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Rajasthan HC confirms 6% Tax on Ayurvedic Medicine ‘Swad Tablet’ [Read Order]

A single bench of Rajasthan High Court has confirmed six percentage Tax on Ayurvedic Medicine ‘Swad Tablet’.

The assessee M/S Khandelwal Drug Agencies is a dealer / distributor of drugs and in addition to other drugs it sold candy, namely “Swad”, and it being a Ayurvedic medicine, the assessee had paid tax @ 6%, however, the Assessing Officer was of the view that it is a confectionery item on which tax rate of 10% is applicable and accordingly issued show cause notice as to why the differential rate of 4% which is applicable on confectionery items, be not levied.

While dismissing the appeal filed by Assistant Commissioner of Commercial Taxes, Justice Jainendra Kumar Ranka observed that, “any drug for even prevention of disease or disorder in human beings or animals, and is manufactured exclusively in accordance with the formulae prescribed in the authoritative books, can be said to fall within the definition of a “drug” and once a common parlance test is applied, after noticing the ingredients, as noticed earlier, “Swad” cannot be said to be a toffee, and one takes the same in case of a stomach disorder or for digestion purposes”.

“It can easily be observed that majority of the ailments begin with stomach and majority of the illness emanates from stomach disorder and by & large, any human being to keep his stomach in a proper manner or condition, even for digestion purposes, takes such tablet like “Swad”, which cannot be said to be a toffee or a candy”, the Court said.

“Merely because it is available in a tea stall or a betel shop or other various places where confectionery items are sold, does not change the character of an item. There is no evidence on record or authoritative material put on record by the AO so that it can be said to be a confectionery item and not a drug”, the Court also added.

While rejecting the contentions of the appellants, the court also noted that, “the burden was on the Assessing Officer if according to the AO it was a confectionery item, and it did not lead any evidence or produced any material or evidence to discharge the onus. Even the High Court of Karnataka in the case of United Trading Agency v. Addl. Commissioner of Commercial Taxes, Bangalore has even for “Vicco products”, namely tooth-paste, tooth powder and cream, though by itself cannot be characterised as medicinal preparation but when taken into consideration the ingredients, put in the said items, held that they can be said to be having medicinal effect and even held that place of sale of such items does not make any difference even if it is available in shops of ordinary merchandise or in chemist shops”.

Read the full text of the Order below.

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