HEINZ INDIA LIMITED Vs. STATE OF KERELA

JUDGEMENT

(1.) The issue which this court has to deal with had placed the courts in a prickly pickle, on several occasions- whether medicated talcum powder is medicine or drug, or a cosmetic, or in terms of the statutes in question, medicated talcum powder The present appeals, by special leave, concern two sets of appeals: one, from the State of Kerala and the other from the State of Tamil Nadu. The Kerala High Court, by its judgment (dtd. 29/9/2008 in S.T. Rev. Nos. 164/ 2007 and 172/ 2008) rejected the revisions filed by the appellant/assessee (hereafter "Heinz") aggrieved by the Kerela Sales Tax Appellate Tribunal's orders holding that its product "Nycil Prickly Heat Powder" was classifiable not under Entry 79 of the First Schedule to Kerala General Sales Tax Act, 1963 (hereafter "KGST Act") [as "medicine" but as "Medicated Talcum Powder"].

(2.) In the second set of appeals, M/s Glaxo Smithkline Pharmaceuticals Ltd ("GSK" hereafter) is aggrieved by the judgment of the Madras High Court (By judgment dtd. 1/3/2012, in Tax Case (Revision) Nos. 742/ 2006 and 301/ 2011) where the court rejected its contention that the prickly heat powder was "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" [under Entry 20-(A) of Part C of First Schedule to the Tamil Nadu General Sales Tax Act, 1959 - hereafter "TNGST Act"] and held it to be toilet powder [under Entry 1(iii) of Part-F of First Schedule of the TNGST Act]. The High Court so held because the Explanation to the said entry stated that:

(3.) Heinz's appeal from the Kerala High Court is concerned with assessment years 1999-2000 and 2000-2001. For the assessment year 1999-2000, Heinz filed its annual return which was accepted by the assessing officer; the tax payable on the taxable turnover was 8%, and the treatment on the sale of Nycil prickly heat powder was accepted to be an item falling under Entry 79 of the First Schedule to KGST Act, by order dtd. 18/11/2005. The revisional authority was of the view that the order of assessment passed by the assessing authority was prejudicial to the interest of the revenue; it initiated proceedings under Sec. 35 of the KGST Act, proposing to set aside the assessment of the assessing authority on the premise that levy of tax at 8% on 'Prickly heat powder' by treating it as medicine by the assessing authority was prejudicial to the interest of the revenue and the rate of tax at 20% was to be applied as applicable to "Medicated Talcum Powder". Heinz objected to this. However, the revisional authority by order dtd. 16/2/2006 set aside the assessment order for the assessment year 1999-2000 and remanded the matter to the assessing authority to pass fresh assessment order by levying tax at 20%. Aggrieved, Heinz carried the matter before the Appellate Tribunal, which affirmed the revisional order and rejected its appeal (Order dtd. 14/11/2006 in IA No 311/2006). The High Court, on further revision, concurred with the classification adopted by the revenue.