HyderabadThe Telangana High Court recently ruled that Navratna Oil, Gold Turmeric Ayurvedic Cream, Boroplus Antiseptic Cream, Boroplus Heat Rash Powder and Sona Chandi Chyawanprash fall under the ambit of medicines and not cosmetics which are liable to GST tax.
The bench, comprising Justices P. Sam Koshi and N. Tukaramji, resolved a two-decade-old dispute that had arisen even before the GST came into force.
Since 1997, the issue has been litigated between sister companies Himani Limited and Emami Limited and the then AP Sales Tax Department, which had categorised them as cosmetic products. When the matter was challenged before the then Sales Tax Appellate Tribunal (STAT), the tribunal declared that antiseptic cream, heat rash powder and Chayawanprash were medicines and the other two items were cosmetic products.
The STAT determination was challenged by the companies through a tax reform suit in the High Court in 2004, with the Sales Tax Department challenging the determination of some products as drugs.
While the case was pending before the High Court, the GST came into force: if the products are categorised as cosmetics (entry 36), they attract 20% GST, whereas if these products are treated as medicines (entry 37), they attract a 10% rate.
The court noted that the medicinal properties of Ayurvedic products and the manner in which they are marketed can be taken into consideration while determining whether they are cosmetics or drugs. The court also noted that the Sales Tax Department had failed to maintain its argument while arguing that these products are cosmetics and not drugs.
