Shaunak Choudhury | SVKM\u2019s NMIMS Kirit P. Mehta School of Law | 6th\u00a0June 2020<\/p>\n\n\n\n
State of Andhra Pradesh v. M\/s Linde India Ltd.\u00a0<\/strong><\/p>\n\n\n\n Facts<\/strong><\/p>\n\n\n\n The main issue of this case is whether \u201cMedical Oxygen IP\u201d and \u201cMedical Nitrous Oxide\u201d are taxable under Entry 88 of Schedule IV (which includes drugs) of the Andhra Pradesh Value Added Tax Act 2005 or as \u2018unclassified goods\u2019 under Schedule V of the 2005 Act. The tax liable to be paid for Entry 88 products is 4%\/5% and the tax liable to be paid for Schedule V is 12.5%\/14%. The Respondent in this case manufactured the above-mentioned gases. The Commercial Tax Officer, Gujawaka and Dwarakanagar, on 12th<\/sup>\u00a0December 2005 communicated to the Respondent that it had as outstanding tax liability of Rs. 5,11,062. The Sales Tax Appellant Tribunal, relying on an Andhra Pradesh High Court judgement of\u00a0Inox Air Products Ltd v The Assistant Commissioner (CT), Hyderabad\u00a0<\/em>(2014 VIL 339 AP) and ruled in favour of the Respondents. The same result was seen in the Andhra Pradesh and Telangana High Court. The Appellant argued that the two items cannot be put under the definition of a \u2018drug\u2019 in order for the Respondents to avail the lower tax bracket. The definition of a drug in section 3 (b) (i) of the Drugs and Cosmetics Act 1940 is given 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 beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes.<\/p>\n\n\n\n The Respondent argued that the two items are \u2018drugs\u2019 as per the 1940 Act and that is concurred by the Indian Pharmacopoeia, which recognises both the items as drugs. The Respondent added that even as per the popular meaning of \u201cMedical Oxygen IP\u201d and \u201cMedical Nitrous Oxide\u201d it can be understood that the items are used for anaesthesia and treatment of diseases, thus making them medicines and hence providing the lower tax bracket as per Schedule IV of the 2005 Act.<\/p>\n\n\n\n Issues<\/strong><\/p>\n\n\n\n Whether \u201cMedical Oxygen IP\u201d and \u201cMedical Nitrous Oxide\u201d are taxable under Entry 88 of Schedule IV of the Andhra Pradesh Value Added Tax Act 2005 or as \u2018unclassified goods\u2019 under Schedule V of the 2005 Act.<\/p>\n\n\n\n Judgement<\/strong><\/p>\n\n\n\n The Court relied on Chimanlal Jagjivandas Sheth v State of Maharashtra<\/em> (AIR 1963 SC 665) to interpret section 3 (b) of the 1940 Act. The meaning of definition given includes \u2018things\u2019 which may not be specifically be used as medicine but are used for diagnosis, treatment, mitigation, or prevention of diseases. The Court also mentioned that the term \u2018for or in\u2019 in section 3 (b) (i) means that both, medicines and substances, are used \u2018for\u2019<\/em> diagnosis, treatment, mitigation, or prevention of diseases and \u2018in\u2019<\/em> diagnosis, treatment, mitigation, or prevention of diseases. Thus, the main question of fact then came down to whether the two items in question are either used for or in any purpose specified. <\/p>\n\n\n\n The Court relied on authorities such as Principles of Statutory Interpretation <\/em>by Justice G. P. Singh, Statute Law <\/em>by Craiesand State of H.P. v. Pawan Kumar<\/em> ((2005) 4 SCC 550) to interpret the statute. The interpretation of a statute is to be done according to the plain, literal, and grammatical meaning of words unless and until there exists some kind of absurdity, repugnancy, or inconsistence. In order to correct said absurdity, the interpretation of the statute must only deviate to the extend of removing the anomaly, not more than that. So the Court relied upon Black\u2019s Law Dictionary and other such authorities to understand the meaning of the word medicine within the 1940 Act as the definition of the word was not given. A broad consensus existed on perceiving \u2018medicine\u2019 as characterised by having curative, alleviative, preventive, restorative or preservative effects on one\u2019s health. <\/p>\n\n\n\n Through the publication made by Indian Pharmacopoeia and the meaning of medicine and by extension \u2018drug\u2019 the Court ascertained Medical Oxygen IP as a product coming in the gambit of Entry 88. Looking at the Drug (Prices Control) Order 2013 which mentions Nitrous Oxide and Oxygen as essential medicines the Court also declared that Medical Nitrous Oxide be given the same status as that of Medical Oxygen IP. The Court also looked at High Court cases Inox Air <\/em>(supra), Panki Oxygen v. State of Uttar Pradesh<\/em> (2014 SCC OnLine All 2144), State of Tamil Nadu v. Ram Oxygen Pvt. Ltd.<\/em> ((2010) 35 VST 478) etc. to support the finding in law. <\/p>\n\n\n\n Thus, the two items were put under Entry 88 of Schedule IV of the Andhra Pradesh Value Added Tax Act 2005, thereby dismissing the appeals. <\/p>\n","protected":false},"excerpt":{"rendered":" Shaunak Choudhury | SVKM\u2019s NMIMS Kirit P. Mehta School of Law | 6th\u00a0June 2020 State of Andhra Pradesh v. M\/s Linde India Ltd.\u00a0 Facts The main issue of this case is whether \u201cMedical Oxygen IP\u201d and \u201cMedical Nitrous Oxide\u201d are taxable under Entry 88 of Schedule IV (which includes drugs) of the Andhra Pradesh Value […]<\/p>\n","protected":false},"author":167,"featured_media":2759,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[69,26],"tags":[],"yoast_head":"\n