods that stand exempted find due
mention in Schedule - I of the Act.
Classification and exemptions are
two different aspects but when it
comes to exemption and payment
of
reduced
rate
of
tax,
the
principles applicable would be the
same namely the burden will be on
Assessee to claim payment at a
reduced rate of tax. Reliance is
placed on the judgments of the
Hon'ble
Supreme
Court
in
Commissioner
of
Customs
(Import),
Mumbai
-v-
Dilip
Kumar and Company and Ors.
(supra), Triveni Glass Limited -v-
Commissioner of Trade Tax, U.P.
reported in 2023 SCC OnLine SC
1295, Heinz India Limited -v-
State of Kerala reported in 2023
SCC
OnLine
SC
561,
and
Commissioner of Central Excise -
v- Shree Baidyanath Ayurved
Bhawan (supra).
aa. The order passed by the
Tribunal suffers from perversity in
as
much
as
it
relies
upon
extraneous material and does not
take into consideration any material
as prescribed under the law. Hence
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1295
the finding holding BPAC to be an
ointment is perverse.
ab. BPAC fails to qualify as
an Ayurvedic drug and also fails to
qualify as a patented or proprietary
medicine. In light of the nonconsideration of the same, the order
of
the
Tribunal
is
rendered
perverse.
ac. Instead of considering
compliance with the requirements
prescribed by law for a product to
qualify as an Ayurvedic Drug or a
patented or proprietary medicine,
the
Tribunal
has
instead
erroneously relied upon extraneous
and irrelevant material that was
produced by the Respondent to
support its claim.
ad. When the statute itself
provided for authoritative texts that
were to be relied upon along with
the requirements that were to be
satisfied by the Assessee, the
Tribunal was bound to analyse the
claim of the Respondent strictly in
accordance with these statutory
requirements.
ae. The Tribunal was bound
by Article 144 of the Constitution of
India and while applying the twin
test it was supposed to consider the
authoritative
texts
relating
to
Ayurvedic
Drug
or
Ayurvedic
proprietary
medicine.
The
said
principle could not have been
deviated from by the Commercial
Tax Tribunal. Reliance in this regard
is placed upon the judgments of the
Hon'ble Supreme Court in Kantaru
Rajeevaru (Sabarimala Temple
Review - 5J) -v- Indian Young
Lawyers Assn. reported in (2020) 2
SCC 1, Spencer & Co. Ltd. -v-
Vishwadarshan Distributors (P)
Ltd. reported in (1995) 1 SCC 259,
and State of Karnataka -v- State of
T.N. reported in (2016) 10 SCC 617.
af. The core issue is that
whether from the evidence that was
led by the Respondent with respect to
BPAC,
the
formulation
was
antiseptic or not. There is no
discussion by the Tribunal of the
formulation of an antiseptic. For
qualifying as a drug or medicine it is
antiseptic quality or its properties that
are to be considered as relevant
factors.
The
vehicle
to
carry
antiseptic property or quality will be
irrelevant. It is a well-known fact that
all ointments are creams but all
creams are not ointments. However,
no finding in this regard has been
returned by nor any evidence has
been led before the Tribunal. For
common parlance, 'antiseptic' is not
understood as medicine.
ag. The proper approach in
the instant case would be to remand
the matter and give opportunity to
both the parties to bring fresh
material on record and to lead
evidence so that proper conclusion
may be drawn by the Tribunal.
Reliance is placed upon the judgment
of the High Court of Uttarakhand in
Cadbury
India
Ltd.
-v-
Commissioner, Commercial Tax,
Uttarakhand reported in 2019(65)
GSTR-283 wherein in a nearly
identical situation, the High Court of
Uttarakhand
had
remanded
the
matter to the tribunal.
ah. In view of the aforesaid
contentions, the instant Revision is
prayed to be allowed.

CONTENTIONS
BY
THE
RESPONDENT
1296 INDIAN LAW REPORTS ALLAHABAD SERIES
5.

Learned
Senior
Counsel
appearing for the Respondent has made the
following submissions:

a. BPAC is manufactured
by the respondent under Ayurvedic
system of medicine under a drug
license
issued
by
the
Drug
Licensing Authority under the
provisions
of
the
Drugs
and
Cosmetics Act, 1940 (hereinafter
referred to as the 'Drugs Act') and
the Drugs Rules, 1945 (hereinafter
referred to as the 'Drugs Rules').
b. All raw materials used in
the manufacture of BPAC are
mentioned in the authoritative
books on Ayurvedic system of
medicine specified in the 1st
schedule to the Drugs Act. In the
Drug
License,
details
of
all
ingredients
along
with
their
medicinal properties and names of
authoritative Ayurvedic books are
mentioned.
c. The composition and
packing
of
BPAC
was
also
approved
by
the
designated
statutory
authority
which
administers and regulates the Drugs
Act. The Drug License inter alia
mentioned the following:
"Product Name: Boroplus
Healthy Skin Antiseptic Cream
(For External Use only)
Category:
Ointment
-
Ayurvedic Medicine
Ayurvedic Raw Materials,
their botanical names, quantities
Curing/medicinal
properties
of
each raw material
Book Reference (name and
page
number
of
concerned
authoritative book)
Direction of Use"
d. On the tubes/packs of
BPAC, the product name Boroplus
Healthy Skin Antiseptic Cream is
mentioned. It is further declared as
under:
"Ayurvedic
Medicine
Ointment. FOR EXTERNAL USE
ONLY"
"A preventive, curative and
healing Ayurvedic ointment for dry
skin diseases, cuts, scratches, minor
burns, wounds, cold sores, chapped
skin,
furuncle,
impetigo
and
intertrigo."
e. The label also contains
the pictorial illustration of various
medicinal uses of the product viz.,
moisturises the skin, cures minor
cuts and wounds, protects skin
from dryness, heals cracked foot,
softens chapped skin and lips and
prevents nappy rash.
f. By the amendment dated
October 11, 2012, antiseptic cream
was excluded from drugs and
medicines but medicated ointment
was included. Thus, the entry made
a distinction between antiseptic
cream and medicated ointment. The
Tribunal considered meaning of
both the said expressions and held
that from the evidence it was clear
that antiseptic cream and medicated
ointment
have
different
characteristics. In the drug licence
also, BPAC was categorised as
"ointment - Ayurvedic medicine".
g. As
per
the
expert
evidence of Shri Loknath Pramanik
(formerly
Additional
Director,
Drugs
Control
and
Member,
Pharmacist
Council
of
India),
BPAC
is
"an
ointment
with
approximately 67% oil ingredient
and 10% water content and the
8 All. The Commissioner, Commercial Tax, U.P. Lucknow Vs. M/S Emami Ltd.
1297
balance being active ingredients
and excipients. Moreover, BPAC is
occlusive in nature which is the
property of an ointment". As per
various authoritative publications
such as British Pharmacopoeia,
International
Journal
of
Pharmaceutics,
Remington's
Pharmaceutical
Manufacturing
(Part V) and other publications
cream
and
ointment
are
two
different items. Comparatively, in
cream the quantity of water is much
more whereas in ointment the
quantity of water is much less as
compared to the quantity of oil.
Due to this reason, cream spreads
easily on the skin and skin absorbs
the same quickly and easily. As
against this, ointment is a greasy
product and does not spread on the
skin easily nor is it absorbed easily
by the skin.
h. As per the drug licence
of BPAC, the quantity of oil is
much more than the quantity of
water and it has been specifically
categorised as "ointment". It has
already been established in the
earlier proceedings that BPAC is a
medicine having all the required
drugs and properties of medicine.
Consequently, the said product is a
"medicated
ointment"
and
is
classifiable under Entry 41.
i. The findings about nature
and characteristics of BPAC were
given
by
the
Additional
Commissioner (Appeal) and the
Tribunal relied on undisputed and
uncontroverted
documents
and
evidence
produced
by
the
Respondent. The Revenue did not
produce any evidence whatsoever
to the contrary. The Tribunal's
findings in the order dated June 8,
2018 and in other orders following
the said order, were pure findings
of fact and these were given on
appreciation of documents and
evidence on record and the same
does not give rise to any question
of law so as to warrant interference
of this Court under Section 58 of
the Act. Reliance is placed on the
judgement of the Hon'ble Supreme
Court in Collector of Customs v.
Swastic
Woollens
(P)
Ltd.
reported in 1988 Supp SCC 796.
j. Entry 41 excludes 7
named items, that is, medicated
soap, shampoo, antiseptic cream,
face cream, massage cream, eye jell
and hair oil. Immediately after such
exclusion, the entry says "but
including
..........medicated
ointments". The said entry 41 has
to be read as a whole and no part
thereof
can
be
rendered
meaningless or otiose. The entry
after excluding some items, uses
the conjunction "but" and then
specifically includes "medicated
ointments".
On
plain
and
unambiguous language, the entry
provides
that
irrespective
of
exclusions, medicated ointment is
included. The expression "but" is
synonymous
with
"except"
or
"nevertheless" and is by way of
exception to what has gone before.
It clearly indicates that what
follows the said expression is an
exception to that which has gone
before. Consequently, on a plain
reading
of
the
entry
itself,
medicated ointment is specifically
covered and "taken in" under the
said Entry 41. This construction
also follows from the normal
1298 INDIAN LAW REPORTS ALLAHABAD SERIES
dictionary
meanings
of
the
expression
"but"
which
are
"nevertheless,
however,
except,
with the exception of, excepting
that, yet, still" etc. Reliance is
placed upon the judgement of the
Constitution Bench of the Hon'ble
Supreme Court in Sardar Gurmej
Singh
versus
Sardar
Pratap
Singh Kairon reported in AIR
1960 SC 122.
k. Drugs and medicines
may be of hundreds of types and
varieties. These may also be
available in various forms for
external use and application. Such
drugs and medicines have not been
excluded from Entry 41. On the
other hand, medicated ointment is
specifically covered by the entry. It
was
never
the
intention
in
amending Entry 41 to exclude any
drugs and medicines simply due to
their being in the form of an
ointment.
The
expression
"medicated
ointment"
is
not
qualified and it covers all types and
varieties of medicated ointments.
Nothing is excluded from the scope
and ambit of "medicated ointment".
If
the
goods
are
medicated
ointment, these may have various
medicinal properties and some of
these may be antiseptic in nature
but due to any such reason, these
do not cease to be "medicated
ointment". No such limitation or
restriction can be imposed on the
expression "medicated ointment"
used in Entry 41. The entry cannot
be amended or recast by the
Departmental authorities.
l. Without prejudice to the
aforesaid, it is submitted that in any
case, the expression antiseptic
cream
in
the
said
exclusion
category in Entry 41 is to be read
ejusdem
generis
with
other
excluded items such as medicated
soaps or shampoo or antiseptic
cream or face cream or massage
cream etc. which are all primarily
cosmetics and toilet preparations.
The principles of ejusdem generis
as well as noscitur a sociis squarely
apply to the said exclusion clause
which comprises different items
mentioned above in which a
common thread is running through
all such excluded items, namely,
that these are primarily cosmetics
and toilet preparations. In support
of this submission reliance is
placed on the judgement of the
Hon'ble Supreme Court in Rohit
Pulp and Paper Mills vs CCE
reported in (1990) 3 SCC 447.
m. The dispute in the
instant case relates to classification
of goods for the purposes of
applying the rate of tax. It is not a
case of any exemption from tax or
interpretation of any exemption
notification. As per the Respondent,
BPAC is classifiable under Entry
41
of
Schedule
II
whereas
according to the Department it is
classifiable under the residuary
entry as unclassified item under
Schedule
V.
Both
the
said
schedules carry different rates of
tax. Classification is a matter of
chargeability.