DR. REDDY'S LABORATORIES LIMITED Versus STATE OF KERALA
VAT / Sales Tax
2008 (6) TMI 628 – KERALA HIGH COURT – TMI
KERALA HIGH COURT – HC
Dated:- 12-6-2008
S. T. Revn Nos 251 of 2003, 59 of 2006, 112 of 2006
CST, VAT & Sales Tax
–
Chief Justice MR.H.L.DATTU AND MR. Justice A.K.BASHEER, JJ.
For the Petitioner : SRI.P.R.VENKITESH
For the Respondent : GOVERNMENT PLEADER
ORDER
H.L. DATTU, C.J.:
Since the assessee is common in all these revision petitions and since the legal issues involved are also common, these revision petitions are clubbed, heard and disposed of by this common order.
2. The assessee is a dealer registered under the provisions of Kerala General Sales Tax Act (KGST Act for short). The assessee had filed its annual returns conceding a particular total and taxable turn over for the assessment years 1997-98, 1998-99 and 1999-2000. Apart from others, the assessee had effected sales of GLA-120 Capsules (Gamma Linolenic Acid) and in the returns f
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is taxable at 12.5% under entry 56 of the 1st schedule to the Act. This entry is for the items of food including vegetative or animal preparation sold in air tight containers and food colours, essence of all kinds and powders or tablets used for making food preparations. The goods under dispute is not coming under any of the items. However, entry 87 to the 1st schedule is non-alcoholic drinks, squashes, sauces, aerated waters, mineral water, beverages, Glucose D, Glucovita and similar items whether bottled, canned or packed. The commodity sought by the appellant have more related under this entry. Therefore 20% tax levied by the assessing authority is found correct. Moreover this Tribunal in T.A. No. 286 and 287/02 decided the same issue in the same line. Thus we decided the issue against the appellant. The appeal filed under the KGST Act is thus dismissed without any consideration.”
4. The assessee being aggrieved by the orders passed by the Tribunal is before us in these Tax Revisi
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e to be classified under Entry 87 or under Entry 56 of the First Schedule to the KGST Act or to be treated as unclassified items and taxable under residuary Entry of First Schedule to the Act.
6. The assessee has taken different stance before the assessing authority and the Tribunal and before us also. Before the assessing authority the claim was that the commodity in question requires to be classified as an unclassified item liable to be taxed under the residuary clause and in the appeal filed before the Tribunal, the claim was that the product requires to be classified under Entry 56 of First Schedule to KGST Act and taxable at the rate of 12.5% and before us at the time of hearing of this revision, the claim of the learned counsel for the assessee is that, it requires to be classified as Medicine under Entry 79 of the First Schedule to KGST Act and if it does not fit in that entry, then at least it requires to be classified as unclassified item falling under residuary entry.
7. At
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At the point of first sale in the State by a dealer who is liable to tax under Section 5.”
20%
9. The residuary Entry of First Schedule of KGST Act is as under:
“Sl.No.
Description of Goods
Rate of Tax Point of Levy
(percent)
177 /141
All other goods not coming under any entry in any of the schedules.
At the point of first sale in the State by a dealer who is liable to tax under section 5.”
12.5
10. The question for consideration and decision is whether GLA-120 is a dietary supplement or an item like Glucose and Glucovita etc. or Medicine.
11. Before we proceed to answer the issue which we have raised for our consideration, it would be appropriate to note the stand of the assessee before the Tribunal. The contention of the assessee's representative is noticed by the Tribunal in its order and the same is extracted:
“Sri. K. Sankara Narayanan, C.A. appeared for the appellant argued that the similar issue were considered by the Full Bench of this
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thy for a particular person/sex/ethnic group is a disease for some one else (for example being slim is healthy for a model but is a sign of malnutrition for a pregnant woman or for doctors). Since the distinction between disease and health itself is not clear, dietary supplement versus medicine is also not clear in many circumstances. In some way, we need to draw a distinction for various reasons (for rigorous pre-clinical and post marketing testing and for taxation purpose). We can say that the distinction can be based on the condition for which the molecule is used. If GLA-120 is used to treat diabetic neuropathy then it should be considered a medicine. If for some reason it is used in normal healthy people (which it is not supposed to) as a tonic to improve the general well being, then it is a dietary supplement. If GLA-120 is a medicine then question still remains whether it has undergone the same rigorous stage I (testing in healthy volunteers), stage II (testing in diseased peopl
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