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Judgment
Arindam Sinha, J.
Mr. Padhy, learned advocate, Additional Standing Counsel appears on behalf of petitioner in this specially assigned revision. Mr. Agarwal, learned advocate appears on behalf of opposite party.
The revision was admitted by coordinate Bench on order dated 1st December, 2022. The question of law framed for consideration is reproduced below.
“Whether on the facts and in the circumstances of the case, the products “HIMANI BOROPLUS ANTISEPTIC CREAM” and lotion are “medicines” falling within the scope of Entry 46 of Part-II of Schedule B appended to the Orissa Value Added Tax Act, 2004”
Mr. Padhy submits, in paragraph 8 in the petition stands quoted the advertisement in respect of the product, claimed by opposite party to have medicinal quality. The quote in the paragraph is reproduced below.
“Boroplus Antiseptic Cream
Millions of users believe in Boroplus, as it stands for an indelible picture of trust and care in the hearts of the consumers across the country. The product offers unique blends of herbal actives and natural oil extracts in an advanced formulation providing one’s skin the perfect care it needs. Largely used during winters as an antiseptic cream, for smooth and beautiful skin, lips, elbows and feet. Boroplus echoes the celebration of good skin.”
He submits, the advertisement is for a cosmetic product.
He relies on judgment of the Supreme Court in Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise, Nagpur, reported in (2006) 3 SCC 266, paragraph 2. He submits, the two tests were accepted by said Court and mentioned in the paragraph. The two tests are extracted from the paragraph and reproduced below.
“I. Whether the item is commonly understood as a medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it will not be an item of common use. A user will use it only for treating a particular ailment and will stop its use after the ailment is cured. The approach of the consumer towards the product is very material. One may buy any of the ordinary soaps available in the market. But if one has a skin problem, he may have to buy a medicated soap. Such a soap will not be an ordinary cosmetic. It will be medicament falling in Chapter 30 of the Tariff Act.
II. Are the ingredients used in the product mentioned in the authoritative textbooks on Ayurveda?”
Mr. Padhy submits, the Assessing Officer (AO) was correct on assessing the product to fall under residuary Part III of Orissa Value Added Tax Act, 2004.
Mr. Agarwal points out from the Commissioner’s order that there was clear finding regarding both the tests specified by the Supreme Court. He draws attention to that part in the Commissioner’s order, in which there was reliance on reports produced by his client in respect of user of the product to treat, inter alia, minor cuts. Relied upon paragraph in the Commissioner’s order is reproduced below.
“Coming to the product in question i.e. Himani Boro Plus antiseptic cream or lotion several studies have been conducted for evaluation of the clinical efficacy of the product. At the time of appeal hearing the ld. Advocate submitted case studies to this effect. One such study is by Dr. Sunita Patra, Ayurvedic Medical Officer, Govt. Ayurvedic Dispensary, Kudutuli, Kandhamal. In her evaluation report, the copy of which was submitted at the time of appeal hearing, the medical Officer has concluded that the said product is used to cure the patients with the symptoms such as:-
• Minor Cuts
• Minor burn
• Dry chapped skin
• Dry skin diseases
• Scratch
Similarly, another study was conducted by Dr. Mukesh Mehta, Chief Ayurvedic Physician, Shreeji Ayurvedic Clinic, Vadali, Gujurat who has given similar opinion on effectiveness of Himani Boro Plus Antiseptic Cream with reference to Cure minor cuts, Burn, Wound, Dry Chapped skin and Lip, Scratch and cold sore/cracked feet. The copy of evaluation done by Dr. Mehta was also submitted at this forum at the time of appeal hearing.”
(emphasis supplied)
He also draws attention to impugned order of the Tribunal to demonstrate that it noticed his client had submitted a paper book in respect of the product including reference of authoritative book, ingredients, clinical drug etc. As such, the question framed should be answered in the affirmative and in favour of his client.
We are to answer the question of law framed. Hence, there can be no fact finding in adjudication of the revision petition. Keeping that in mind we have to understand what are the two tests that have been accepted by the Supreme Court. The first test is common understanding of the product to be a medicament, which is called the common parlance test. A user of the product would use it only for treating a particular ailment and stop its use after the ailment is cured. The second test is regarding ingredients used in the product, whether mentioned in authoritative textbooks on Ayurveda. The Commissioner in allowing the appeal of opposite party did so in accepting reliance by said party on two reports. The first was on study made by Dr. Sunita Patra, Ayurvedic Medical Officer, Govt. Ayurvedic Dispensary, Kudutuli, Kandhamal. Evaluation in the report is regarding user of the product. The second report was on study conducted by Dr. Mukesh Mehta, Chief Ayurvedic Physician, Shreeji Ayurvedic Clinic, Vadali, Gujarat, who gave similar opinion about user of the product. There is no mention in the order that either or any of the reports said, the product is not for continuous use.
Neither of the reports was accepted by the Commissioner for reliance on ingredients used in manufacturing the product.
The Tribunal found it is not disputed that the product has medicinal value. The finding is disputed by petitioner in having filed for revision. It recorded that in course of hearing opposite party had submitted a paper book on the product including, inter alia, details of authority book reference, ingredients etc. Relevant passage in said order, relied upon herein by opposite party, is reproduced below.
“xxx xxx xxx The product in dispute has medicinal value, which is undisputed. It is covered under section 3 of the Drugs and Cosmetic Act, 1940. Ld. Assessing Officer has not followed the orders of the higher authorities. The same has been accepted as authentic medicine by the authorities. The burden of proof rests on revenue for classification of goods which has not been done. In course of hearing he has submitted a paper book of Himani Boroplus Antiseptic Cream. It includes details of authentic book reference, ingredients, label, excise invoices, sale invoices, clinic drug etc. xxx xxx xxx.”
(emphasis supplied)
The Tribunal, however, did not direct remand, for ascertaining the question of fact regarding ingredients of the product. Instead, without itself ascertaining on the fact, it went on to dismiss the appeal of revenue. In the circumstances, we must proceed with the revision, to answer the question of law in the absence of the finding on fact regarding ingredients. The inevitable conclusion is that there was no satisfaction rendered by opposite party on the second test. It must be said that it was for opposite party to prove the product fell under the entry as the Tribunal erred in saying the burden was on petitioner to prove the negative.
Coming back to the first test, on perusal of both, impugned order as well as the one made by the Commissioner carrying concurrent findings, we have been unable to notice that there was finding also on fact, regarding common parlance test. It must be mentioned here that the advertisement relied upon by petitioner was so done at this stage and not in the earlier proceedings, ascertained by us on query made. Hence, we disregard the advertisement in our adjudication.
In view of aforesaid we are minded to allow the appeal by directing remand to the Tribunal for ascertaining on the two questions of fact in respect of the two tests, accepted by the Supreme Court in Puma Ayurvedic Herbal (supra). In the circumstances, it is not necessary for us to answer the question. We make it clear that restoration to the Tribunal is not confined to the two tests but the parties may urge all points available to them.
The revision is disposed of.
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