M/S Himani Limited vs. The Sales Tax Appellate Tribunal

Heard Mr. Lakshmi Kumaran' learned counsel along with Mr. Narendra Dave, Mr' Sumanth Chanda ald Ms' Anushka Rastogi, learned counsel for the petitioner / assessee and Mr. Swaroop OoriIIa, learned Standing Counsel for Commercial Taxes, appearing for the respondent/ Department'

These Tax Revision Cases pertains to sister companies known as M/s.Himani Limited and M/s'Emami Limited' Of these eleven Tax Revision Cases, three each have been filed by two assessees. Tax Revision Case Nos'193' 188 and '187 of 2OO4 have been filed by M/s.Himami Limited for- the assessment years 1996- 1997, 1997-1 998 and lgga_Lggg. There are trvo Teu< Revision Cases in respect of the company vvhere the challenge has been made by the Department i.e. Tax Revision Case Nos.21 I and 155 of 2oo4 challenging the order for the assessmenr yea-rs rggz _ rgg| and 1998- 1999. Likewise, there are three Tax Revision Cases filed by M/s.Emami Limited i.e. Tax Revision Case Nos. lg2, lg3 and I92 of 2OO4 for the assessment years l99g_1999, lggg 2OO0 and 2OOO-2OOI. Similarly, there are three Tax Revision Cases hled agarnst M/s.Emami Limited by the Department, those are Tax Revision Case Nos. 166, 169 and 156 of 2OO4 for the assessment years 1998-1999, I999_2OOO and 2OOO_2OOI.

The whole dispute revolves around six products being manufactured and marketed by the two sister concerns. .rhose are Navaratan Oil, Gold Tlrrmeric Alrrrvedic Cream, Nirog Dant power Lal, Boroplus Antiseptic Cream, Boroplus prickly Heat powder and Sonachandi Chavanprash.

The whole issue involved in the instant set of Tax Reyision Cases are whether the aforementioned products manufactured by two sister concerns would fall within the purview of cosmetics or drugs under the ApGST Act, 1957 (for short, the Act). The question substantially to be decided is, whether the aforementioned products would fall under Entry 36 or Entry 3Z of the CGST Act and TGST Act? The issue primarily arises on account

(A) Of the six products' the STAT has held (i) Navaratan Oil (ii) Gold Turmeric Ayurvedic Cream and (iii) Nirog Dant Power Lal to be products which are- otherwise either cosmetics or toiletry products. Thus, it was this hnding of the STAT which has been challenged by the petitioner/ assessee through the instant Tax Revision Cases' (Bf Whereas, the STAT further also held that the three products (i) Boroplus Antiseptic Cream (ii) Boroplus Prickly Heat Powder and (iii) Sonachandi Chavanprash have been held to be drugs and not cosmetics and it is this declaration of these three products as drugs which has led to the Department hling the Tax Revision Cases' At the same time' the ' assessee is fighting the exclusion of these three products (i) Navratan oil (ii) Gold r\'rrmeric Ayurvedic Cream and (iii) Nirog Dant Powder Lal as drugs which led to frling of Tax Revision Cases by the assessee'

As can be seen from the previous paragraphs' there are two set of Tax Revision Cases' For convenience sake' we take up the Tax Revision Cases which have been hled by the Department hrst' Those are Tax Revision Case No.155 of 2OO4 lor the assessment year lgga-Lggg, Tax Revision Case No. 166 of 2OO4 for the assessment year 1998- 1 9 99 , Tax Revision Case No' 169 <>f 2OO4 for the assessment year lggg-2OOO, Tax Revision Case No'2ll of 2OO4 for the assessment yeat 1997 -1998 and Tax Revision Case No' 156 of 2OO4 for the assessment year 2OOO-2001 . It is pertinent to mention here that there was yet another Tax Revision Case which was filed by the Department i.e. Tax Revision Case No' ltil of 2OO4 for the assessment year 1996-1997 which was dismissed for default vide order dated 2O.O7.2OO9. 8. There does not seem to be any further effort made for restoration of the said Tax Revision Case and by efflux of time, the assessment order so passed for the assessment year 1996-1997 has attained hnality. Whatever be the effect of the same, we proceed to decide the substantive issue so far as the aforementioned remaining frve Tax Revision Cases hled by the Department challenging tlle hndings of the STAT. So far as (a) Himami Sonachandi Chavanprash (b) Himami Boroplus Antiseptic Cream (c) Himami Boroplus Prickly Heat Powder being ordered to be treated as drugs and not as a cosmetic i.e. treating these three products falling under Entry 37 and not under Entry 36 of the I Schedule of the Act ald with a further direction to revise the assessment orders accordinglY g. In the three Members Bench of the STAT, one of the Departmental Member is said to have taken a contrary view in respect of the aforesaid majority view of the STAT and a-11 the appeals before STAT stood decided in accordance with the majority vlew.

Now for adjudicating upon the dispute whether the STAT was justified and the order was proper and legal or not, we proceed to deal with the characteristics ofthe three products'

So far as the product Himani Sonachandi Chavanprash is concerned, the rapper afhxed on the container in which this Himani Sonachandi Chavanprash is sold in the market would disclose its composition whereby it has been specihcally mentioned that the product is made of around hfty two rare herbs and minerals along with the powder of gold, silver and saffron and it also specifrcally reflects the benefrts of consuming Himani Sonachandi Chavanprash like (i) improves eye sight and complexion (ii) buifds immunity (iii) helps in absorbing quashment (iv) strengthens teeth and bones (v) improves stomach ald forms healthy blood (vi) builds body arrd active muscles and lastly (vii) meets everyday eners/ needs.

Another fact ',r,hich needs to be reflected/ appreciated at this Juncture is the literature in respect of Himali Sonachandi Chavanprash and the reference of the said product in the books and texts used by the Vaids of this producr is found in: in Ayurvedic discipline. The reference "(REF. - CHAPItrR SHLOILA 63 - 60) (#REF. - BHAVA EDITION 1993, RESPECTIVELY) definition of .,Cosmetics" 1940, where "Cosmetics" CHARAK SAMHITA - CHIKITSA 01 _ RASAYAN ADHYAHA - STHANA PADA 01 (## REF. _ BHAVA PRAKASH, p.NO.234)"

In addition to this, what is also required to be un,erstood is that the petitioner/assessee has obtained license for manufacturing of the said Himani Sonachandi Chavanprash and is being sold as a product under the Drugs and cosmetics Act, 1940. According to the petitioner/assessee, it would be a product which would fall under Entry 37 of the l"t Schedule of Act. It is this, what is being claimed by the petitioner/assessee as well. The STAT has duly appreciated the aforesaid factual matrix of the case and also the ingredients of the product coupled with the appreciation of 8TH 455 under the Drugs and Cosmetics Act, PRAKASHA, CHAUKHAMBHA, PG.NO.523, 467, 90, are dehned under Section 3(aaa) and 'Drugs" are defined under Section 3(b) and has reached to the conclusion of the product being drug and not cosmetic. Thus, the said issue was decided in favour of the petitioner/assessee.

Disputing the said hnding' the learned Standing Counsel for the respondent/Department contended that the product has saJfron in it and since saffron lends vigor to the body and glow to the skin, hence, the glowing and the luster of skin being qr'ralities related to cosmetics, therefore' it has been brought under Entry 36 of l't Schedule of the Act' Apart from this oral contention of the rearned Standing counsel appearing for respondent/Depa-rtment, there was no documentary proof, material, Iiterature or text with which the Department could sustarn their contention while contending that Himani Sonachandi Chavanprash is a cosmetic and not a drug'

If we look at the definition of cosmetics as per which for ready reference is reproduced herein under Section 3(aaa) "(aaa) cosmetic means any article intended 'to be rubbed' noured, sprinkled or sprlyed on' or introduced. int o' or ttherwise applied to, tn" i'uLuo Lodv ot uov.i1:]n""o' for cleansing, beaulrtyrng, promoting. attractiveness. or altering the ^pp""^t'J"' 'anJ inc"tudes - any article intended lor use as a component of cosmetic" From the aforesaid defmition it can be safely concluded that article which otherwise is not a product which cosmetic means an edible or can be drinked' It is something which is aPPlied 1S externally over the body and not to be consumed internally'

Whereas drugs which stands defined under Section 3(b) of the Drugs and Cosmetics Act which again for ready reference is agarn reproduced herein under: "(b) "drug" includes-_ (i) a1l medicines for internal or external use of human beings or animals and all ""u"r",-,.."-'iri,i".o,io ,o o. :-"^".1-r:,1 ". "in the..diagno"i", t..ri-.rrt,'._iit",U., ". 5:"Hi:n," i;lJJi".1"" o r di sorder -in'r,, -,T n.i, g" y-{ ;;- il;' "il;*:.,},':&-.,iH,*?,""l,l"T* mosquitoes; (ii) such substances [oth the structure or anv fr:1il" food) intended to affect intended ,"- i."""la, f"unctron of the human b.dy or insects which cause o,l1t^ -dt"l,-":tion of [vermin] or animals. ," ;; Ll"io.l1"t'"t in human beinqs or : #: n " a ; :fl_[," T;,,';3,,T:L Jfl ., ",.,,i:. ji j,x: A plain reading of the aforesaid definition of drugs would clearly indicate that it is a product which can be internally ald externally used. Hence, Himani Sonachandi Chavanprash is one product which is only edible and is not a product which can be used externally.

In view of the aforesaid factual aspect of the case and the specific finding of fact given by the STAT, we are of the considered opinion that no strong case has been made out by the learned Standing counsel for the respondent/Department to interdict the Iinding so far as the product Himani Sonachandi Chav4gash is 7 concerned. The challenge to the said finding thus stands ansr,n'ered Y adve affrrming the frnding given by the STAT' ' in the negi

Next we proceed to decide the characteristics of "Himanr Boroplus Antiseptic Cream'' The very name of the product i'e' Himani Boroprus Anticeptic cream t:::": ::".t:""-:;J; ordinary cream or a cosmetic creafi' Rather rt antiseptic composition and as such is a medicine or a drug under Entry 35 of 1" Schedule -of the Act' Another aspect which needs appreciation is the fact that the product as such is not any of those bod.y creams or lotions with medicated composition; rather' it is fully medicated product in the form of a cream' Hence' it would not fall under the purview of Entry 36 of 1"t Schedule of the Act' The BoroPlus AntisePtrc Cream' while it was sard Product "Himanr eflect the ayurvedic being applied for getting the license was required to r composition and the books of reference under literaturewithspecilrcpagenumbersandchapters same. From the details so furnished with tlre Government agency while obtaining license; the products, composition and book of was reflected, which for ready reference is reproduced the dealing with the reference herein under: o N P th wi f fe ks Boo Percenta ition Com Raj Nighantu ( Charak Samhi Bhava Prakash (18e) 3971 ta 62 1.O

Extra Kachari (Hedychium spicatum) ct of Kapoor tract of Nimba (Azadirachta indica)

Ex act of Haridra (Curcuma tonga)

Extr 1.0 0.3

Extract of Yastimadhu (Glycyrrh2a giabra) o.3 (Aloe barbedensis) 7 . Extract of Ghrit Kumari (Ve tiveria zizinioides)

Extract of Ushir 1.O o.5 asad Bhasma (Zinc 9.J oxide) 2.5 1O. Tankan Amla (Boric Acid) 0.8 ari Nighantu lt 17) amgraha (298) (1771 A5mrved Samgraha (2I g) Dhanvant Al.urved S tari Dhan an N tu han 74 lg B h rl n1 zrn an u t Ratn gh akara ha 318 Rasataran nt 1 l. Hiravi (TaIc) (Dugha pashana) 11.O Rasataral Ayurvedic grni {11 / 233 (2821} Formulary of India 677 edi a Rasashastra Part I (2371 A 12. Surasar (Alchahof O.7 v /w Dhanwaltari Charak Samh 2s/4o(3re)l Nighantu (222 ita {Su. 27 (392) Ayurved Samgraha (263) Sushruta Samhita Suka (4s/148l, Bhava Prakash (785-786) Bada N 168 45 36 aha

Incorporated in a suitable ointment Q.S. to ) ) (s

Further from the Percentage used in manufac tunn g the Percentage of aY'urv predominant in the s incidental medicinal soaP, hand wash etc of various aYurvedic Products of the same would clearly reflect that 1t ls edic product with medicinal value which is aid altiseptic cream' In addition to the properties, for example medicated shampoo' . etc. As has been reflected in the rapper of the petitioner/ assessee' 2r-. What is also to be appreciated at this juncture is that the said cream under no circumstances can be brought or treated as a cosmetic. It can only be used for the medicinal value that it has and it cannot be used as an ordinar5r facial or a body cream except for the purpose for which it has been manufactr'rred and sold' It also is not a product which is otherwise capable of being used as a cosmetic or a toiletry product' Neither can it be brought within the purview of medicated goods as the medicated goods are those which are used otherwise than as medicines with its added of the Product' it is Preventlve product/ label in natrrre and has curative and healing alrrrvedic ointment and it is presc.ribed for dry skin diseases, cuts, burns, minor skin burns, u,ounds, chapped skins, furuncle impetigo and intertrigo. All ol_ n hich by itself establish that it is not a cosmetic product or a toiletry product. Even the STAT has accepted the product to be having curative effect along with it being a healing ayurvedic ointment for curing the aforementioned skin disorders.

For the aforesaid reasons, we are of the considered opinion that the finding given by the srAT is a well_reasoned finding which does not warrant interference as no substantial material could be brought on record either before the authorities concerned or before this Court so as to disprove the hndings given by the STAT. Thus, for the aforesaid reason also, the challenge by the Department so far as the finding given by the STAT stands negated.

The next product, the hnding of which has been challenged by the State Government and its Department is the Himani Boroplus prickly Heat powder. However, perusal of the Tax Revision Case and the d66s66nts attached therein does not show arry strong resistance by the State to the findings given by the STAT so far as the product .Himani Boroplus prickly Heat powder, is concerned. For ready reference, the relevant portion of the findings given by STAT in reproduced herein under: respect of the said product is again

On the other side Himani Boroplus prickl-r, Heat pou.der also contains medicinal ingredients in a way that rs similar to Nycil, such as zinc oxide (Jasad Bhasma), boric acid (Tankan Amla) and salicylic acid, a beta hydroxy acid. However the Himani Boroplus Prickly Heat powder could potentially be classified differentl-y due to the extra ingredient that is salicylic acid which makes the product drug. In particular, it could be classihed as a drug, indicating a primary use for therapeutic or prophylactic purposes.

This product is not merely another addition to the endless aray of cosmetic skincare products available on the market; it is meticulously formulated product that has been design ed with a specific purpose: to treat and heal skin conditions. This significant distinction is primarily due to the potent medical properties of its active ingredients, which include zinc oxide, boric acid, and salicylic acid. On the other hand, Nycil powder is also designed for skin health and comfort, with its primary component being talc, known for its absorbent properties. Nycil is also medicated with Zinc Oxide and may contain other ingredients depending on its variant, such as cooling agents or additional medicinal ingredients. Zinc oxide (Jasad Bhasma) a primary ingredient in the formulation, is a compound known for its antiseptic properties. This ingredient is instrumental in preventing skin infec\s and soothing irritated skin, making it a crucial component in skincare products. rt .:a]'.:

The inclusion of salicylic acid in the product's formulation fortifres its medicar potential. saricyric acid, a beta hydroxy acid' is a common ingredient in many skincare products due to its ability to exfoliate the skin and treat conditions like acne By Promotrng the shedding of dead skin salicYlic acid contributes si appearance of the skin' cells and preventing pore clogging' gnifrcantlY to the overall health and 2a. Further the combination of these ingredients imbues Himani Boroplus Prickly Heat Powder with a distinct therapeutic quality not commonly found in ordinary cosmdies' The product's ability to irritatron I

Considering the presented arguments and the discussion has thoroughly examined the classification of Himani Boroplus prickly Heat powder in the context of the Schedule 1"r of ApGST ,{ct. This product, unlike Nycil prickly Heat powder has predominant medicinal elements which has a soothing and protective effect on the skin, which can be attributed to its cosmetic nature. It only contains medicinar ingredients such as zinc oxid.e, Boric Acid and Salicylic Acid, which gives it therapeutic and prophylactic properties, making it more than just a cosmetic product. 30' Taking into account the decision of the Allahabad Higrr court in the case of Himani Ltd. v. comm. of commerciar raxs and the common parlance test, it is clear that the public perceives products like Himan Boroplus Prickly Heat powder as medicinat or 'zorr 1ze:1 E.L.r.33s (Al.)

In view of these observations and legal precedents' it is concluded that Himani B-oroplus Prickly Heat Powder has been rightly classified under Entry 37 in Schedule 1"' of the APGST Act' This classifrcation acknowledges the product's medicinal properties and its role in health and healing' Conversely' the product should not be classified under Entry 36 as 'Cosmetics or Toilet Preparations' in the same schedule of the Act' This is because such a classifrcation would downplay the product's medicinal attributes and potentially misrepresent its purpose and use to the public' g2. Thus, the challenge to the said frnding of the STAT does not have any force or strength either in the form of any cogent material brought on record or in the submissions that they have tried to make to interfere with the frndings of the STAT' The challenge to the frndings of the STAT so far as Himani Boroplus Prickly Heat Powder not being a drug under Entry 37 Schedule l*t of the Act 4 2015 scc online Gau 818

At the outset, the learned counsel for the petitioner/assessee appearing for the two assessee companies submitted that they do not challenge the assessment made by the Department so far as the product Himani Nirog Dant powder LaI. T the assessment so made by ,r. ,:;;;: ;;t;":; product "Himani Dant powder LaI,, within the ambit of Entry 36 i.e. the cosmetic product in 1"t Schedule of the Act. 36' on account of giving up of the challenge to .Himani Nirog Dant powder LaJ,, product, the onty twolloducts which now remains to be considered and adjudicated upon are (1) F{imani Navaratan Oil.and (2) Himani Gold Turmeric Ayurvedic Cream' The STAT in ttle impugned order tras given hndings of both this products being cosmetic product which falls under Entry 36 of 1" Schedule of the Act' Whereas the contention of the learned counsel for the petitioner/ assessee is that both these products are in fact drugs as is reflected under Bntry 37 of 1$ Schedule of the Act' The contention of the learned counsel for the petitioner / assessee in so far as Himani N ava-ratan Oil is concerned' was that' the product is a medicinal product and is prescribed for keeping the head cool' relieve headache' helpful in providing sound sleep' effective memorY aid' it tones up body muscles' removes tiredness' useful in minor burns and cuts and also prevents premature hair fall ' None of the actions as mentioned in the label of the product cater to the de|rnitionofacosmeticproductoratoiletryproduct. g7. It was the petitioner/ assessee obtained as an nctioned bY the Drug its comPosition with its contention of the learned counsel for the that even the license for the Product was ayurvedic Product Controller after thorough scrutiny of intended cure of headache, reduction in burns, improving blood circulation and also for improving the hair growth ' According to the learned counsel for the petitioner/ assessee' it is an ay'urvedic product and is not perfumed hair oil with medicinal value' All the I

Learned counsel lbr the petitioner/assessee relied upon a decision of the Allahabad High Court in respect of the very same products of the assessee,s company which the Allahabad High Court has accepted it to be products which otherwise fall under Entry 37 and not under Entry 36 of lsr Schedule of the Act. He also took the Court to the compositions of the product and reference to the alrurvedic texts in respect of the various products involved in the making of the said Himani Navaratan Oil. For ready reference, the composttion and reference to these ayurvedic texts are reproduced herein under: Composition Books ref. With Pg.No- * Bharatiya Banousadhi Vol. V, P.No. t2g3_72g Bhava prakash, Vol. I, P.No. 239. * Banousadhi Chandrodaya, Vol. VI, P.No. 45. * Bhava Prakash, Vol. I. P.No. 184. Chiranjib Vol. VII, P Banousadhi Vol. II, P.No. Banousadhi, ,No.

Chaldroclaya, t72. * Bhava prakash, Vol. I, P.No.

Wealth of India, Vol. VI, P.No. 81-9O, Bhava Prakash, Vo1. I, P.No.242. * Dravyaguna, P.Ntr. 124 1OO ml contains

KUNCH 0.25 gm .! Chiranjib Banou sadhi, Vol. III, P-No. 27 l-272. * Bhava Prakash, Vol. I, P.No. 356. 8- AMLA

MUSTHA 1.O gm * Bharatiya Banousadhi, Vol. IV, P.No. 1076-1077 .l Bhava Prakash, Vol. I, P.No. 10- 1 1. 0.O5 gm t Bhava Prakash (244) .i. Charak Samhita {Su. a/3 (60)) lO.KARPUR (Camphor) 0.05 gm * ChiranjibBalousadhi, Vol. III, P.No. 119-126. .

According to the learned counsel for the petitioner/assessee, it was pure ay'urvedic oil and under no stretch of imagination can it be termed as a perfumed hair oil. Rather, it is never sold in the market as hair oil and the said oil is an a)'urvedic medicine and not medicated goods. It was contended that medicated goods are those which are intended to be used otherwise than as medicines. For example; shampoos, soaps, hand wash with medicinal contents in it. Medicated goods are those where incidental medicinal properties are incorporated in small quantity and the product needs to be otherwise sold for the very same purpose for which it was otherwise manufactured and sold. Thus the finding of the STAT so far as Navaratan Oil being a cosmetic and not a Drug is liable to be set aside and it is ordered accordingly.

Now we come to the next product i.e. the Himani Gold Turmeric A5,,urvedic Cream. The petitioner/assessee has manufactured the same and is marketing the same claiming it to be highly effective for curing cracked skins, pimples, boils etc. None of these actions as mentioned in the label of the product cater the defrnition of cosmetics or toiletry product. As in the other products, it was the contention of the learned counsel for the petitioner/ assessee that Himani Gold T\-rrmeric Ay'urvedic Cream also was a product which has been licensed as an ayurvedic drug by the Drug Controller based on the composition and these 4r-" . -_

Though the learned Starding Counsel for the respondent/ Department contended hard to persuade this Bench to hold that the two products i.e. the Himani Navaratan Oil and Himani Gold t I TURMERIC Powder o.20h Ayurveda Sangraha Bharatia Banousadi IV 1158 - 60 By Dr. K.P.Biswas r37

The Tax Revision Cases filed by the petitioner/assessee i.e. Tax Revision Case Nos. 193, 188 and 187 of 2OO4 filed by M/s.Himani Ltd. and Tax Revision Case Nos. 182, 183 and 192 of 2OO4 hled by M/s.Emami Ltd. deserves to be arrd are accordingly allowed. Accordingly, the order of the STAT is set aside/quashed.

In the result, the Tax Revision Case Nos. 155, f56, 166, 169 and 2Il of 2OO4 are rejected and the Tax Revision Case Nos.193, 188, 187, 182, 183 andl92of2OO4 standsallowed. Nocosts.

As a sequel, miscellaneous petitions pending if any, shall stand closed. //// . K. SRINIVAS JOINT REGISTRAR SECTION OFFICER A RAO oneFairc.olr,3,,[i,1..']fii.Ir*:i[J"';su:',iJustice oneFairc.l..;,'ffi"t"Jlfii,X''.lXlfl 3[,Lii"'"" to' ', . ,n" Sales Tax Appellate Tribunal' Andhra i-99:h Hvderabad

The Appellat" o"p'tit"o'r.ii"ion"'tcl' punlaguita bivision' Hvderabad 3. rhe com merciat rax ;#u;: ;;;;,"iri ru*""b.partmenl, Begumpet Circle. H erabad l i

The Commercial Tax Officer, Commercial Taxes Department, Malakpet Circle, Hyderabad. 5. 11LR Copies

The Under Secretary, Union of lndia tvlinistry of Law, Justice and Company Affairs, New Delhi

The Secretary, Advocates Association Library, High Court for the State of ^. Telan_gana, High Court BuitOings ai iyd"r"O'rJ " -

One CC to Mr. Swarooo Ooriflal S.C. for. Com.ercial Taxes [OpUC]

One CC to Sri Lakshmi Kumaran Sridharan, Advocate tOpUCI

One CC to Mr. Narendra O_ave, navocate tOpUCJ-*'' 1 1. One CC to Mr. Sumanth Ch"nO", nJro"ut. iOp-tjCf 12.One CC to Ms. Anushka Rastogi, Adrocat" iOpUCi '

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