DANDWALA Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE Gujarat Sales Tax Tribunal has referred the undermentioned questions to this Court for the opinion and reply while exercising the jurisdiction under section 69 of the Gujarat Sales Tax Act, 1969. 1. Whether, in the facts and circumstances of the case, the Tribunal was justified in holding that the sales of "dandwala Keshkalpa" made by the applicant in terms of its sale bill No. 135, dated June 11, 1981, is covered under entry 7 of Schedule III appended to the Gujarat Sales Tax Act, 1969, and not under entry 26 (1) of Schedule II, Part A appended thereto ? 2. If the answer to the above question is in the affirmative, that is against the applicant, whether in the facts and circumstances of the case, the Tribunal was justified in not exercising its discretion in giving prospective effect to the order of the Deputy Commissioner of Sales Tax, i. e. , from the date of communication thereof to the applicant ?

(2.) THE assessee is manufacturing a product in the trade name of "dandwala Keshkalpa" since 1978 and according to the assessee the said product is an ayurvedic medicine. THE applicant-assessee had effected a sale of the abovesaid product to M/s. Kantilal Jesingbhai as per bill No. 135 dated June 11, 1981. THE applicant-assessee had presented necessary application to the Deputy Commissioner of Sales Tax under section 62 of the Act for determination of the rate of tax payable on the abovesaid sale. THE case of the assessee before the Deputy Commissioner was that the said sale was covered under entry No. 26 (1) of Schedule II, Part A to the Act, which relates to drugs and medicines. THE applicant had tried to show that to the abovesaid sale in respect of which the bill was produced before the Deputy Commissioner, the entry applicable would be the said entry which relates to the drugs and medicines. It was the case of the applicant/assessee that the product sold under the said bill or invoice was a purely an ayurvedic medicine for treatment of various diseases of hair like premature baldness, premature hair loss and their premature whitening. It was also claimed that the said product was used for checking dandruff and indralupta and that the product was able to produce sound sleep also. According to the applicant, the abovesaid product is being manufactured out of certain herbs having medicinal properties. It was urged that the components of the product were til oil, coconut oil, castor oil and cow milk and that certain other herbs having high quality of medicinal value like brahmi, bhangra, amala, rose petals, sandalwood powder, etc. , were also utilised for the manufacture of the abovesaid keshkalp. On the basis of the abovesaid, it was sought to be urged before the Deputy Commissioner that the product cannot be said to be a hair-oil but would be the medicinal preparation which would fall within the said entry as a medicine. It was also pointed out before the Deputy Commissioner, that various persons holding important positions, in all walks of life, have certified regarding the effectiveness of the abovesaid preparation, which would also go to show that the product has got medicinal value and therefore, it cannot be simply described as a hair-oil. THE Deputy Commissioner, Sales Tax, had taken the view that the case of the applicant-assessee as urged by them could not be accepted, and that, the product is not exigible to sales tax under Schedule II, Part A to the Act but the relevant entry under which the product was required to be taxed was entry 7, Schedule III to the Act, which is in respect of hair-oils. Later on the matter was carried before the Gujarat Sales Tax Tribunal, which also after the careful examination of factual and legal aspects, came to the conclusion that the case of the assessee in this respect has rightly been not accepted by the authority, who has decided the question by way of determination. THE abovesaid orders of the Tribunal dated August 31, 1984, could not satisfy the applicant-assessee and therefore, the necessary application was moved for a reference to this Court, and ultimately at the instance of the assessee the abovesaid two questions have been referred to us for reply and answer.

(3.) MR. Pathak has invited our attention to the number of certificates in this respect, with a view to urge that the product in question is not an oil or oil simpliciter but it is a medicine. We have a detailed look at those certificates on which MR. Pathak has placed reliance for buttressing his submission before us. It must be accepted that various people, belonging to different walks of life were impressed by the product manufactured by the applicant-assessee. It appears that these people have issued certificates and opinion in praise of the quality of the product. They have definitely stated in those certificates and opinions that the product prepared by the applicant-assessee was proved to be of a great assistance in curing and preventing certain complaints and diseases of the hair and the scalp. They have also said that they would like other people to use the said product for such complaints. A reading of the abovesaid certificates and opinions to which a much detailed reference is not called for, would go to show that various persons have found the product as having some qualities which would be able to prevent and cure certain diseases of hair and scalp. It is also made clear, that a continuous use of the product has been recommended with a view to have healthy hair growth and lustrous hair. But merely because of these certificates and opinions, it cannot be said that those people who have used it have accepted the product as a medicine. It requires to be appreciated that the general impression in the minds of those people who have issued certificate and who have given opinions is that the product in question is a hair-oil which is required to be used for the prevention and curing of various diseases relating to hair and scalp. Therefore, the view sought to be canvassed by MR. Pathak, namely, that because of such certificates and opinions the product becomes medicine, which would again fall under the abovesaid entry relating to drugs and medicines, cannot be accepted.