Andhra Pradesh Value Added Tax Act, 2005 – Entry 88, C Schedule IV; Schedule V – Respondent-Company registered under the 2005 Act is engaged in manufacturing, trading of industrial gases and also Medical Oxygen IP and Nitrous Oxide IP – Issue as to whether Medical Oxygen IP and Nitrous Oxide IP are taxable u/Entry 88, Schedule IV or as ‘unclassified goods’ u/Schedule V and the resultant rate of tax to be levied on them – Held: Schedule IV D prescribes a uniform tax rate of 4%/5% for listed goods – Entry 88 includes drugs and medicines, as defined in clauses (i), (ii) & (iii) of s.3(b), 1940 Act – Any drug or medicine that falls within the ambit of clauses (i), (ii) & (iii) of s.3(b) falls within the ambit of Schedule IV – Schedule V stipulates that all goods that do not fall E within the ambit of Schedules I, III, IV & VI shall be taxed @ 14.5% – s.16, 1940 Act r/w the Second Schedule and the specification of Medical Oxygen in the Indian Pharmacopoeia (an autonomous institution of Ministry of Health and Family Welfare, Govt. of India, through its publication titled “Indian Pharmacopoeia” prescribes standards for identity, purity and strength of the drugs specified F therein) lends support to respondent’s contention that Medical Oxygen IP is a drug as defined in s.3(b)(i), 1940 Act – Further, 2013 Prices Control Order contains the National List of Essential Medicines 2011 – Inclusion of Oxygen and Nitrous Oxide as Anesthesia therein lends support to its use in the diagnosis and treatment of a disorder or disease as specified in s.3(b)(1), 1940 Act – Medical Oxygen IP and Nitrous Oxide IP are medicines used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings falling within the ambit of s.3(b)(i), 1940 Act and are consequently covered in Entry 88, 2005 Act – Drugs and Cosmetics Act, 1940 – s.3(b)(i)-(iv); s.16 – STATE OF A.P. v M/S LINDE INDIA LTD. (FORMERLY BOC INDIA LTD.)
Interpretation of Statutes – Essential Commodities Act, 1955 – s.3 – Drug (Prices Control) Order 2013.
Dismissing the appeals, the Court
HELD: 1.1 Schedule IV of the 2005 Act prescribes a uniform tax rate of 4%/5% for listed goods. Entry 88 includes drugs and medicines, whether patent or proprietary as defined in clauses (i), (ii) and (iii) of Section 3(b) of the 1940 Act. Any drug or medicine that falls within the ambit of clauses (i), (ii) and (iii) of Section 3(b) falls within the ambit of Schedule IV. Entry 88 also stipulates that hypodermic syringes, hypodermic needles, catguts, sutures, surgical cotton, dressing, plasters, catherters, cannulae, bandages and ‘similar articles’ are also included, save and except for the three specified exclusions. Schedule V stipulates that all goods that do not fall within the ambit of Schedules I, III, IV, and VI shall be taxed at a rate of 14.5%. Clause (i) of Section 3(b) defines a drug as all medicines for internal or external use of human beings or animals and all substances “intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human being, or animals”, including specified preparations. Clause (iv) of Section 3(b) includes all devices ‘intended’ for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals. [Paras 10-12][846-B, E-G; 847-D]
Chimanlal Jagjivandas Sheth v. State of Maharashtra AIR 1963 SC 665 : [1963] Suppl. SCR 344; Ishwar Singh Bindra v. The State of UP [1969] 1 SCR 219 – referred to.
1.2 The term “medicine” is not defined in the 1940 Act. The ordinary or popular understanding of the term medicine is characterized by its curative properties in general and specifically, its use for or in diagnosis, treatment, mitigation or prevention of any disease or disorder. [Paras 16, 18][849-G; 852-B]
State of HP v. Pawan Kumar (2005) 4 SCC 550; State of Goa v. Leukoplast (India) Ltd. (1997) 4 SCC 82 : [1997] 2 SCR 516 – relied on.
State of Himachal Pradesh v Pawan Kumar 2005
Cr.L.J. (SC) 2008; State of Haryana v Suresh (2007)
15 SCC 186 : [2007] 7 SCR 961; State of Rajasthan v Babu Ram (2007) 6 SCC 55 : [2007] 7 SCR 939;
Commissioner of Customs (Import), Mumbai v Dilip Kumar and Company (2018) 9 SCC 1 : [2018] 7 SCR 1191 – referred to.
Black’s Law Dictionary; Collins Dictionary; Cambridge Dictionary – referred to.
1.3 The Indian Pharmacopoeia Commission is an autonomous institution of the Ministry of Health and Family Welfare, Government of India. The IPC, through its publication titled ‘Indian Pharmacopoeia’ prescribes standards for the identity, purity and strength of the drugs specified therein. Medical oxygen (at 99.9% purity) is included as a drug termed as ‘Oxygen IP’. Section 16, read with the Second Schedule and the specification of Medical Oxygen in the Indian Pharmacopoeia lends support to the contention urged by the respondents that Medical Oxygen IP is a drug as defined in Section 3(b)(i) of the 1940 Act. Furthermore, in exercise of the powers conferred by Section 3 of the Essential Commodities Act 1955, the Central Government issued the Drug (Prices Control) Order 2013. Para 2(t) stipulates that the ‘National List of Essential Medicines’ means the National List of Essential Medicines 2011 published by the Ministry of Health and Family Welfare as updated and revised from time to time. It also specifies that the National List of Essential Medicines 2011 is included in the First Schedule to the order. Para 2(2) stipulates that all other words and expressions used therein and not defined, but defined in the 1940 Act shall have meanings respectively assigned in the 1940 Act. The first Schedule contains the National List of Essential Medicines 2011. Section 1.1 includes both Nitrous Oxide and Oxygen as medicines within the ambit of ‘Anesthesia’. The inclusion of Oxygen and Nitrous Oxide as Anesthesia lends support to its use in the diagnosis and treatment of a disorder or disease as specified in Section 3(b)(1) of the 1940 Act. [Paras 20-23][853-F-H; 854-A-B, G-H] Southern Gas Ltd. v. State of Kerala (2005) 3 KLT 78; Indian Oxygen Ltd. v. State of Karnataka (1989) SCC STATE OF A.P. v M/S LINDE INDIA LTD. (FORMERLY BOC INDIA LTD.)
Online Kar 459; State of Tamil Nadu v. Ram Oxygen (Pvt.) Ltd. 2010 (35) VST 478; Panki Oxygen v. State of Uttar Pradesh (2014) SCC Online All 2144 – referred to.
1.4 Medical Oxygen IP and Nitrous Oxide IP are medicines used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings falling within the ambit of Section 3(b)(i) of the 1940 Act. Medical Oxygen IP and Nitrous Oxide IP fall within the ambit of Section 3(b)(i) of the 1940 Act and are consequently covered in Entry 88 of the 2005 Act. The impugned judgment of the High Court, to the extent it held that Medical Oxygen IP and Nitrous Oxide IP fall within Entry 88 of the 2005 Act is upheld. [Paras 31, 32][859-B-C] Inox Air Products Ltd v The Assistant Commissioner (CT), Hyderabad 2014 VIL 339 AP; Southern Gas v State of Kerala 2005 (139) STC 504 (Ker); State of Tamil Nadu v Ram Oxygen [2011] 5 GST 87 (Mad HC); Chimanlal v State of Maharashtra 2004 (137) STC 68; Indian Oxygen v State of Karnataka 1990 (79) STC 351; State of Kerala v Indian Oxygen 2003 (129) STC 471; ACTO, Special Circle Jodhpur v M/s Jodhpur Gases (2009) SCC Online 2459 – referred to.
Principles of Statutory Interpretation by Justice G P Singh; Craies on Statute Law; KD Tripathi, Essentials of Medical Pharmacology, VIIth Ed., at p. 378 – referred to.
V Lew, E McKay, M Maze, Past, present, and future of nitrous oxide, British Medical Bulletin, Volume 125, Issue 1, March 2018, Pages 103–119; WHO Model Prescribing Information: Drugs Used in Anaesthesia (1989) – 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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