Hyderabad: The Telangana High Court recently ruled that five Ayurvedic products manufactured and sold by Himami and Emami — Navratna Oil, Gold Turmeric Cream, Boroplus Antiseptic Cream, Boroplus Heat Rash Powder and Sona Chandi Chyawanprash — are classified as medicines and not cosmetics.
The Court dismissed the appeal of the Revenue Department and upheld the view of the assessees (Himami and Emami) that the products were drugs and not cosmetics under the Andhra Pradesh General Sales Tax Act, 1957.
The court examined the products’ ingredients, marketing claims and regulatory licenses and determined that they were not merely cosmetic or toiletry products but had superior medicinal and therapeutic properties.
The ruling will help reduce the tax burden of both companies as pharmaceuticals are subject to a 10% GST rate while cosmetics are subject to a 20% rate.
The dispute began in the 1996-97 tax year when the state’s commercial tax department began treating the products as cosmetics and imposing a 20 percent sales tax on them.
After hearing the parties extensively and considering the matter thoroughly, a bench of Justices P. Sam Koshi and N. Tukaramji concluded that the five products fall within the category of drugs.
The dispute also involved six other products, including Nirog Dant Powder Lal, manufactured and sold by the two companies, which tax authorities had classified as cosmetics and levied a 20% tax on.
The Sales Tax Appeals Tribunal (STAT) ruled that Danto Powder is a cosmetic product and not a drug, a decision that was not challenged by the companies involved and was accepted.
This post was last updated on July 14, 2024 at 1:26 pm
