Boro Plus Ayurvedic Cream is a Medicated Ointment, Taxable at 5% Under Entry 41 Schedule II of UPVAT Act: Allahabad High Court

Subheading “Drugs and Medicines” in Entry 41, effective October 11, 2012, follow me medicated soap, shampoo, antiseptic cream, face cream, massage cream, eye gel and hair oil but includes injections, syringes and dressings, medicated ointments, IP grade light liquid paraffin; Choorane; sugar pills for medicinal use in homeopathy; human blood components; CAPD Fluid; Cyclosporine.

Justice Shekhar B. Saraf he admitted that “although antiseptic ointments are excluded from Entry 41, medicated ointments will be included due to the use of the word “but”. The word “but” clearly indicates that the legislature intended to include, as an exception, a medicinal ointment, although some medicinal ointments may be classified as antiseptic ointments. If the product is more than just an antiseptic and qualifies as a medicated ointment, it will be included in Entry 41.”

Background of the Case and Arguments

Boroplus Antiseptic Cream (BPAC) has been assessed at a rate of 14% by the Examination Council by classifying it as ‘unknown substance’. The respondent, M/s Emami Ltd., appealed against the order of the assessing authority which was dismissed. Thereafter, an appeal was filed before the Commercial Tax Tribunal where it was held that Boroplus Antiseptic Cream is a ‘medicinal ointment’ and was liable to tax of 5% under ‘drugs and medicines’ in Entry 41 Schedule II.

Challenging the Court’s order, the Ministry said that BPAC has long been considered a cosmetic and was properly tested. However, the Court had previously considered it to be a medicine. It was stated that since antiseptic cream is excluded from the entry of ‘drugs and medicines’ in Entry 41 Schedule II wef 11.^th October 2012, BPAC is liable to be taxed as an unorganized entity.

It was contended that although the respondent is trying to get the product assessed as a medicated ointment, it advertises BPAC as “India’s first disinfectant.” The Ministry’s Counsel said that BPAC is bought without a prescription while for medicated creams, a prescription is required. Therefore, it was argued that BPAC is an antiseptic which should be taxed at 14% as an ‘unknown substance’.

Counsel for the respondent-M/s Emami Ltd. argued that BPAC is an ayurvedic medicine under the drug license granted by the Drug Licensing Authority under the provisions of the Drugs and Cosmetics Act, 1940 and the Drugs Rules, 1945. It was argued. entry change at 11^th October 2012 does not include an antiseptic cream but does include a medicated ointment which is BPAC.

Judgment of the High Court

The court held that Entry 41 classifies products according to their medical properties and uses, and provides tax benefits to products with medical properties. It was held that the word

The “but” in the Entry is used intentionally to include things that were not previously part of the Entry.

“But”, in Entry 41, is accompanied by words such as “expect”, “nevertheless”, and “nevertheless”, which indicate an exception to the list of exceptions that precede it..”

The Court held that the Court had correctly labeled BPAC as a “medicated ointment” as the Legislature had specifically chosen to include “medicated ointments” within Entry 41. held to include medicated soaps, shampoos, face creams and massage lotions. All cosmetic products under Entry 41 clearly indicate the exclusion of disinfectants from Entry 41.

The Court noted that although BPAC was labeled as a disinfectant by the Court’s expert, a closer look at BPAC’s ingredients revealed that it had more properties than being a disinfectant. microorganisms and is closely related to medicinal properties. a perfume.

“BPAC’s ability to soothe, heal and protect the skin from various diseases shows that its composition is not only intended for disinfecting purposes. By providing hydration, reducing inflammation, and promoting healing, BPAC works similarly to medicated creams that address chronic skin conditions and skin health..”

The Court said that the Respondent clearly demonstrated before the Court that BPAC is a medicinal product and will come under Entry 41 for taxation. It was held that the burden of disproving the charge of the Assessing Officer is on the Department which has failed to discharge it. It was held that the Department did not produce material contrary to what was presented by the Assessing Officer to show that BPAC is an ‘antiseptic cream’ and is not included in Entry 41.

The Court held that when the Department seeks to reclassify property, it must present specific evidence including expert opinion, industry standards, etc. to justify the reclassification. It was held that in the absence of evidence produced by the Department, the redistricting was illegal.

Observing that the Court has the ultimate authority to find the truth and there is limited room for interference by the High Court in the area of ​​development, Justice Saraf upheld the order of the Court and describes Boro Plus Antiseptic Cream as a medicated cream under Entry 41 Schedule II of. Uttar Pradesh Value Added Tax Act, 2008.

Case Title: Commissioner, Business Tax V. M/S Emami Ltd. 2024 LiveLaw (AB) 523 [SALES/TRADE TAX REVISION No. – 274 of 2018]

Quote: 2024 LiveLaw (AB) 523

Advice for the Revisionist: Manish Goyal, Additional Advocate General assisted by Bipin Kumar Pandey

Advice for Assessee: SK Bagaria, Senior Advocate assisted by Kumar Ajit Singh and Rahul Agarwal

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