I.M.Quddusi, J.
1. Since common question of law is involved in all these seven revisions, hence they have been heard together and are being disposed of by one common judgment.
2. The first four revisions have been filed by M/s. Dey's Medical Stores Ltd., Revision No. 3 of 1997 relates to the assessment year 1984-85, Revision No. 4 of 1997 relates to the year 1985-86, Revision No. 6 of 1997 relates to the year 1987-88 and Revision No. 190 of 2003 relates to the year 1989-90. The other set of three revisions has been filed by M/s. Dey's Medical Stores (Mfg.) Ltd. Revision No. 144 of 1999 relates to the year 1989-90, Revision No. 145 of 1999 relates to the year 1987-88 and Revision No. 146 of 1999 relates to the assessment year 1990-91.
3. The question of law involved in the first four revisions filed by M/s. Dey's Medical Stores Ltd., is whether Keo Karpin brand hair vitaliser and baby oil fall under the category of medicines or they are cosmetics. Similarly in the other set of three revisions filed by M/s. Dey's Medical Stores (Mfg.) Ltd., the question of law involved is as to whether Keo Karpin brand antiseptic cream and massage oil fall under the category of medicines or they are cosmetics.
4. The contention of the applicants is that, they are medicines while on the other hand and department's version is that they are cosmetics and are taxable as such.
5. The relevant notifications are No. ST-2-5784/X--10(1)-80--U.P. Act 15/48--Order-81 and No. ST-2-5785/X-10(1)-80--U.P. Act 15/ 48--Order-81, both dated September 7, 1981, issued under the U.P. Trade Tax Act (hereinafter to be referred as 'the Act'). Entry No. 5 of Notification No. ST-2-5784/X with regard to cosmetics reads as under:
'All kinds of cosmetics and toilet preparations for beautification or care of the face, skin, hair, nails, eyes or brows, but not including soaps, safety razor blades, hair combs, tooth pastes, tooth powders and other dentifrices, tooth brushes and kumkum.'
Entry No. 29 of Notification No. ST-2-5785/X, dated September 7, 1981, relates to medicines, which is as follows :
'Medicines and pharmaceutical preparations including insecticides and pesticides.'
6. The learned counsel for the applicant Sri V.N. Tandon, Advocate, argued before this Court that the applicant manufactures medicines at its factory at Calcutta and they are sold throughout India through their sales offices in almost all the States in India. The applicant has been granted a licence to manufacture them by the Drugs Controller, West Bengal, as a medicine ; the definition of 'drug' and 'cosmetics' is given in the Drugs and Cosmetics Act, 1940 ; there are different forms and norms under the said Act for drugs and cosmetics ; the said commodities are not used as cosmetics, but are for either cure or prevention of some diseases ; and when a drug licence has been issued by the Drugs Controller, West Bengal, which is a Government of India authority, then an authority of a State Government is not competent enough to challenge the said decision. On the other hand, it was argued by the learned Standing Counsel Sri Rajeev Sharma, on behalf of the opposite party, that they are for beautification of the body or skin, and even if some medicinal properties are added in the oils they would not change their character as a cosmetics.
7. Before the question of law is decided, it is necessary to see and examine the provisions of the Drugs and Cosmetics Act, 1940, under which licence has been issued by the Drugs Controller, West Bengal, to the applicants.
Under the Drugs and Cosmetics Act, 1940 the definitions of the term 'drug' and 'cosmetics' are given in the following words :
' 'Cosmetics' means any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic, but does not include soap.'
' 'Drug' includes--
(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or diagnosis or treatment, mitigation or prevention of any disease or disorder in human beings or animals; and
(ii) 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.'
8. Rule 76 of the Rules framed under the Drugs and Cosmetics Act, 1940 deals with the procedure for licences of drugs or medicines, which are issued under Schedule C or C(I) and X, and form 27-A is the form in which a licence for manufacture, of a drug is applied, while for cosmetic, Rule 138-A prescribes the procedure and form 32 is the form in which a licence for a cosmetic is issued,
9. Apart from the above fact, it is also necessary to examine the ingredients of each commodity in order to decide whether they would be a medicine or a cosmetic. The compositions as per the specifications given in the certification by the Drugs Controller, as well on the phial of each of the said commodities are as given below :
Keo Karpin Hair Vitaliser : Bottle of 100 ml. and 300 ml.
Each 100 ml. contains :
Keratin Hydrolysate (5%) ... 5.0 ml.d-Panthenol. ... 50.0 mg.Biotin ... 5.0 mg.Nicotinic Acid I.P. ... 200.0 mg.Resorsinol I.P. ... 50.0 mg.Hailkyl HBU-150 ... 500.0 mg.(Underylenic derivative)Povidone U.G.P. ... 1.0 gm.Absolute alcohol ... 25.0% v/v.Glycerin I.P. ... 10.0 ml.Purified water I.P. to 100 ml. Keo Karpin Massage Oil : Bottle of.50 ml. and 4,50 ml.
Each 10 ml. contains :
Vitamin A.I.P ... 20,000 I.U.Vitamin D3 B.P ... 4,000 I.U.Vitamin E.U.S.P./N.F. ... 3 mg. In all emollient base containing :
Olive oil B.P. ... 0.05 mg.Lanolin I.P. ... 0.05 gm.Arachis oil I.P. ... 5.0 ml.Light liquid paraffin I.P. ad ... 10.0 ml.Sandalwood oil & perfume g.o.Absolute alcohol 1% v/vAppropriate overage of vitamin added Keo Karpin Baby oil : Bottle of 100 ml. and 300 ml.
Each 100 ml. contains :
Vitamin A.I.P ... 20,000 I.U.Vitamin D3 B.P. ... 4,000 I.U.Vitamin E acetage I.P. ... 3 mg.Olive oil D.P.'73 ... 0.05 mg.Anhydrous lanolin I.P ... 0.05 gm.Arachis Oil I.P. ... 5.0 ml.Neem oil I.P.'66 ... 0.05 ml.Isopropy myristate B.P.C. ... 0.05 ml.Alcohol I.P. ... 1 % v/vLight liquid paraffin I.P. ad. ... 10.0 ml.Appropriate overages of vitamins added Keo Karpin Antiseptic Cream : Tube of 10 gm, 15 gm, 20 gm, 21 gm,
25 gm, and 30 gm. Diatilate ofHaridra ... 5%v/wTulsi ... 5%v/wPadmaka ... 5%z/wShimul ... 5%v/wMehndi ... 2% v/wIn a cream base containing : Puspanjan ... 2% w/wChandan Taila ... 0.2% v/wUshira Taila ... 0.1% v/wNimba Taila ... 0.1% v/w
10. The learned counsel for the applicant vehemently argued that from the above details of compositions, it would be seen that there is no element of hair oil in any of the four commodities, and medicines as mentioned either in the Indian Pharmacopia (I.P.) or British Pharmacopia (B.P.) form part of the ingredients. It was also pointed out that in massage oil there is presence of olive oil, but olive oil is never used as a hair oil, and it is a medicine, which is mentioned in the British Pharmocopia. On the other hand, it was argued by the learned Standing Counsel that massage oil and baby oil is an oil for massaging the body of the babies. Written submissions have also been filed by both the parties, which have also been perused.
11. It was further argued by the learned counsel for the applicants that as medicine is for cure of a disease and also for prevention of a disease both in a human being as well as animals, but a cosmetic is only for care of body or for beautification, while a medicine is not meant for beautification, the definition of 'drug' is very wide and is inclusive of a number of things, while a cosmetic is restricted to certain field of application. I find force in the arguments of the learned counsel for the applicant.
12. So far as vitaliser is concerned, it was argued that it is to prevent untimely fall of hair, and to remove dandruff, which is an ailment. In this regard the learned counsel for the applicant has also filed the opinion of Dr. Gopal Mukharjee, Head of the Department of S.T.D., Calcutta National Medical College and Hospital, and others that vitaliser is for premature fall of hair and dandruff, which is a disease and as such vitaliser is used to prevent this disease. The following is the extract from it :
'Vitaliser is a formulated product for uses in excessive fall of hair and in dandruff. The formulation is a quite rational one containing keratin, hydrolysate, biotin, panthenol, nicotinic acid, resorcinol and hialkyl HBU 150. Keratin is the protein which forms the essential constituent of hair. The hydrolysate form helps optimum utilisation of this substance. This along with co-factor biotin help prevent fall of hair.
In a controlled study local application of biotin in persons with excessive hair fall 89 per cent showed good response and some visible hair growth. Pathenol is an important co-enzyme and its deficiency in laboratory animals has shown alopecia. Damaged hair treated with pathenol has also been found to show appreciable improvement, Nicotinic acid, because of its property of peripherial vasodilatation helps maintain local nutrition on scalp along with enhancing the absorption and dissipation of topically applied concomitant drugs. Resorcinol is highly effective in reborihocie skin condition and dandruff. Haikyl HBU is also invaluable in dermatophytie infection of the scalp. The product as such has been very nicely formulated for prevention of excessive hair fall and cure of dandruff.'
13. The learned counsel for the applicant invited my attention to the ruling of the honourable Supreme Court in the case B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise reported in [1997] 104 STC 164. In this case the ratio was whether 'SELSUN' shampoo would be a medicine or cosmetic. Allowing the appeal, the apex Court has held that so far as medicinal properties of the product were concerned the technical and pharmaceutical references indicated that selenium sulfide had anti-fungal and anti-seborrhoeic properties and was used in a detergent medium for the treatment of dandruff on the scalp which was a milder form of seborrhoeic dermatitis and tinea versicolour. It was further held in the said decision by the apex Court that 'the fact that a small quantity of perfume was added or that the product was packed in an attractive plastic bottle would not change its character,' On every pack of vitaliser the following, amongst other, expression has been exhibited :
'It provides deep down treatment for prematured and excessive hair loss. It cures common acute bacterial and fungal scalp infections, caused by pollution, nutritional deficiencies and from excessive strains of modern life.'
14. The date of manufacture and a specific date of expiry is also exhibited on each and every pack of vitaliser as per provisions of Drugs and Cosmetics Act, 1940. The ruling of B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise [1997] 104 STC 164 (SC) is therefore squarely applicable in the present case, and I have no hesitation in holding that hair vitaliser manufactured by the applicant is a medicine and not a cosmetic. It may be added here that the law laid down by the apex Court is the law of the land and is binding on all the authorities, whether judicial or executive, all over India. It has been held by the honourable Supreme Court in the case of Union of India v. Kamlakshi Finance Corporation Ltd. reported in (1992) Supp 1 SCC 648 that:
'The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department--in itself an objectionable phrase--and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.'
15. From a perusal of the record, it appears that the ruling of B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise [1997] 104 STC 164 (SC) was reported in the year 1997 much before the orders of the Trade Tax Tribunal passed by it which are under challenge in revision Nos. 3, 4 and 6 of 1997, but this very ruling was quoted on behalf of the applicant before the Trade Tax Tribunal in Second Appeal No. 272/1994, which was decided on January 23, 2002, but the Trade Tax Tribunal did not at all discuss the said ruling and dismissed the Second Appeal of the applicant in a very cursory manner taking shelter of its old judgments in previous second appeals. The Tribunals are the watch-dogs of the judicial system, and it is their duty to seriously consider the rulings of higher courts, and more specially the apex Court. In the facet of the said ruling of B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise [1997] 104 STC 164 (SC), I have but to accept the contention of the applicant, as the said ruling is directly and squarely applicable in the present case, and hold that hair vitaliser sold by the applicant is a medicine.
16. The learned Standing Counsel for the opposite party has, in the written submission, quoted the definition of 'medicines' from various books. They far from supporting the case of the opposite party, support of the arguments advanced by the learned counsel for the applicant. The learned Standing Counsel has cited the ruling of Balaji Agency, Gorakhpur v. Commissioner of Sales Tax reported in 1994 UPTC 184, in which this Court has held that 'merely because the cosmetics have some medicinal properties, they cannot be treated as medicines, whether a thing is cosmetic or medicine depends on its general use'. This Court held vaseline, emami naturally fair cream, himani cold turmeric cream and himani boroplus antiseptic cream are cosmetics, but held HIMTAJ oil are a medicine. On the other hand, several rulings have been cited on behalf of the applicants by the learned counsel appearing for them. It was contended that in the case of United Trading Agency v. Additional Commissioner of Commercial Taxes, reported in [1997] 104 STC 182 (Kar), it has been held by the Karnataka High Court that Vicco products, viz., tooth-paste, tooth-powder and cream as medicinal and pharmaceutical preparations, in the case of Dabur India Limited v. Commissioner of Sales Tax, Orissa reported in [1997] 104 STC 198 (Orissa), Lal Dantamanjan has been held by the Orissa High Court at Cuttack as a medicine. In the case of Commissioner of Commercial Tax, Madhya Pradesh v. Dawar Brothers reported in [1998] 111 STC 319 ; 1998 UPTC 1211, the M.P. High Court has held Vicco Vajradanti paste and powder and Vicco turmeric cream to be drugs. In the case of Commissioner of Sales Tax v. Murari Brothers reported in [1980] 46 STC 88, it has been held by the Lucknow Bench of this Court that Bhimseni kajal is a medicine. In the case of Rashtra Deep Laboratory v. Commissioner of Sales Tax reported in [1983] 53 STC 419 (AIL), distilled water has been held to be a medicine. In this case it has been held that the concept of 'medicine' is static. In the case of Commissioner of Sales Tax v. Balsara Hygiene Products Ltd., reported in 1986 UPTC 367, it has been held by this Court that 'Odomos' though is not a curative but a preventive medicine. In that case it was observed 'Odomos' is used only as mosquitoes repellent. The purpose is to save the human skin from mosquitoes which results in several infectious diseases and mostly malaria fever, etc. It is true that it is not used as a medicine to cure some disease or to heal up some wound but it is certainly a preventive medicine which prevents the body from being infected by the bite of the mosquitoes. One redeeming feature is that manufacturing of this commodity is controlled by the authorities under the Drugs and Cosmetics Act, 1940, which also lends support to the view that it is used like a medicine.
17. As regards its availability in the open market, the following observations by this Court are noteworthy :
'The mere fact that Odomos is available even in general merchandise shops will not detract the substance from being used as a preventive measure or as a preventive medicine.'
18. In the case of Commissioner of Sales Tax v. Allied Surgical Emporium (Agencies) reported in [1986] 63 STC 331 (All.) ; 1987 UPTC 32, in which catguts sutures was held to be a medicine, the following observations were made by this Court :
'The term 'medicine' has not been expressly defined in Section 3 of the Indian Drugs and Cosmetics Act, 1940, but the 'drug' defined under Clause (b) of Section 3 of the said Act includes all 'medicines' for internal or external use of human beings or animals in the diagnosis, treatment, mitigation or prevention of diseases....... The definition of 'drug' is comprehensive enough to take in not only 'medicines' but also 'substances' intended to be used for any treatment of diseases of the human beings or animals.'
19. In the case of Commissioner of Sales Tax v. Gramodyog Karyalaya reported in [1979] 44 STC 270, (All.) ; 1979 UPTC 884 Jari Booti have been held to be a medicine by this Court. In the case of B. Shah & Co. v. State of Gujarat reported in [1971] 28 STC 5, Gujarat High Court has held Nycil powder to be a medicine and not a cosmetic, as it contains medicinal properties. In the case of State of Andhra Pradesh v. Koduri Satyanarayana & Co. reported in [1988] 68 STC 233 (AP), it has been held by the Andhra Pradesh High Court that prickly heat powder is a medicine. In the case of Arya Vaidya Pharmacy v. State of Tamil Nadu reported in [1989] 73 STC 346, the Supreme Court has held that asavas and arishtams are medicine. In the case of State of Orissa v. Reckitt and Colman of India Limited reported in [1995] 97 STC 279, the Orissa High Court has held that Dettol antiseptic cream is a medicine. In this case a distinction has been drawn between the terms 'cosmetics' and 'medicines' in the following terms :
' 'Van Nostran Chemists' Dictionary defines cosmetics as a material, generally a mixture of substance, used to enhance or preserve beauty by application to the face, hair, hands, and other parts of the body, In Chamber's 20th Century Dictionary, cosmetic is defined 'as adjective purporting to improve beauty, especially that of the complexion, as noun a preparation for the purpose'. In Webster's International Dictionary, 'cosmetic' is defined as 'any external application intended to beautify and improve the complexion, skin or hair'. The word is derived from Greek word 'kosmetikos', meaning skilled in decorating and 'kosmos' meaning order or ornament. In Encyclopaedia Britannica 'cosmetics' means 'substance of diverse origin scientifically compounded and used to cleanse, to allay skin troubles, to cover up imperfections and to beautify'. The expression 'antiseptic' is defined in Borland's Pocket Medical Dictionary, Twenty Second Edition, as 'preventing sepsis, a substance that inhibits the growth and development of micro-organisms but does not necessarily kill them'. 'Septic' means pertaining to sepsis, which word means 'the presence in the blood or other tissues of pathogenic microorganisms or their toxins ; the condition associated with such presence', 'Drug' according to Chamber's 20th Century Dictionary is 'any substance used in the composition of medicine, a substance used to stupefy or poison or for self-indulgence'. According to Oxford Dictionary 'drug' means original simple medicinal substance, organic or inorganic, used alone or as ingredient, adulterate with drug, especially with narcotic or poison ; nauseate. According to Webster's Dictionary 'drug' means 'any substance used as a medicine or in the preparation of medicines or chemical mixtures'. According to Encyclopaedia Britannica 'drug' means a substance ordinarily used for the treatment of disease which either suppresses or enhances the normal activity of the cell, tissue or organ on which it exerts its action. According to Borland's Pocket Medical Dictionary, 'drug' means any 'medical substance'....The manufacturing literature on which the appellate authorities placed reliance clearly shows that Dettol antiseptic cream has been specifically formulated to 'protect against germs in cuts, abrasions, minor burns and other skin conditions. It not only soothes irritation and helps to prevent re-infection but also promotes healing.'
20. From all the abovementioned decisions, and especially the view expressed by the apex Court in the case of B.P.L. Pharmaceuticals Ltd. [1997] 104 STC 164 it is very clear that while a cosmetic is used on the skins of a human being for beautification or cure and is used externally, a drug or medicine is used for the cure or prevention of a disease, and is used both externally and internally. Baby oil and massage oil are used for strengthening bones, which are not on the surface of the body but are the internal parts of the body, as such the test of a cosmetic is not applicable on them. Moreover, their formulations clearly show that they possess medicinal properties. Olive oil is not a cosmetic and is not used as a hair oil. It is costly too. So far antiseptic cream is concerned, it has been clearly mentioned on the tube as well as packing :
'A protective and smoothing emollient for chopped skin, cracked nipples, cuts and dry skin diseases.'
21. Hence antiseptic cream manufactured by the applicants, has medicinal properties and is something more than a cream simpliciter. The view taken by the Orissa High Court in the case of State of Orissa v. Reckitt and Colman of India Limited [1995] 97 STC 279 is squarely applicable on this commodity in the present case.
22. It may be pointed out that in the ruling of Balaji Agency, Gorakhpur v. Commissioner of Sales Tax 1994 UPTC 184 cited by the learned Standing Counsel, Himtaj oil, which is an hair oil and is also used as hair oil, but because it has some medicinal properties of healing some disease, has been held to be a medicine. There is also another aspect of the matter. In the case of Shakti Lace Factory v. Commissioner of Sales Tax, U.P. reported in [1984] 57 STC 261 (All.) [App.] ; 1983 STJ 35, it has been observed by this Court that if a commodity falls under two notifications, then the notification which is beneficial to the assessee should be applied. In view of the above discussions and observations, I have no hesitation in holding that all the four commodities are medicines, and are covered by entry No. 29, i.e., medicines and pharmaceutical preparations, and are taxable as such. Another submissions of the learned counsel for the applicant was that interest at the rate of 15 per cent may also be allowed on the excess deposits by the applicant, as in some cases partial stay had been granted by this Court and in some cases full amount of tax had been deposited, which may be allowed from the date of excess deposits in each year in view of the decision of the division Bench of this Court in the case of Anuj Bricks v. State of U.P., reported in 2000 UPTC 999, paras 4 and 5 of which are as under :
4. The grievance of the petitioner is that interest on principal amount must also be paid by the department. We agree with this submission as interest is the normal accretion on capital. Similar view has been taken by this Court in Babu Ram Daya Nand Prakash v. State of U.P. 1997 UPTC 1264 paras 8 and 9.
5. Following the said decision, the petition is allowed. The department is directed to pay 15 per cent interest per annum from the date of deposit till the date of refund of the principal amount and this interest will be paid within three months of production of certified copy of the order before the authority concerned.'
23. In view of the above, all the seven revisions are accordingly allowed and it is held that Keo Karpin brand hair vitaliser, massage oil, baby oil and antiseptic cream are medicines and are taxable as such at the rates applicable to medicines from time to time as per notifications of the U.P. Government. The Trade Tax Tribunal concerned is directed to pass orders in each case under Section 11(8) of the Act within 2 months from the date of production of the certified copy of this order by the applicants. An order was passed by this Court on January 30, 2003 directing the Trade Tax Tribunal not to decide the second appeals pending before it in which identical points were involved. This order is vacated, and the Trade Tax Tribunal concerned is directed to decide the pending second appeals of the applicants in accordance with the directions contained in this judgment.
24. If is further directed that the amount deposited with the trade tax authorities shall be refunded to the applicants with interest at the rate of 12 per cent per annum within a period of three months. There shall be no order as to costs.