A Bench led by Justice S Ravindra Bhatt on Friday upheld the decisions of the Kerala and Madras high courts that ‘Nycil Prickly Heat Powder’ cannot fall within the ambit of the category of “medicine”, i.e., Entry 79 of the Kerala General Sales Tax Act.
It said the Tamil Nadu General Sales Tax Act was consciously amended to include talcum powder, whether or not medicated, in the specific entry or class of entries enumerating cosmetics. “Hence, like in the Kerala case, the plain meaning of that taxation head or entry had to be given, as there was no ambiguity. Consequently, the findings recorded by the HCs are justified,” the top court said.
According to the Supreme Court, the legislative intent was that all types of talcum powder which contained medications (irrespective of the proportion, or at any rate, not containing predominant proportions) should necessarily be treated as cosmetics, falling under Entry 127, thus leaving no scope for the court to interpret the entry. Heinz India had challenged the Kerala government’s decision to impose a sales tax rate of 20% on Nycil when the tax rate for medicines in the state was 8%.
Similarly, Glaxo Smithkline Pharmaceuticals had moved the top court against the Tamil Nadu government’s decision to impose 16% sales tax on Nycil (medicated powder) compared with 5% charged on medicines/drugs under the Tamil Nadu General Sales Tax Act. Heinz’s unit was, during the interregnum (1993-95), taken over by GSK.
The assesses argued that Nycil was manufactured under a drug licence issued under the Drugs and Cosmetics Act, 1940, and its active ingredient, Chlorphenesin IP, was meant to treat and prevent fungus infection, prickly heat sores, etc. They said Nycil powder was not like any ordinary talcum powder, but a prickly heat powder recommended as a drug for treatment and, therefore, was a medicine.
(With inputs from health)