COURT
IN THE SUPREME COURT OF INDIA
DATE OF ORDER
4th MAY,2023
BENCH
HON’BLE JUSTICE MR. S. RAVINDRA BHAT
PARTIES
APPELLANT- HEINZ INDIA LIMITED
RESPONDENT- THE STATE OF KERALA
SUBJECT
The court in the present appeals is examining whether medicated talcum powder is a medicine or drug or cosmetic or just medicated talcum powder.
OVERVIEW
- There are two appeals preferred before the apex court. First is by the State of Kerala and second is by State of Tamil Nadu.
- In the first set of appeals, the judgement of Kerala High Court is brought up before the court in which the HC has rejected the revision petition of the appellant who were aggrieved by the decision of Kerala Sales Tax Appellate Tribunal’s orders. The tribunal rejected to hold “Nycil Prickly Heat Powder” as medicine under Entry 79 of the first schedule to the Kerala General Sales Tax Act, 1963 but as medicated talcum powder.
- In the second set of appeals, the judgement of Madras High Court which dissatisfied M/s Glaxo Smithkline Pharmaceuticals Ltd is preferred before the apex court. The HC in its decision rejected the contention that the prickly heat powder was medical formulated instead held it as a toilet powder under Entry 1(iii) of Part-F of First Schedule of the Tamil Nadu General Sales Tax,1959.
- Kerala High Court in its judgement was of the pinion that the product was used for specific purpose for treating prickly heat and once the ailment gets treated the use of product is discontinued and hence it is not everyday used talcum powder but medicated talcum powder having curative ingredients to treat the ailment.
- The Madras High Court was of the opinion that rhe product was a toilet powder though the manufacturer has a license under Drugs Act which is a mischief under the TNGST Act. The decision relied on the decision of the Kerala High Court.
AARGUMENTS ADVANCED BY APPLLEANT
- The learned counsel submitted that the manufacturer markets the substance called ‘Chlorphenesin’ under the trade name ‘Nycil’. It contained 32% of zinc oxide and boric oxide whereas the rest constituents of the powder is talc and starch. Hence, it falls within Entry 79 of the first schedule under KGST Act.
- Counsel relied on the judgement passed in the cade of B.Shah & Company v State of Gujarat where Nycil was held as a powder or ointment which is effective in eliminating fungal or bacterial infections of low toxicity. It exercises fungicidal action as well as it is an absorbant.
- It was contended that Nycil has medical formulation and can be used internally or externally to cure disease or disorder, which is the essential requirement under the Entry 79. Thus, clearly Nycil should be brought under the category of medicine since it treats dermatological conditions, including prickly heat.
- It was submitted that the considering the formulation or preparation and the use of Nycil, it cannot be regarded as ‘cosmetic’.
- It was contended by the counsel to consider Nycil either as a ‘drug’ or ‘medicine’.
ARGUMENTS ADVANCED BY RESPONDENT
- The learned counsel appearing on behalf of the state submitted that the ‘medicated’ word has a great significance and must be used diligently. It is important to test whether the product is capable to be used as medication.
- It was submitted by the counsel that the legislature has consciously used the term ‘medicated talcum powder’ so as to classify ordinary talcum powders from the one which has ingredients of medical purpose. Nycil has been rightly categorized as ‘medicated talcum powder ‘.
- Counsel relied on the case of Union of
- India (UOI) & Ors v Leukoplast Private Limited & Ors where court held that a surgical pad after being sterilized with even small quantity of Nitrofurozone categorized it as medicine.
- The counsel contended that the legislative history is an important factor to be considered. Two important pint were emphasized- first, that entry 20, Part C of the First Schedule of the TNGST Act which deals with medicines, before the amendment excluded preparations or formulations that were capable of being used as creams, Cosmetics, shampoos etc. Second, talcum powder being placed with lipsticks, toilet powders etc clearly stars that all sort of talcum powders are put in Entry 1(iii) of TNGST Act. After amendment, medicated talcum powders were brought under the Drugs Act.
JUDGEMENT
- The apex court dismissed the appeals.
- Court observed that both the KGST Act and TNGST Act had a distinguishing feature from CETA. The feature is that both the acts do not have general or chapter notes.
- Court observed that interpretation of provisions must be done in the plain words as intended by the legislation.
- Court held that all kinds of talcum powder which contained medications will fall under the category of ‘cosmetics’. The inference is drawn from the word ‘includes’ put after ‘talcum powder’ in the Entry 127 of KGST Act.
- Court ruled out Nycil Prickly Heat Powder as Medicated Talcum Powder.
- Court gave similar interpretation to Talcum powder placed along with nail polishes, toilet powder, lipsticks etc under TNGST Act. It upheld the explanation given to the entry and ruled that even if talcum powder is medicated, it would fall within the same entry.
- Court observed that the legislative intent of putting the phrase ‘even if medicated’ in the TNGST Act should be interpreted in plain words.
- Consequently, Supreme Court upheld the findings of the High Court and observed it as justified.
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