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Murari Brothers Vs. Assistant Commercial Taxation Officer - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case Number D.B. Sales Tax Reference No. 23 of 1975
Judge
Reported in[1981]48STC286(Raj)
AppellantMurari Brothers
RespondentAssistant Commercial Taxation Officer
Appellant Advocate S.M. Mehta, Adv.
Respondent Advocate G.G. Sharma, Additional Government Adv.
Cases ReferredSwat v. State of Gujarat
Excerpt:
.....in commodities like bhimsaini kajal, nagjyoti and baljyoti, which are different varieties of kajal. the assessee filed an application under section 15(1) of the act before the board of revenue and the present reference has been made on that application by the order of the board of revenue dated 16th august, 1974. 5. before we proceed to decide the question raised before us, we would like to observe that under section 15(1) of the act, the board of revenue is competent to make a reference in respect of 'any question of law arising out of such order' of the board of revenue. in the present case, the finding of the board of revenue, in its order dated 6th march, 1974, is that the three articles referred to above were not covered by entry 65, but they were clearly covered under entry..........drugs and pharmaceutical preparations ofall sorts. 2 per cent.* * *59. perfumery, cosmetic and all toilet articles including toilet soaps, tooth pastes including manjan, combs,brushes, perfumed hair oils, etc. 10 per cent.* * *65. goods not covered by s. nos. 1 to 64. 6 per cent.3. m/s. murari brothers (hereinafter referred to as 'the assessee') is the manufacturer of and a dealer in commodities like bhimsaini kajal, nagjyoti and baljyoti, which are different varieties of kajal. in respect of the assessment year 1965-66, the assistant commercial taxes officer, d-circle, jaipur, imposed sales tax on the taxable turnover of the assessee in respect of the sale of bhimsaini kajal, nagjyoti and baljyoti at the rate of 10 per cent, as in his view the aforesaid commodities were covered under.....
Judgment:

Dwarka Prasad, J.

1. The Board of Revenue for Rajasthan at Ajmer has referred the following question for the consideration of this Court:

Whether bhimsaini kajal, nagjyoti and baljyoti manufactured and sold by the assessee are a cosmetic or a medicine ?

2. By the notification dated 2nd March, 1963, the State Government notified the various rates of tax which it intended to charee on different commodities and entries 13, 59 and 65 of the aforesaid notification, which are relevant for our present purpose, are reproduced below :

'13. Medicines, drugs and pharmaceutical preparations ofall sorts. 2 per cent.* * *59. Perfumery, cosmetic and all toilet articles including toilet soaps, tooth pastes including manjan, combs,brushes, perfumed hair oils, etc. 10 per cent.* * *65. Goods not covered by S. Nos. 1 to 64. 6 per cent.

3. M/s. Murari Brothers (hereinafter referred to as 'the assessee') is the manufacturer of and a dealer in commodities like bhimsaini kajal, nagjyoti and baljyoti, which are different varieties of kajal. In respect of the assessment year 1965-66, the Assistant Commercial Taxes Officer, D-Circle, Jaipur, imposed sales tax on the taxable turnover of the assessee in respect of the sale of bhimsaini kajal, nagjyoti and baljyoti at the rate of 10 per cent, as in his view the aforesaid commodities were covered under item 59 of the notification dated 2nd March, 1963. By his order dated 21st January, 1966, the Assistant Commercial Taxes Officer rejected the plea of the assessee that the aforesaid three commodities were medicines or medicinal preparations. An appeal preferred by the assessee was accepted by the Deputy Commissioner (Appeals), Jaipur, by his order dated 31st October, 1966, as he was of the view that bhimsaini kajal and the other two commodities referred to above did not fall under item 59 as they were not cosmetics but they had also preventive medicinal value. However, it was observed by him that the aforesaid three commodities were not sold as medicines under any prescription of a medical practitioner but were applied to the eyes as a precautionary measure. The Deputy Commissioner, therefore, held that the said commodities fell under item 65 of the schedule annexed to the notification dated 2nd March, 1963, and were taxable at the general rate of 6 per cent. The Board of Revenue on revision remanded the matter back to the Deputy Commissioner. But the Deputy Commissioner (Appeals) by his subsequent order dated 22nd May, 1969, maintained the view expressed earlier by his predecessor.

4. The assessing authority again filed a revision petition before the Board of Revenue against the order of the Deputy Commissioner (Appeals). Finally the Board of Revenue by its order dated 6th March, 1974, held that all the three articles referred to above were covered under entry 59 and were chargeable to tax at the rate of 10 per cent and the order of the Deputy Commissioner was set aside. The assessee filed an application under Section 15(1) of the Act before the Board of Revenue and the present reference has been made on that application by the order of the Board of Revenue dated 16th August, 1974.

5. Before we proceed to decide the question raised before us, we would like to observe that under Section 15(1) of the Act, the Board of Revenue is competent to make a reference in respect of 'any question of law arising out of such order' of the Board of Revenue. In the present case, the finding of the Board of Revenue, in its order dated 6th March, 1974, is that the three articles referred to above were not covered by entry 65, but they were clearly covered under entry 59 of the notification dated 2nd March, 1963.

6. It was observed by the Board of Revenue that entry 69 was comprehensive enough to include bhimsaini kajal, nagjyoti and baljyoti. What we would like to point out in this connection is that the Board of Revenue did not hold that the three articles referred to above were cosmetics, although it definitely held that they were not medicines. Thus, what has been decided by the Board of Revenue is that the articles which were subject-matter of reference were covered by item 59 of the notification dated 2nd March, 1963, and not under item 65 of the said notification. To our mind, the question which has been framed by the Board of Revenue is not aptly worded and does not bring out clearly the real issue in dispute between the parties, which is whether the assessee is chargeable to tax in respect of the sale of the abovementioned three articles under item 59 or under item 65 of the notification dated 2nd March, 1963. We feel that the question has been framed by the Board of Revenue too narrowly and the question which has to be referred must conform to the question which arises out of the order of the Board of Revenue. We, therefore, think it proper to reframe the question referred to us, before proceeding to answer the same, so as to bring out the real issue in controversy between the parties in this case. We, therefore, restate the issue as under :

Whether bhimsaini kajal, nagjyoti and baljyoti manufactured and sold by the assessee are covered by item 65 or under item 59 of the notification dated 2nd March, 1963.

7. Learned counsel for the assessee strenuously contended before us that the three articles, which are subject-matter of reference in this case, are medicinal preparations and are prepared according to ayurvedic formula. According to learned counsel these articles are cleansing agents which are to be applied to the eyes for the prevention of diseases and in order to keep the eyes healthy and for improving the sight.

8. Learned counsel for the assessee also relied upon a certificate of the In-charge, Government Ayurvedic College Laboratory and a test certificate of Shri Ram Trust. He also relied upon the pamphlets supplied along with the three varieties of kajal. The assessee has described in the pamphlets the effect of using the three varieties of kajal manufactured by him which is mainly of keeping the eyes healthy, beautiful and attractive and also of keeping the eyes cool and clean. People have been advised to use the said varieties of kajal daily, twice a day, in the night while going to sleep and in the morning. Thus, according to the assessee, who is the manufacturer of the three varieties of kajal, they were things of daily use. It has also been mentioned in the pamphlets that the kajal is not to be used as a curative for any particular disease, but it can be useful for improving the sight by removing dust particles and preventing infection in the eyes. The test certificate issued by the Shri Ram Trust, a department of Shri Ram Institute for Industrial Research, Delhi, shows that upon analysis, the sample of bhimsaini kajal discloses the constituents specified in the certificate. The other certificate dated 11th October, 1965, issued by the In-charge, Government Ayurvedic Dispensary College Laboratory, Jaipur, states that the varieties of kajal manufactured and sold by the assessee were purely ayurvedic produce, and bhimsaini kajal is useful for every day cleansing of the eyes, although it has not been found to be of medicinal value in respect of any specified ailment. Another certificate which was relied upon by the learned counsel for the assessee, issued by the Principal, Government Ayurvedic College, Jaipur, dated 17th August, 1976, merely states that considering the pamphlets and the composition of the three varieties of kajal manufactured by the assessee, it would be proper to treat them as medicines. It may be observed that no reason has been assigned by the Principal of the Government Ayurvedic College in expressing the opinion that the aforesaid three varieties of kajal should be treated as medicines nor he has stated that the kajal in question had any specified medicinal or curative value in respect of any specified diseases.

9. Thus, according to the Igarned counsel, the three articles in question fell within item 13 of the notification dated 2nd March, 1963, and they are neither covered under item 69 nor under item 65 of the aforesaid notification. Learned counsel relied upon the decisions of the Allahabad High Court dated 28th March, 1979, in Sales Tax Reference No. 1134 of 1976 (Commissioner of Sales Tax, U.P. v. Murari Brothers, Ghaziabad [1980] 46 S.T.C. 88) and of the Madras High Court in State of Madras v. S.P. Vadivel Nadar and Sons [1968] 21 S.T.C. 448 and of the Gujarat High Court in Shah & Co. v. State of Gujarat [1971] 28 S.T.C. 5.

10. Learned Additional Government Advocate, appearing for the assessing authority, however, contended that the three articles in question were toilet articles and fell within item 59 of the 'notification dated 2nd March, 1963, and they were neither medicines covered by item 13 nor they were covered by item 65 of the said notification.

11. The entire material which has been placed on record on behalf of the assessee goes to show that the three varieties of kajal manufactured and sold by the assessee were meant for daily use as cleansing agents for the eyes and if they were so used daily, they would keep eyes healthy, beautiful and attractive as also cool and clean. But the said articles had no medicinal effect for curing any particular diseases or eye ailments. The question with which we are concerned is not whether the use of the three varieties of kajal is capable of keeping the eyes clean and healthy but the question is whether the same are actually used as medicine or merely as cleansing agents for the eyes. What is to be considered is as to whether the buyers who are common citizens understand and purchase these varieties of kajal as medicines or merely as cleansing agents for the eyes. It has been repeatedly observed by their Lordships of the Supreme Court that where the words employed in' a taxing statute are words of every day use, they must be construed not in any technical or scientific sense, but they must be understood as used in common parlance and in commercial language. Story, J., in 200 Chests of Tea (1824) 9 Wheaton (U.S.) 430 observed that the particular words used by the legislature in the denomination of the articles are to be understood according to the common commercial meaning of the terms used and not in their scientific or technical sense, for the legislature does not suppose our merchants to be naturalists, or geologists, or botanists. Pollock, B., pointed out in Grenfell v. Inland Revenue Commissioners (1876) 1 Ex. D. 242 that 'if a statute contains language which is capable of being construed in a popular sense, such 'a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words 'popular sense', that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it' '. In Porritts and Spencer (Asia) Ltd. v. State of Haryana [1978] 42 S.T.C. 433 (S.C.), Bhagwati, J., speaking for the Supreme Court, observed:

Where a word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature.

12. Thus, the legal position in this respect is firmly established that ordinarily the words of every day use should be construed according to their popular sense, as they were commonly understood by the vendors and purchasers. Merely because the three varieties of kajal manufactured and sold by the assessee were purely ayurvedic preparations, it cannot be held that they were to be considered as medicines. In the case of Commissioner of Sales Tax v. Vicco Laboratories [1968] 22 S.T.C. 169 also it was claimed that 'Vajradanti' tooth-powder was a medicinal preparation as it was an ayurvedic product. However, their Lordships of the Bombay High Court held that 'Vajradanti' tooth-powder was a toilet preparation and observed that it is essential if anybody wants to live in good health to clean one's teeth by tooth-paste or tooth-powder and the powder in question was essentially a toilet preparation, although cleaning one's teeth may have the effect of beautifying his face or his personality. In C. C. Mahajan and Co. v. State of Bombay [1958] 9 S.T.C. 133, it was held that 'Badshahi' soap and 'Badshahi' powder were toilet articles as they were used as a depilatory for the purpose of cleansing and gromming one's person.

13. In Commissioner of Sales Tax, Madhya Pradesh, Indore v. Shri Sadhna Ausha-dhalaya [1963] 14 S.T.C. 813, the Madhya Pradesh High Court held that 'Maha Bhringraj' hair-oil, which was also an ayurvedic preparation, was a toilet article and it could not be treated as a medicinal preparation merely because it was prepared according to a specified formula given in ayurvedic treatise and because fragrance of the oil was disagreeable to people. The following observations made in the aforesaid decision may be usefully quoted :

The words 'cosmetics' and 'toilet', being words of everyday use, must be construed not in any technical or scientific sense, but as understood in common parlance and in commercial language. A hair-oil intended to be applied to the hair and supposed to act as a hair-tonic and to prevent dandruff, falling hair and baldness and to cool the brain does not cease to be a hair-oil merely because it is manufactured and sold by a person dealing in medicines and according to a process more complex than used in the manufacture of ordinary hair-oil. The object of all hair-oils is to tidy the hair, to promote luxuriant growth of hair and to prevent dandruff and falling hair, and it cannot be denied that if a hair-oil produces the effects proclaimed and claimed in regard to it, then the appearance of the person using it is undoubtedly improved. We have no doubt that the hair-oil manufactured by the assessee is a 'toilet article' and falls also within the meaning of the term 'cosmetics'.

14. In Savin Chemical Laboratory v. Commissioner of Sales Tax, U.P. [1970] 26 S.T.C. 339 (S.C.), their Lordships of the Supreme Court held that 'Sarin Tooth Powder' was a toilet preparation. In doing so they approved the decision of the Bombay High Court in the case of 'Vajradanti' tooth-powder, to which we have already referred to above.

15. In State of Gujarat v. Prakash Trading Co. [1972] 30 S.T.C. 348 (S.C.), the question which arose for consideration before their Lordships of the Supreme Court was as to whether 'Colgate' tooth-paste was a foilet article. Their Lordships observed that considering the concept of a toilet article, as understood in common parlance, tooth-powder or tooth-paste used for cleansing the teeth is a toilet article.

16. The expressions 'cosmetic' or 'toilet' have not been defined in the Act and so they shall have to be understood as in common parlance. According to Webster's International Dictionary 'cosmetic' is 'a preparation to beautify or alter appearance of the body or for cleansing, colouring, conditioning or protecting skin, hair, nails, eyes or teeth'. The expression 'toilet' according to the same dictionary means 'an act or process of dressing, especially formerly of dressing hair and now usually cleansing and grooming of one's person'. The test to be applied in such matters, in our opinion, would be whether an article or thing is used or is capable of being used commonly for cleansing or grooming one's person. It is immaterial as to which part of the body of a person is selected for cleaning or grooming, because it is not relevant for consideration. If the article is used for a cleansing process of any part of the body, then it is intended to be included within the expression 'toilet' articles. It may be that the three varieties of kajal manufactured and sold by the assessee may contain different proportions, of the ingredients used for preparation of 'kajal', but the fact would still remain that it would not alter the basic character of the articles manufactured and sold as 'kajal'.

17. It was argued before us by the learned counsel for the assessee that 'bhimsaini' kajal cannot be used for the purpose of beautifying the face of a person as on the application of 'bhimsaini' kajal tears will come out and that is why it is meant to be used while going to sleep and in the morning. According to the learned counsel, for this reason the same should be considered as medicine. We are unable to accept the contention of the learned counsel. The argument emerges from misconception about the difference between 'cosmetic' and 'toilet' preparations. The word 'toilet' has been defined in the dictionary as an act or process of cleansing or grooming one's person and such articles used as toilet preparations are not necessarily articles used for beautification of one's body. Of course, after the application of kajal tears come out and the eyes are cleaned which would necessarily result in making the eyes healthy, beautiful and attractive. The toilet articles have to be applied first and after the concerned part of the body is cleansed, then cosmetics are applied, which are no doubt preparations meant for beautification of the various parts of the body.

18. In the decision of the learned single Judge of the Allahabad High Court in the case of Commissioner of Sales Tax, U.P. v. Murari Brothers [1980] 46 S.T.C. 88 (Sales Tax Reference No. 1134 of 1976 decided on 28th March, 1979) the argument advanced on behalf of the State was that kajal was used for beautification of the eyes and fell within the category of 'cosmetics' and that 'bhimsaini' kajal is ayurvedic medicine useful for treatment of the ailments of the eyes. The learned single Judge of the Allahabad High Court accepted the finding recorded by the revising authority that 'bhimsaini' kajal sold by the assessee was primarily used for its medicinal qualities and not for the beautification of the eyes. However, the material which has been placed before us goes to show, as we have already pointed out above, that the three varieties of kajal manufactured by the assessee have not been found as cure of any specified ailment of the eyes but they have been found useful merely as cleansing agents for the eyes. It may be observed here that the question as to whether 'bhimsaini' kajal and the other two varieties of the kajal manufactured and sold by the assessee were toilet articles, does not appear to have been raised before or considered by the learned Judge of the Allahabad High Court and as he found that it was not a cosmetic, a finding was recorded that it was a medicine. With great respect to the learned Judge, we are unable to agree with the decision arrived at by him as no reasons have been assigned for the conclusion arrived at by him, and he merely accepted the finding recorded by the revising authority.

19. The article 'Sarvaroga Sanjeevi Thailam' with which their Lordships of the Madras High Court were concerned in the case of State of Madras v. S.P. Vadivel Nadar and Sons [1968] 21 S.T.C. 448, it was found that it was a medicinal preparation used as a cure for one disease and it was held that merely because it also contained perfume and had an agreeable odour and thereby incidentally led to beautification of the person, did not alter the character of the article as medicine. That case has no application to the facts of the present case, as it is not disputed that 'bhimsaini' kajal is not used as an ordinary kajal for beautifying the eyes but it is used as a cleansing agent.

20. The article which was the subject-matter of consideration before their Lordships of the Gujarat High Court in B. Shah & Co., Swat v. State of Gujarat [1971] 28 S.T.C. 5 was 'Nycil' medicated powder. After a consideration of the material on record in that case, their Lordships of the Gujarat High Court came to the conclusion that 'Nycil' powder is a medicinal preparation, looking to its nature, properties and ingredients and further as it was not used by itself for the purpose of cleansing or dressing or grooming the body of a person, so as to beautify his appearance. It was held in that case also that it was really the use for which the article in question was sold or found suitable that will determine the category in which the same would fall for purposes of taxation. On the facts of that case, it was found that 'Nycil' powder was suitable for medicinal purposes and was not being used for toilet purposes, as it was used as a cure for certain skin ailments such as ringworm, dhobie itch, athlete's foot and like skin ailments. As the aforesaid decision was given in relation to the particular article which was. the subject-matter of consideration before their Lordships, it is not relevant for the consideration of the question, as to whether 'bhimsaini' kajal is a toilet preparation or not.

21. In view of the aforesaid discussion, our answer to the question, as reframed by us, is that the three varieties of 'kajal' manufactured and sold by the assessee squarely fall within item 59 of the schedule of the notification dated 2nd March, 1963.

22. The reference is, therefore, decided against the assessee and in favour of the revenue. However, the parties are left to bear their own costs.


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