The Telangana High Court has determined that Himani Navaratan Oil and Himani Gold Turmeric Ayurvedic Cream are to be classified as Ayurvedic medicines and not cosmetics, resulting in a 10% duty being applied.
Court’s Observations
The bench comprising Justice P. Sam Koshy and Justice N. Tukaramji noted that the packaging of these products emphasizes their Ayurvedic medicinal qualities. The packaging clearly indicates the products’ efficacy for conditions such as cracked skin, pimples, and boils, without any claims of cosmetic benefits like enhancing complexion or fairness. The licensing authority had also issued licenses for these products as Ayurvedic drugs, further establishing their classification as drugs rather than cosmetics.
Dispute Overview
The petitioner filed eleven tax revision cases against the common order passed by the Sales Tax Appellate Tribunal, Hyderabad (STAT). The dispute centered around the classification of six products manufactured by the petitioner’s sister concerns: Navaratan Oil, Gold Turmeric Ayurvedic Cream, Nirog Dant Power Lal, Boroplus Antiseptic Cream, Boroplus Prickly Heat Powder, and Sonachandi Chavanprash. STAT had classified Navaratan Oil, Gold Turmeric Ayurvedic Cream, and Nirog Dant Power Lal as cosmetics or toiletry products, a decision the petitioner challenged.
The key issue was whether these products fell under Entry 36 or Entry 37 of the CGST Act and TGST Act. If classified as cosmetics, the products would attract a 20% GST rate. Conversely, if treated as drugs under Entry 37, they would be subject to a 10% duty.
Petitioner’s Argument
The petitioner argued that Himani Navaratan Oil is a medicinal product used for various therapeutic purposes, including keeping the head cool, relieving headaches, aiding sleep, toning muscles, treating minor burns and cuts, and preventing hair fall. The product’s label supports these uses and does not suggest it is a cosmetic or toiletry product. The petitioner also highlighted that the license for Navaratan Oil was issued as an Ayurvedic product by the Drug Controller, reinforcing its classification as a drug based on Ayurvedic texts.
Court’s Decision
The Telangana High Court allowed the tax revision and found the STAT’s classification of these products as cosmetics under Entry 36 of the 1st Schedule of the Act to be improper, illegal, and unjustified.
Case Title: The State of Andhra Pradesh and Others Versus M/s.Himani Limited and Others. Case No.: Tax Revision Case Nos.155, 156, 166, 169, 182, 183, 187, 188, 192, 193 And 211 Of 2004