of Telangana High Court It ruled that Himani Navaratan Oil and Himani Gold Turmeric Ayurvedic Cream are categorised as Ayurvedic medicines and not cosmetics and hence are liable for 10 per cent customs duty.
Bench Judge P. Sam Koshy and Justice N. Tukaramji We have seen wrappers selling the cream very emphatically highlighting this cream as an Ayurvedic medicine. The wrappers also clearly indicate that this cream is very effective for cracked skin, acne, boils and many other skin blemishes. The wrappers have never claimed that this cream is a cosmetic product or a product to improve complexion or whiteness. The granting of a license to this product by the licensing authorities as an Ayurvedic medicine establishes the manufacture, sale and distribution of this product as a medicine and not a cosmetic and it is being sold only as a medicine and not a cosmetic.
The petitioners have filed 11 tax revision cases impugning the common orders passed by the Sales Tax Appellate Tribunal (STAT), Hyderabad. The dispute is over six products manufactured and sold by two sister companies – Navaratan Oil, Gold Turmeric Ayurvedic Cream, Nirogdant Powerral, Boroplus Antiseptic Cream, Boroplus Heat Rash Powder and Sona Chandi Chyavanprash.
The STAT had held that Navaratan Oil, Gold Turmeric Ayurvedic Cream and Nirogdant Powerral were either cosmetic or toiletry products, which the petitioners have challenged.
The question raised was whether these products fall under Entry 36 or Entry 37 of the CGST and TGST Act. If the products are classified as cosmetics, they will be subject to GST at the rate of 20%. On the other hand, if the products are treated as drugs within Entry 37, these products will be taxed at the rate of 10% only.
The petitioner/assessee has contended that so far as Himani Navaratan Oil is concerned, the product is a medicinal drug and is formulated for cooling the head, relieving headaches, providing sound sleep, improving memory effectively, toning the body muscles, removing fatigue, treating minor burns and cuts and also preventing premature hair loss.None of the benefits mentioned on the label of the product fall within the definition of a cosmetic or toiletry product.
The assessee has contended that the license for the product has been obtained as an Ayurvedic product approved by the Drugs Controller after extensive scrutiny of the ingredients for curing headaches, reducing burns, improving blood circulation and improving hair growth. It is an Ayurvedic product and not a scented hair oil with medicinal properties. All the ingredients and composition used in the manufacture of the product are mentioned in the Ayurvedic literature.
The Court while allowing the tax reform held that the finding of STAT that the reform constituted a product within the ambit of Section 36 of the First Schedule of the Act was not proper, lawful or justified.
Counsel for the Applicant: Lakshmi Kumaran
Defence lawyer: Swaroop O’Ollira
Case Name: State of Andhra Pradesh and Others Vs. M/s.Himani Limited and Others.
Case Numbers: 2004 Tax Reform Cases Nos. 155, 156, 166, 169, 182, 183, 187, 188, 192, 193, 211
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