GOVERNMENT OF ANDHRA PRADESH

COMMERCIAL TAXES DEPARTMENT.

PROCEEDINGS OF THE AUTHORITY FOR CLARIFICATION AND ADVANCE RULING

(Under Section 67 of APVAT Act, 2005)

Present :

Sri T. Yugandhar Reddy, Addl.Commissioner(VAT)

Sri T. Vivek, Jt.Commissioner (VAT)

Sri K. Raghavaiah, Jt. Commissioner(Audit)

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CCT's Ref.No: PMT/P&L/A.R.Com/38/2005.,Dated 11-08-2005.

Ref:- CCT's.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:

I. M/s. Ashwini Homeo Pharmacy,(TIN No. 28560176069) Hyderabad have filed an application and sought clarification and advance ruling on the following items under Section 67 of APVAT Act, 2005 read with Rule 66(2)(i) of APVAT Rules, 2005 along with the application fee of Rs.1,000/-

II. They sought clarification on the following:

Whether the commodity Ashwini Homeo Arnica Hair Oil is a drug/medicine ?

III. The applicant submitted the following documents:

a) Copy of Chapter 30 - Pharmaceutical products.

b) Copies of invoices issued by the firm

c) Copies of Form ER-3 U/Central Excise Rules

d) Copy of Form 25-C issued by Director, Indian Medicine.

e) Copy of the proceedings issued by Jt.Commissioner, Customs & Central Excise, dt.2.11.2004.

IV. Sri B.Ch.V.Subba Rao, Proprietor has, appeared for hearing and explained the case.

V. The issue has been examined with reference to the provisions of the APVAT Act and Rules and HSN Codes notified by Government vide G.O.Ms.No:398, Revenue (CT.II) Department Dated 31-03-2005 and G.O.Ms.No:490, Revenue (CT.II) Department Dated 15-04-2005 and the ruling is given as under:

VI. For a commodity to fall under "Drugs & Medicines", it must satisfy the definition laid down in Section 3 of the Drugs & Cosmetics Act, 1940.

Mere registration under Section 3(b) of the Drugs & Cosmetics Act,1940 does not make a product eligible for classification as drugs and medicines.

Entry 88 of the IVth Schedule of A.P.VAT Act, 2005 reads as follows :

" Drugs & Medicines, whether patent or proprietory, as defined in Section 3 of the Drugs & Cosmetics Act,1940, but not including --- (a) Medicated goods (b) products capable of being used as cosmetics and toilet preparations including toothpaste, tooth powders, cosmetics, toilet articles and soaps (c) mosquito repellants in any form."

By applying the test of common parlance, it is not a drug or medicine, as it is identified in the market as a specialized and branded hair oil. Secondly, as to the curative function of the product, there is no authoritative proof available. Thirdly, the commodity is sold /available across the counters of general stores without any prescription from medical practioners.

Even assuming that the commodity is a "medicated goods", it is excluded from the Entry 88 of the IVth Schedule of the A.P.VAT Act under clause (a).

A similar issue was decided by the STAT in the case of Arnica Hair Oil (T.A.No.451/91,dt.24-5-98) which was held as falling either under "cosmetics" or "toilet preparation" but not under "drugs and medicine."

Following the enunciation of entry 88 read with clauses and the test of common parlance, hair oil, traded as "Ashwini homeo hair oil" can not be considered as a drug and medicine, and therefore, automatically, fits into the residual entries of Vth schedule liable to tax @ 12.5%.

NOTE:- An appeal against this proceedings can be filed before the Sales Tax Appellate Tribunal, A.P. Hyderabad within 30 days of this ruling.