ORDER
R. Jayasimha Babu, J.
1. Petitioners have questioned in this petition the order passed by the Tamil Nadu Taxation Special Tribunal rejecting the petitioner's O.P. which was one for quashing the assessment order dated 16.08.1996 for the assessment year 1994-95 and also for a declaration that the Explanation to Serial No.I of Part F of First Schedule to the Tamil Nadu General Sales Tax Act reading 'Any of the item listed above even if medicated or as defined in Section 3 of the Drugs & Cosmetics Act, 1940 (Central Act XXIII of 1940) or manufactured on the licence issued under the said Act will fall under this item' and the words 'excluding products capable of being used as creams, hair oils, tooth paste, tooth powders, cosmetics, toilet articles, soaps and shampoos' found in parenthesis in Entry 20 in Part C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 as ultra vires Articles 14, 19(1)(g) and 300A of the Constitution of India. That Explanation as also the impugned part in Entry 20 were introduced into the Act with effect from 12.03.1993.
2. The second petitioner is a manufacturer of two well-known consumer products 'Vicco Vajradanti' tooth paste, and 'Vicco Turmeric' face cream, first petitioner being one of it's dealers. It is the case of the second petitioner that these products are ayurvedic products and are ayurvedic drugs properly classifiable under Serial No.20 of Part C of the First Schedule to the Act which reads thus:
'Part C. Entry 20
(A) Medicines conforming to the following description:
Any medicinal formulation or preparation ready for use internally or externally for treatment or mitigation or prevention of diseases or disorders in human being or animals (excluding products capable of being used as creams, hair oils, tooth-pastes, tooth-powders, cosmetics, toilet articles, soaps and shampoos), but including -
(i) Allopathic medicine
(ii) Other medicines and drugs including ayurvedic, Homeopathic, siddha and unani preparations.
(iii)Medicinal mixtures or compounds, the components of which have not already suffered tax.
(iv) Surgical dressing which expression shall include adhesive plasters, adhesive plaster dressing, gypsona, Plaster of paris and bandages velroc pop bandages, elastro crape bandages, gauze, wadding gauze, lint and cotton wool poultices and similar articles impregnated or coated with pharmaceuticals substances put up in forms or packings for surgical purposes which have been sterlised and conform to the accepted standards of the medical profession.
(v) Pharmaceutical and surgical products or plastic and rubber including gloves, aprons and caps.
(B) Instruments and appliances used in medical, surgical, dental or vertinary sciences, including scientific apparatus, other electro medical apparatus and sight testing instruments including Opthalmoscope, Otoscope, Larryngoscope, Retinoscope, Binacular loupe, parts and accessories thereof, (other than those specified elsewhere in this schedule).
(C) (i) Heart pacemaker (pulse generator)
(ii) Intro-ocular lenses.'
3. The Revenue has treated 'Vicco Vajradanti' as a toothpaste falling under Sl.No.7 of Part E of the First schedule which reads thus :
Part E. Entry 7. 'Tooth Pastes, tooth powders and mouth washes and other dentifrices whether or not medicated or defined in Section 3 of the Drugs and Cosmetics Act, 1940 (Central Act XXIII of 1940) or manufactured under a licence issued under that Act, tooth brushes, tongue cleaners.'
4. The other product 'Vicco Turmeric' face cream is sought to be taxed by the revenue by treating it as one falling under Entry 1 of Part F of the First Schedule to the Act which reads thus:
'Part F Entry 1
(i) Scents and perfumes in any form excluding doop and agarbathis but including aragaja, javvadu and punugu
(ii) Hair oils, hair creams, hair dyes, hair darkeners, hair tonics, brilliantines, pomades and vaselines;
(iii) Lipsticks lipsalve, nail polishers, nail varnishes, nail brushes, beauty boxes, face powders, toilet powders, baby powders, talcum powders, powder compacts, powder pads and puffs, toilet sets, made of all materials (with or without contents) toilet sponges, scent spray, depilatories, blemish removers, eye liners all sorts, eye shadow, eye brow pencils, eye lash brushes, eau de cologne, solid colognes, lavender water, snows, face creams, all purpose creams, cold creams, cleaning creams, make-up creams, beauty creams, beauty milk, cleaning milk, hair foods, skin tonics, complexion rough, nail cutters, sanitary towels and napkins, astringent lotions, pre-shave and after-shave lotions and creams, moisturisers of all sorts and personal (body deodorants).
Explanation: Any of the items listed above even if medicated or as defined in Section 3 of the Drugs and Cosmetics Act, 1940 (Central Act III of 1940) or manufactured on the licence issued under the Drugs and Cosmetics Act, 1940 (Central Act) will fall under this Entry.
5. It is not in dispute that the second petitioner has obtained a drug licence under the Drugs and Cosmetics Act for both these products; that it has not obtained a licence for the manufacture of any cosmetic; that the ingredients used in these products are those prescribed by the texts in Ayurveda; and that these products have medicinal value.
6. The ingredients of 'Vicco Vajradanti' tooth paste are set out on the carton in which it is sold, thus :
'Babhul 90 mg., Jambhul 50 mg., Lavang 3 mg., Manjistha 130 mg., Dalchini 8 mg., Bor 50 mg., Vajradanti 25 mg., Acrod 3 mg., Khair 82 mg., Palang 120 mg., Akkal Kadha 13 mg., Bakul 160 mg., Jeshthamadh 65 mg., Kabab-Chini 97 mg., Ananth Root 20 mg., Ajwan 1 mg., Mailal 3 mg., Trifala 80 mg.'
7. Ingredients of `Vicco Turmeric' skin cream are set out on the carton thus: - 'Extract of turmeric 16% sandal wood oil 1.2% (in a non-greasy base.' The medicinal value claimed is that it prevents and cures disorders of the skin and that it is very effective in boils and pimples. The picture of an young girl's face is printed on the carton.
8. It is the case of the petitioners that these products were put on the market in the year 1960 and has ever since been marketed in India and elsewhere. The products have also been widely advertised in print as also electronic media.
9. The petitioner has, among the documents filed in this Court which documents had been produced by it in the litigations to which it had been a party in other Courts earlier, filed a letter dated 25.05.1979 addressed by the Vicco Laboratories, Bombay to the Director of the Indian Standard Institution, New Delhi which reads thus:
' Sub: Vicco Vajradanti Tooth Paste and Vicco Turmeric Vanishing Cream.
We are manufacturing Vicco Vajradanti Tooth Paste and Turmeric Vanishing Cream under Ayurvedic Drug Licence A/237, issued by the Food and Drugs Administration, Maharashtra State, Bombay.
We shall thank you to please let us know whether you would treat Vicco Vajradanti Tooth Paste as product falling under IS:6356-1978 and Vicco Turmeric Vanishing Cream as product falling under IS:6608-1978 and issue us licences to use ISI marks for the said two products.'
10. It is evident from this that the assessee did not regard these two items merely as medicines to cure certain diseases to be sold through chemists and druggists, but as two consumer items of daily use meant for use by anyone who uses a tooth paste or a vanishing cream.
11. It was the case of the assessee before us, even as it was before the Tribunal and other authorities, that these products are only ayurvedic medicines and that it had been so held by various forums over a long period of time - the High Court at Bombay, Sales Tax Appellate Tribunals at Kerala and Andhra Pradesh, and the High Courts of Karnataka, Kerala and Madhya Pradesh. Against some of these judgments petitions seeking leave to appeal had been rejected by the Supreme Court.
12. The language of the entry and its true scope will determine the includibility or otherwise of the taxable goods in such entry. The decisions to which petitioner has referred, therefore, do not conclusively establish that these two items are not capable of being subjected to tax as tooth paste and skin cream under the provisions of the Tamil Nadu General Sales Tax Act. It is, therefore, necessary to examine the petitioner's claim with reference to the language employed in those entries. The relevant entries in the Schedule to the Act have already been set out.
13. The validity of the Explanation to Entry 1 in Part F of the First Schedule has been challenged by the assessee on the ground that it is violative of Article 14 of the Constitution. It was submitted that medicines having been separately classified under Entry 20, in Part C of the First Schedule, it was discriminatory to exclude some of the items falling within that class separately and subject them to a higher rate of tax. Counsel in this context relied on the judgment of the Supreme Court in the case of Arya Vaidya Pharmacy and another vs. State of Tamil Nadu, 73 STC 346, wherein the Court considered the question as to whether the levy of a higher rate of sales tax on Arishtams and asavas, which are ayurvedic drugs and medicines, by subjecting them to tax at the rate of 30%,was discriminatory when the rate of tax for medicines was only 7%. The ground on which the State had sought to justify the higher levy was that these Arishtams and asavas had a high alcohol content, and the higher rate of tax was meant to curb the abuse of medicinal preparations for their alcoholic content by drink addicts, and to eliminate the mushroom growth of the ayurvedic pharmacies preparing sub-standard Arishtams and asavas for purposes other than medicinal use. The Court rejected the stand of the revenue and held that,
'The two preparations, Arishtams and asavas are medicinal preparations and even though they contain a high alcohol content, so long as they continue to be identified as medicinal preparations, they must be treated, for the purpose of the sales tax law, in a like manner as medicinal preparations generally, including those containing a lower percentage of alcohol. On this ground alone the appellants are entitled to succeed.'
14. Mr.C.Natarajan, learned senior counsel for petitioners very fairly brought to our notice the subsequent judgment of the Apex Court in which that decision was referred to and distinguished. In the case of State of Assam and Others vs. Shri Naresh Chandra Ghose, 121 S.T.C. 294, the medicinal preparations considered by the Court was 'Mritasanjiban' which was taxed at a higher rate by reason of the fact that it contained more than 12% alcohol. The Apex Court upheld the classification that had been made in the Assam Finance (Sales Tax) Act (11 of 1956) in Entries 28 and 67 of the schedule, between `medicines' and `drugs-spirituous medicinal preparations under any pharmacopoeia containing more than 12% by volume of alcohol'. It was observed by the Court that,
'An analysis of these two entries of the schedule to the Act clearly shows that generally all ayurvedic, homeopathic or unani medicines are exempt from the levy of tax. However, this exemption is not available to specific class of medicinal preparations including allopathic, ayurvedic, homeopathic and unani medicines, if it contains 12% by volume of alcohol'.
15. The Court held that medicinal preparations containing 12% or more of alcohol stand as a separate class of medicinal preparations, as compared to other medicinal preparations and therefore the classification was based on intelligible differentia, and thus valid. The apex Court also pointed out that in the case of Arya Vaidya Pharmacy, while all other patent or proprietory medicinal preparations belonging to different systems of medicines were taxed at 7% only without any classification, Arishtams and asavas prepared under the ayurvedic system alone were made subject to 30% levy and that at the relevant point of time there were over 130 allopathic medicines containing alcohol which were potable, as against only three ayurvedic medicines out of which Arishtams and asavas were alone subject to 30% tax.
16. The classification brought about by the Explanation to item 1 in Part F of the First Schedule impugned in this petition is based on the dominant purpose for which the product is used. This classification does not discriminate against any system of medicine or against any of the licences. All of them are treated alike.
17. There is no hostile discrimination against Ayurvedic medicines or any medicine by reason of this Explanation. It merely carves out all preparations made by licencees holding licences under the Drugs and Cosmetics Act and others, with reference to their dominent user, and subjects those preparations to a different rate of tax having regard to that use. The classification so made cannot be said to be arbitrary, or as lacking in any nexus with the objects sought to be achieved. Tooth pastes which are used as articles of daily use for cleaning the teeth are not to be taken out of that class only by reason of their ingredients being ingredients prescribed by ayurvedic texts, which also makes it a ayurvedic medicine. Similarly face creams which are meant to protect the skin on the face and which are used by those who wish to take care of the texture of their skin, also do not cease to be face cream by reason of their contents being those prescribed by the ayurvedic texts and such contents also having medicinal value.
18. In a case to which the manufacturer of these products, the second petitioner herein, was a party, namely, the case of C.I.T. vs. Vicco Laboratories, 22 S.T.C. 169, a Division Bench of the Bombay High Court went into the question whether Vicco Vajradanti was a dentifrice in the form of powder for cleaning the teeth and held that it is a toilet article. In that judgment the Court observed thus:
'The respondents are manufacturers of a dentifrice in the form of a powder used for cleaning teeth. It sells in the trade name of Vicco Vajradanti. It does not seem to be disputed that such a powder is used for cleaning teeth'.
19. It had been contended by Vicco Laboratories, in that case, that cleaning one's teeth by a tooth powder or a paste was essential thing to be done by anybody who wants to live in good health and therefore, dental powder or dentifrice cannot be included in toilet articles. The Court while rejecting the argument that it is not a toilet article observed that,
'We fail to see how the process of cleaning one's teeth could be excluded from what is understood by 'toilet' or 'toiletry'. If anything that is the most essential thing to be done'.
The Court then noticed the definitions of the word 'toiletry' in Webster's International Dictionary which included tooth paste and observed that if tooth paste is toiletry, there can be no doubt that the tooth powder is equally so.
20. That judgment of the Bombay High Court was delivered on 20th February, 1968. It is not the case of the assessee that the composition of the Vajradanti powder or paste made by it has undergone any drastic change since then, or that the powder or paste is not meant for use for cleaning one's teeth. It is also not it's case that the tooth paste sold also with the name Vajradanti is meant for anything other than brushing one's teeth and that such tooth paste is not a toilet article.
21. It is thus evident that the primary purpose for which the product Vicco Vajradanti in the form of paste as also Vicco Vajradanti in the form of powder are used, is for the purpose of cleaning one's teeth - an act which is required to be performed every day - if not several times, atleast once in a day - by everyone. It is to that market that the assessee seeks to cater by promoting the sale of these products for the purpose of use as tooth paste, and as a tooth powder. Vicco Turmeric is marketed as a face cream and as a skin care product. It is meant for use daily by those who wish to preserve the smooth texture of their skin on their face. The market targeted comprises mostly of women more particularly adolescent girls and young women.
22. The additional feature of these two products namely, that they are made with the ingredients prescribed in the ayurveda texts, and those ingredients promote good health, do not, on that score alone, make the purpose for which they are used less relevant while classifying the product as a tooth paste or face cream.
23. Medicines are referred to in Sl. No.20 of Part C of the Schedule to the Act and have been described therein thus,
'Any medicinal formulation or preparation ready for use internally or externally for treatment or mitigation or prevention of diseases or disorders in human being or animals (excluding products capable of being used as creams, hair oils, tooth pastes, tooth powders, cosmetics, toilet articles, soaps and shampoos), but including ...'
24. Many articles of daily use are meant to prevent occurrence of disease. Using soap to clean one's body and using a tooth paste or powder to clean one's teeth are such examples. Such articles of daily use have their value with reference to the purpose they serve, while medicines are ordinarily taken only after one has noticed symptoms of a disease and are primarily meant to suppress, control and cure disease. Articles containing ingredients which help to prevent the occurrence of diseases while maintaining good hygiene are properly classifiable with reference to their use, and need not necessarily be classified as `medicine'. The entry in the State Act in Item 20 has now excluded from the category of medicine products 'capable of being used as creams, hair oils, tooth pastes, tooth powders, cosmetics, toilet articles, soaps and shampoos'. This exclusion is set out in the Explanation under Sl.No: I of Entry 1 in Part F. The words 'capable of being used' if widely construed, would apply to any medicinal products if used as creams, hair oils, tooth-pastes, tooth-powders, cosmetics, toilet articles, soaps and shampoos Those words `capable of being' are required to be construed as, used primarily as creams, hair oils, tooth pastes, tooth-powders, cosmetics, toilet articles, soaps and shampoos. Such a construction is warranted as that entry has to be read along with entries at Serial No. 7 in Part E and Sl. No:1 in Part F.
25. What has been said about Vajradanti tooth paste and powder would apply to the Vicco Turmeric face cream as well. That cream is marketed in a package which shows the face of a young lady and it is meant to cater to those concerned with beautification and maintaining a soft skin. The preventive properties of the cream are also displayed on the carton. Face cream is an item mentioned in Entry 1 of Part F.
26. Learned counsel for the petitioners, however, contends that once a product is classified as a drug and the character of the product is not changed, it cannot be deprived of the classification that had been given to it earlier as a medicine or drug. Reliance in this context was placed on the case of B.P.L. Pharmaceuticals Limited vs. Collector of Central Excise, Vadodara 104 S.T.C. 164. The matter concerned a shampoo 'Selsun' and its classification under the Central Excise Act. That product contained selenium sulfide lotion U.S.P. containing 2.5% of selenium sulfide w/v. It was not disputed in that case that, that product is prescribed by physicians for treatment of skin diseases commonly known as 'dandruff', and 'tinea versicolour' which is caused by an organism known as 'pytryriasis versicolour'. It was also noticed that, that product was described and held out to be a drug or a medicinal product and was not held out to be cosmetic or toilet preparation. It had been claimed by the manufacturer that, that product had been considered to be an ethical product in the medical literature and that the same was meant to be used under medical advice. Affidavits had been produced in that case to show that the product is a patent and proprietary product and that chemists require a valid drug licence to buy, stock and sell the same and that it is sold to customers who come with a prescription for 'selsun' from a registered medical practitioner. The Court found that the revenue, in that case, had not produced any maerial to discredit the affidavit and letters which the manufacture of 'selsun' had filed in support of its claim that it was a drug and medicine sold by chemists on prescription issued by a registered medical practitioners and that it had not been marketed for use merely as a shampoo. The Court held that, that product 'Selsun',
'... is not intended for cleansing beutifying, promoting attractiveness or altering appearance. On the other hand it is intended to cure certain diseases as mentioned supra'.
27. The Court also noticed that the contents of the label and literature showed that the appellants before it had nowhere indicated that the product is to be used as a cosmetic or toilet preparation or that it had been held out to be a cosmetic. The Court also noticed that the labels gave a warning, precaution and directions for use unlike ordinary shampoos. The Court observed,
'Further no individual would be prepared to say in a social gathering that he or she is using 'selsun' to get rid of dandruff or other similar diseases whereas nobody would hesitate to state in a similar gathering that he or she is using a particullar brand of shampoo for beutifying his or her hair. Thus, there are lot of available materials to treat the product in question as a medicine rather than cosmetic.'
The decision of the Court in that case was in the background of these facts and with reference to the language employed in the relevant entries in the Central Excise Tariff Act 1985.
28. Here it is not the case of the petitioner that it's products are sold only under medical prescription or that it is available only in chemists shops and sold through chemists who are duly licenced or that it is not marketed and promoted for use as a cosmetic or a toiletary item. Counsel for the assessee also fairly stated that its products are advertised on the television. Such advertisements are generally made for consumer products and is meant to address a very large group of potential buyers. It is therefore clear that the products with which we are concerned are not comparable to the product 'Selsun'.
29. We, therefore, do not find it possible to accept the argument put forth for the petitioners that these products are only to be classified as medicines and taxed accordingly. The writ petitions are dismissed.