Kerala General Sales Tax Act, 1963 – Entry 79, 127 – Tamil Nadu General Sales Tax Act, 1959 – s. 3, Entry 20-(A) of Part C of First Schedule; Entry 1(iii) of Part-F of First Schedule – Drugs and Cosmetics Act, 1940 – s. 3(aaa), 3(b) – Whether medicated talcum powder is medicine or drug, or a cosmetic, or in terms of the statutes in question, medicated talcum powder – In the first set of appeals, the revisional authority was of the view that the order of assessment passed by the assessing authority (levying tax at 8% on ‘Prickly heat powder’) was prejudicial to the interest of revenue by treating it as a medicine and tax at 20% was to be applied as applicable to “Medicated talcum powder” – Kerala High Court concurred with the view adopted by the Revenue – In the second set of appeals, the Madras High Court relied on the decision of the Kerala High Court holding that medicated talcum powder includes prickly heat powder and answered the issue in favour of the Revenue and against the assessee – Before the Supreme Court, the Revenue contended that in the Kerala case, that Nycil prickly heat powder is “medicated talcum powder” since there is separate entry for medicated talcum powder (Entry 127), it has to be classified under Entry 127 of the first schedule to the KGST Act – In the Tamil Nadu case, it is contended that the exclusion of products capable of being used as cosmetics from Entry 20 in Part C, on the one hand, and the inclusion of talcum powder, in Entry 1 of Part F, as cosmetics, read with explanation to Entry 1, is decisive that the proper classification of the product is as a cosmetic – Held: The court has to, as a principle, interpret the concerned statutes, in the light of their plain words, and having regard to their internal guides or aids – In Kerala case, the use of the term “includes” after talcum powder, followed by “medicated talcum powder” in the Court’s opinion can lead to only one inference, which is that the clear legislative intent was that all kinds of talcum powders, 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 – The clear legislative intent, of inserting a carefully worded entry, which was a “hybrid” one, i.e. describing an article that contained medicinal ingredients, as well as those used for cosmetics, and yet placing such a creature (“neither beast nor fowl” so to say) in the category of cosmetics, ruled out altogether any interpretive scope of classifying it as a medicinal preparation, or drug or medicine – In the Tamil Case, the TNGST 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 High Courts are justified. Interpretation of Statutes – A salutary rule for fiscal legislation interpretation is that words used in the statute must be given their plain meaning and the court’s function is not to give a strained and unnatural meaning to the provision.
Dismissing the appeals, the Court
HELD: 1. According to the literature made available to the court, there are medicinal ingredients in Nycil prickly powder, which is also manufactured under a Drug License. Yet, the State Legislature, in Entry 127, thought it fit to include, while dealing with cosmetics, such as shampoos, “talcum Powder including medicated talcum powder.” There can be no two opinions that talcum powder ipso facto is classifiable as a cosmetic. Yet, the expression “including” used in Entry 127 has the effect of bringing in [or “pulling in”] an entirely different product, which ordinarily may not have been in the same class, i.e. medicated powder. To rule out any ambiguity, the legislature specifically referred to a sub class of medicated powders, i.e. medicated talcum powder. Such specific entries have not come up for consideration, before this court; as noticed, predominantly, the courts have ruled that in the context of broad descriptions such as cosmetics or medications, if there are medical ingredients, in a product, which is meant as a curative or prophylactic product, it would be classifiable as drugs or medicines. However, the specificity employed by the legislature in this case, rules out that possibility. Besides, “includes” has been construed as broadening the sweep of a provision, and at the same time restricting its amplitude to the meanings ascribed in the statute. [Para 47][452-B-E]
2. The use of the term “includes” after talcum powder, followed by “medicated talcum powder” in this court’s opinion can lead to only one inference, which is that the clear legislative intent was that all kinds of talcum powders, 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. The pointed phraseology in fact concludes the issue, leaving no scope for the court to interpret the Entry as including any class of goods, other than such as Nycil prickly heat powder, which is a talcum powder that is also medicated. A salutary rule for fiscal legislation interpretation is that words used in the statute must be given their plain meaning. The court’s function is not to give a strained and unnatural meaning to the provision. The intention of the legislature, manifested in plain words, must be accepted. [Para 48][453-D-F]
3. In the present case, the clear legislative intent, of inserting a carefully worded entry, which was a “hybrid” one, i.e. describing an article that contained medicinal ingredients, as well as those used for cosmetics, and yet placing such a creature (“neither beast nor fowl” so to say) in the category of cosmetics, ruled out altogether any interpretive scope of classifying it as a medicinal preparation, or drug or medicine. Therefore, this court cannot fault the High Court for drawing the conclusion that it did. The TNGST 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 High Courts are justified. [Paras 49, 53][454-B-C; 455-F-G]
A.V. Fernandez v. State of Kerala [1957] 1 SCR 837 – followed.
Oblum Electrical Industries Pvt. Ltd., Hyderabad v Collector of Customs, Bombay [1997] 3 Supp SCR 68; Union of India (UOI) and Ors. v. Godfrey Philips India Ltd. [1985] 3 Supp SCR 123; Hamdard (Wakf)
Laboratories v. Deputy Commissioner [2007] 5 SCR
873 – relied on.
Collector of Central Excise v. CIENS Laboratories [2013] 14 SCR 38; Puma Ayurvedic Herbal Pvt. Ltd. v. Collector of Central Excise (2006) 2 SCR 1120; Ponds India Ltd. v. Commissioner of Trade Tax [2008] 9 SCR 496; Muller & Phipps (India) Ltd v. Collector of Central Excise [2004] 2 Supp SCR 39; B.P.L Pharmaceuticals v. Collector of Central Excise [1995] 3 SCR 1235; Union of India v. Vicco Laboratories [2007] 12 SCR 534; Commissioner of Central Excise v. Hindustan Lever Ltd (2015) 10 SCC 742; Collector of Central Excise v. Wockhardt Life Sciences Ltd. (2012) 5 SCC 585; S. Sundaram Pillai v. V. R. Pattabiraman [1985] 2 SCR 643; Share Medical Care v. Union of India [2007] 3 SCR 44; Pappu Sweets and Biscuits v. Commr. of Trade Tax, U.P [1998] 2 Suppl. SCR 119; Collector of Excise v. M/s Parle Exports (P) Ltd. [1988] 3 Suppl. SCR 933; Union of India (UOI) & Ors. v. Leukoplast Private Limited & Ors. [1994] 1 SCR 343; Dattatraya Govind Mahajan & Ors. v. State of Maharashtra & Anr. [1977]
2 SCR 790; Mrs. Zakiya Begum & Ors v. Mrs. Shanaz Ali & Ors. [2010] 9 SCR 692; Collector of Central Excise v. Wood Crafts Products Ltd. (1995) 3 SCC 454 : [1995] 2 SCR 797; Meghdoot Gramodyog Sewa
Sansthan, UP. v. Commissioner of Central Excise, Lucknow [2005] 4 SCC 15; Amrutanjan Ltd. v. Collector Central Excise [1996] 9 SCC 413; N.D.P.
Namboodripad (Dead) by LRs. v. Union of India [2007]
3 SCR 769 – referred to.
B. Shah & Company v. State of Gujarat (1971) 28 STC
5 (Guj) – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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