REPORTABLE  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3644        OF 2008 (Arising out of SLP (C) No. 11726 of 2006)

M/s. Ponds India Ltd. (Merged with H.L. Ltd.) … Appellant

Versus

Commissioner of Trade Tax, Lucknow … Respondent

WITH

        CIVIL APPEAL NO. 3647,3645,3646      2008   (Arising out of SLP(C) No. 13202, 13204  of 2006 and 3637 of 2007)

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Whether  petroleum jelly  is  a  ‘drug’  or  a  ‘cosmetic’  within  the

meaning of the provisions of U.P. Trade Tax Act, 1948 is the question

involved herein.   

The factual matrix of the matter is undisputed.  

The Legislature of the State of U.P. enacted U.P. Sales Tax Act,

1948.   Entry  26(a)  as  inserted  in  the  Schedule  appended  thereto  by

notification  No.ST-II-1233/X  –  10(1)-1974  dated  14.04.1974  includes

petroleum jelly for the purpose of  levy of sales  tax.   It  was however,

substituted by notification dated 7.9.1981.  We would deal with effect

thereof on the issue involved herein a little later.

3. We  may  at  the  outset  notice  the  provisions  of  the  Drugs  and

Cosmetics  Act,  1940  (for  short,  “the  Act”).   Section  39(aaa)  defines

“cosmetic” as:-  

“Section  3(aaa)  “cosmetic”  means  any  article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human  body  or  any  part  thereof  for  cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic.”

‘Drug’ has been defined in Section 3(b) in the following terms;

“Section 3(b)  “drug” includes –

[(i)  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;

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(ii) such substances (other than food) intended to  affect  the  structure  or  any function  of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;

(iii) all  substances  intended  for  use  as components  of  a  drug  including  empty gelatin capsules; and

(iv) such  devices  intended  for  internal  or external  use  in  the  diagnosis,  treatment, mitigation  or  prevention  of  disease  or disorder  in  human  beings  or  animals,  as may be specified from time to time by the Central Government by notification in the Official  Gazette,  after  consultation  with the Board;”  

4. Chapter  4  of  the  Act  provides  for  manufacture,  sale  and

distribution  of  drugs  and  cosmetics.    Section  16  provides  for  the

standards of quality in the following terms:

“16. Standards of quality – (1) For the purpose of this  Chapter,  the  expression  “standard  quality” means -

(a)    in relation to a drug, that the drug complies with  the  standard  set  out  in  the  Second Schedule, and  

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(b) in  relation  to  a  cosmetic,  that  the  cosmetic complies  with  such  standard  as  may  be prescribed.

(2) The  Central  Government,  after  consultation with the Board and after giving by notification in the Official Gazette not less than three months’ notice of its intention so to do, may by a like notification add to or otherwise amend the Second Schedule for the  purposes  of  this  Chapter,  and  thereupon  the Second  Schedule  shall  be  deemed  to  be  amended accordingly.   

5. Entry 5 of  the second schedule  appended thereto lays down the

standard in respect of other drugs in the following terms;

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“5.

(a)

Other drugs : -

Drugs  included  in  the Indian Pharmacopoeia

Standards of identity, purity and  strength  specified  in the  edition  of  the  Indian Pharmacopoeia for the time being  in  force  and  such other  standards  as  may be prescribed. In  case  the  standards  of identity, purity and strength for drugs are not  specified in the edition of the Indian Pharmacopoeia for the time being  in  force  but  are specified  in  the  edition  of the  Indian  Pharmacopoeia immediately  preceding  the standards of identity, purity and strength shall be those occurring  in  such immediately  preceding edition  of  the  Indian Pharmacopoeia  and  such other  standards  as  may be prescribed.   

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  (b

) Drugs not included in the Indian Pharmacopoeia but which are included in the official  Pharmacopoeia of any other country.

Standards of identity, purity and  strength  specified  for drugs in the edition of such official  Pharmacopoeia  of any  other  country  for  the time  being  in  force  and such other standards as may be prescribed.

In  case  the  standards  of identity, purity and strength for drugs are not  specified in  the  edition  of  such official  Pharmacopoeia  for the time being in force, but are specified in the edition immediately  preceding  the standards of identity, purity and strength shall be those occurring  in  such immediately  preceding edition  of  such  official Pharmacopoeia  and  such other  standards  as  may be prescribed.”

6. The Central Government, in exercise of the power conferred upon

it under Sections 6(2), 12, 33 and 33(N) of the Act, made Rules, known

as the Drugs and Cosmetics Rules, 1945 (for short, “the Rules”).    

Rule 123 of the Rules provides for exemption from Chapter IV of

the Act stating;

“123.   The drugs specified in Schedule K shall be exempted from the provisions of Chapter IV of the Act  and the  rules  made thereunder  to  the  extent and  subject  to  the  conditions  specified  in  that Schedule.

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7. Schedule “K” as specified in Rule 123 specifies the drugs and lays

down the  conditions  under  which  such  exemptions  are  to  be granted.

White or Yellow Petroleum Jelly I.P. (Non-perfumed) has been specified

in item No. 28 in the following terms:

“28.    White  or  Yellow Petroleum  Jelly  I.P. (Non-perfumed)

 The Provisions  of Chapter IV of the Act  and  the  rules  made  thereunder which require them to be covered by a sale  licence  subject  to  the  conditions that  such  a  product  has  been manufactured  under  a  valid  drug manufacturing licence.”

8. The  exemption  granted  is  subject  to  the  condition  that  such  a

product has been manufactured under a valid drug manufacturing license.

It is not denied or disputed that the appellants herein are licensees

under the said Act.  It is  also not in dispute that cosmetics within the

meaning of the provisions thereof are not included in the Schedule.    

9. These  cases  relate  to  the  assessment  years  1981-1982  to  1988-

1989.

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Indisputably  again,  the  Sales  Tax  Tribunal  by  an  Order  dated

30.3.1990  in  respect  of  assessment  year  1981-1982  accepted  the

notification  of  the  said  product  as  falling  under  Entry  No.  5  being

pharmaceutical  preparation  and,  it  was  therefore,  not  classified  as  a

cosmetic and toilet preparation.  The said order has not been questioned.

A similar  order  was passed  by the Sales  Tax Tribunal,  Ghaziabad  on

21.3.1991 relying on its earlier judgment dated 30.3.1990.    

A  report  of  the  Government  Analyst  is  also  in  favour  of  the

appellant.

10. The said decision of the Tribunal has also not been questioned by

the  Revenue.    Similar  orders  of  assessment  had  been  passed  for  the

assessment years 1984-1985 to 1986-1987.   

The Allahabad High Court refused to interfere with the said orders

of Tribunal on a revision application filed by the respondents herein.   

11. The Revenue prayed for re-opening of the assessment for the years

1986-1987 to 1988-1989 which was denied, despite its attention having

been drawn to a decision of the learned Single Judge of the Allahabad

High Court  in  M/s.  Balaji  Agency, Gorakhpur Vs.  CST [1994 UPTC-

184], stating;

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“Therefore, in the above circumstances since against all  the  above  three  years  judgments  have  been passed in the Appeals.  Therefore, after the aforesaid judgment,  the  tax  assessing  officer  has  no jurisdiction  to  make  amendment  in  the  tax assessment  order  and  in  such  cases  only  the appellate  authority,  who  has  passed  the  last judgment has jurisdiction to make amendments.   In the  light  of  aforesaid  facts  in  all  the  above  three years the action taken by the Tax Assessing Officer under Section-22 is not just and proper in the eye of law cannot be supported.  Therefore, orders passed under Section 22 in all the above three years are set aside.”  

The  said  judgment  of  the  Tribunal  has  been  affirmed  by  the

Allahabad High Court.    

However,  relying  on  Balaji (supra),  the  authorities  changed  the

basis  of  the  assessment  from  the  assessment  year  1989-90  onwards

without producing any new material or proof to establish that the product

was not a medicinal preparation and should be classified as a cosmetic.

In respect of the assessment years 1990-91, 1991-92, 1992-93 when the

matter reached the appellate tribunal, it however opined that the product

of the petitioner being ‘Vaseline White Petroleum Jelly’ should be taxed

at the rate of 12 per  cent  as “cosmetics  and toilet  preparation”.    The

revision petition filed by the petitioner thereagainst before the Allahabad

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High  Court  has  been  dismissed  by  reason  of  the  impugned  judgment

dated 28.10.2005.

12. We may place on record that in Civil Appeals arising out of SLP

(C) No. 11726 of 2006 and SLP(C) No. 3637 of 2007, the appellant did

not move the Allahabad High Court in revision and have filed the special

leave petition directly before this Court.

13. Mr. Ashok Desai, learned senior counsel appearing on behalf of

the appellant would contend:  

(i) The  product,  having  consistently  being  held  to  be

pharmaceutical/medicine  from  1990  onwards,  and  there

having  been  no  change  in  the  subsequent  period,  the

purported order of classification of goods is illegal.

(ii) The burden as regards classification of goods being on the

Revenue and no material has been placed on record by it to

discharge the burden.

(iii) The product  is  a pharmaceutical  preparation  falling  under

Entry 29 as it is used for cure and treatment of various skin

disorders.

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(iv) Entry 5 relating to cosmetics and toilet preparations cannot

have any application in the instant case as the said goods are

not used for beautification or care of the skin in the normal

circumstances.   

(v) Furthermore, the State of U.P. having issued the notification

dated 7.9.1981 whereby vaseline was deleted from Entry 5,

hence, the same could not have been assessed as a cosmetic

and toilet preparation.   

(vi) As commercial  meaning  or  meaning  in  common parlance

must  prevail  over  the  dictionary  meaning  or  technical

meanings,  

(vii) The Appellant having filed a large number of affidavits in

support  of  its  case  and  the  deponents  thereof  having  not

been cross-examined, the averments contained therein must

have been held to have been accepted.   

(viii) In any event,  if  an entry is  capable  of  two meanings,  the

meaning which has been accepted  continuously should be

held to be valid, unless it is held to be an implausible view.   

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(ix) Balaji  Agency (supra)  being  not  ex-facie  applicable,  the

Tribunal and the High Court committed an error in relying

thereupon  despite  the  amendment  made  by reason  of  the

notification dated 7.9.1981.    

14. Mr. Dinesh Dwivedi, learned senior counsel appearing on behalf

of the respondent, on the other hand, would contend:  

(i) As Entry 5 contains an elusive definition, it cannot be said

to have a fixed meaning but an extended meaning.    

(ii) The product being applied for care of skin, it comes within

the purview of the definition of “cosmetics” and not within

the definition of “medicine”.  

(iii) Entry  5,  as  inserted  in  1981  would  clearly  show that  all

drugs and cosmetics would come within the purview thereof

except  those  which  are  specifically  excluded,  and  in  that

view of the matter, Vaseline manufactured by the appellant

in a cosmetic.   

(iv) Vaseline having no curative value and merely being used for

taking  care  of  one’s  skin,  it  cannot  be  a  drug  within  the

meaning of the provisions of the U.P. Trade Tax Act.   

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15. Indisputably, a license has been granted to the appellant under the

provisions of the Act.    

A drug as defined in Section 3(b) thereof would not only include a

medicine which is used for external use of human beings, but if used for

prevention of any disease or disorder in human being, shall also come

within the purview thereof.   The said definition is an extensive one.  It

even applies to preparations applied on human body for the purpose of

killing insects like mosquitoes, which per se does not have any medicinal

or any value for curing any disease or disorder in human beings.   

We may furthermore  notice  that  Parliament  consciously  used  a

restrictive meaning while defining the term “cosmetic” but an extensive

meaning has been given to the word “drug”.   

The  effect  of  such  inclusive  definition  vis-à-vis  restrictive

definition  is  well  known.  In  Hamdard  (Wakf)  Laboratories Vs.  Dy.

Labour Commissioner and Others [(2007) 5 SCC 281], this Court held;

“33.   When  an  interpretation  clause  uses  the word  “includes”,  it  is  prima  facie  extensive. When it uses the word “means and includes”, it will  afford  an  exhaustive  explanation  to  the meaning which for the purposes of the Act must invariably  be  attached  to  the  word  or expression.”  

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Almost to the same effect is the decision of this Court in  N.D.P.

Namboodripad (Dead) by Lrs. Vs.  Union of India and Others [(2007) 4

SCC 502], wherein the law was stated in the following terms:

“18. The word “includes” has different meanings in different contexts. Standard dictionaries assign more than one meaning to the word “include”.  Webster’s Dictionary  defines  the  word  “include”  as synonymous  with  “comprise”  or  “contain”. Illustrated  Oxford  Dictionary  defines  the  word “include” as: ( i ) comprise or reckon in as a part of a whole; ( ii ) treat or regard as so included. Collins Dictionary  of  English  Language  defines  the  word “includes” as: ( i ) to have as contents or part of the contents; be made up of or contain; (  ii  ) to add as part of something else; put in as part of a set, group or  a category;  (  iii  )  to  contain as  a  secondary or minor ingredient or element. It is no doubt true that generally  when  the  word  “include”  is  used  in  a definition  clause,  it  is  used  as  a  word  of enlargement, that is to make the definition extensive and not restrictive. But the word “includes” is also used  to  connote  a  specific  meaning,  that  is,  as “means  and  includes”  or  “comprises”  or  “consists of.”  

Yet again in  Bharat Coop. Bank (Mumbai) Ltd. Vs.  Coop. Bank

Employees Union [(2007) 4 SCC 685], it was held;

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“…..It  is  trite  to  say  that  when  in  the  definition clause  given  in  any  statute  the  word  “means”  is used,  what  follows  is  intended  to  speak exhaustively. When the word “means” is used in the definition, to borrow the words of Lord Esher, M.R. in Gough v. Gough it is a “hard-and-fast” definition and no meaning other than that which is put in the definition can be assigned to the same. (Also see P. Kasilingam  v.  P.S.G.  College  of  Technology.)  On the other hand, when the word “includes” is used in the  definition,  the  legislature  does  not  intend  to restrict  the  definition:  it  makes  the  definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which  in  its  ordinary  meaning  may  or  may  not comprise.  Therefore,  the  use  of  the  word  “means” followed by the word “includes” in Section 2(  bb  ) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover  only  those  banking  companies  which  fall within the purview of the definition and no other.”  

Yet again in Commercial Taxation Officer, Udaipur Vs. Rajasthan

Taxchem Ltd.  [(2007) 3 SCC 124], it was held;

“22.  We have already extracted the definition of  raw material  under  Section  2(34)  which  specifically includes fuel required for the purpose of manufacture as raw material. The word includes gives a wider meaning to  the  words  or  phrases  in  the  statute.  The  word includes is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute. When the word include is used in the words or phrases, it  must be construed as comprehending not only such things  as  they  signify  according  to  their  nature  and impact  but  also  those  things  which  the  interpretation clause declares they shall include. There is no dispute

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in the instant case that the diesel and lubricant is used to  generate  electricity  through  DG  sets  which  is admittedly used for the purpose of manufacturing yarn. Thus,  it  is  seen  that  as  diesel  is  specifically  and intentionally included in the definition of raw material by  the  legislature,  the  question  that  whether  it  is directly or indirectly used in the process of manufacture is irrelevant as argued by Mr Sushil Kumar Jain.”

In  Associated  Indem  Mechanical  (P)  Ltd. Vs.  W.B.  Small

Industries  Development  Corporation  Ltd.  and  Others [(2007)  3  SCC

607], this Court held;  

“13.  As  the  language  shows,  the  definition  of  the word “premises” as given in Section 2( c ) of the Act is  a very comprehensive one and it  not  only means any building or hut or part of a building or hut and a seat  in  a  room,  let  separately,  but  also  includes godowns, gardens and outhouses appurtenant thereto and  also  any  furniture  supplied  or  any  fittings  or fixtures  affixed  for  the  use  of  the  tenant  in  such building, hut or seat in a room, as the case may be.”  

16. In M/s. Mahalakshmi Oil Mills Vs. State of Andhra Pradesh [AIR

1989 SC 335],  under the provisions  of  Section 8 of  the A.P.  General

Sales Tax Act, the “tobacco” is defined in the following term:

“Tobacco means any form of tobacco, whether cured or  uncured  and  whether  manufactured  or  not,  and includes  the  leaf,  stalks  and  stems  of  the  tobacco plant, but does not include any part of a tobacco plant while still attached to the earth.”  

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It  was  held  that  the  same consists  of  two  separate  parts  which

specify what the expression means and also what it includes is obviously

meant to be exhaustive.

17. Mr. Dwivedi placed strong reliance on the following observations

occurring  in  the  well  known  treatise  of  Justice  G.P.Singh  titled

“Principles of Statutory Interpretation”:

“…But  the  word  ‘include’  is  susceptible  of another  construction,  which  may  become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the  words  or  expressions  used.   It  may  be equivalent  to  ‘mean  and  include’  and  in  that case it may afford an exhaustive explanation of the meaning which for the purposes of the Act must invariably be attached to those words or expressions”.   Thus,  the  word include may in certain contexts be a word of limitation.”

There cannot be any dispute with regard to the bare principles of

law  stated  therein.   Each  question  posed  in  each  case  has  to  be

determined having regard to the purport and object for which the same

had been enacted.    

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18. Reference to  Carter v.  Bradbeer [(1975) 3 All ER 158], has been

made in the aforementioned treatise.   The House of Lords was dealing

therein with a case where one word “bar” had more than one meaning

and in that context, it was opined:

“It may well be that the contention advanced on behalf of the  appellant  sought  to  derive  from  the  interpretation section a measure of support which that section does not yield.   By s. 201(1) of the 1964 Act it is provided that in the  Act,  unless  the  context  otherwise  requires,  ‘“bar” includes any place exclusively or mainly used for the sale and consumption of intoxicating liquor’.   It is important to note the word ‘includes’.   As used in s. 201, I regard the word ‘includes’ as denoting that the word ‘bar’ may refer  to  and  may  comprehend  not  only  what  would ordinarily and in common parlance be spoken of as a bar but  also  some  place  (such  as  a  bar-room)  which  is exclusively or mainly used for the sale and consumption of intoxicating liquor.”

It was noticed;

“I feel not the slightest doubt that anyone asked if the sales took place at a bar would unhesitatingly answer Yes.   Parliament must be assumed to use the English language in its ordinary natural sense unless the context shows a contrary intention.   If no contrary intention is shown,  then  one  is  driven  to  the  conclusion  that Parliament intended in s 76(5) the word ‘bar’ to include counters  such  as  were  present  in  this  case,  and  to prohibit the use of such counters during the substituted permitted hours.

Sometimes a room is called a bar, for instance, a saloon bar or a lounge bar.   Such a room, it is not disputed, is

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a bar within s. 76(5).   Ordinarily a saloon bar will have a counter in it over which drinks are supplied, but the definition  in  s  201  extends  the  meaning  of  ‘bar’  to include  any place  exclusively or  mainly used  for  the sale and consumption of intoxicating liquor.   So, for the purpose of s 76(5), a place can be a bar even though it has not within it any bar counter.

It is to be noted that the definition in s 201 does not say that  ‘bar’  means  something  but  that  ‘bar’  included something.   That is appropriate where it  is sought to apply  a  word  in  a  sense  which  it  does  not  normally bear, or to make it clear that the word has a meaning about which otherwise some doubt might be felt.”

Such a question does not arise herein for our consideration.

19. Indisputably,  having  regard  to  the  provisions  contained  in  Rule

123 of the Rules, white Jelly IP (non-perfumed) is a drug.   The Act and

the  Rules  framed thereunder  do  not  provide  that  non-perfumed  white

jelly IP would also be a cosmetic.      

20. This Court is called upon to interpret Entry 5 of the notification

dated 7.9.1981. While doing so, it is necessary to consider that with a

view to attract  the applicability thereof, it  must  not only be a kind of

cosmetic but also be the one which is used for the care of the face, skin,

nails, eyes or brows.    

What  would  be  the  effect  of  such  a  provision  came  up  for

consideration  before  this  Court  in  Ramavatar  Budhaiprasad  Etc. Vs.

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Assistant  Sales Tax Officer,  Akola [1962 1 SCR 279], wherein it  was

held;

“Thus under the Act all articles mentioned in the Schedule were exempt from Sales Tax and articles not  so specified  were  taxable.    In  the  Schedule applicable  there were originally two items which are relevant  for the purposes of the case.   They were items Nos. 6 and 36.

Item 6 Vegetables – Except  when sold in  sealed containers.

Item 36 Betel leaves.

The Schedule was amended by the C.P. & Berar Sales Tax Amendment Act (Act XVI of 1948) by which item No. 36 was omitted.   It is contended that  in  spite  of  this  omission  they  were  exempt from  Sales  Tax  as  they  are  vegetables.   The intention  of  the  legislature  in  regard  to  what  is “vegetables” is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from Sales Tax.   Subsequently betel  leaves  were  removed  from  the  Schedule which is indicative of the legislature’s intention of not exempting betel leaves from the imposition of the tax.   But it was submitted that betel leaves are vegetables  and  therefore  they  would  be  exempt from Sales Tax under item 6.”

21. It is therefore, difficult to agree with Mr. Dwivedi that a medicinal

preparation must be one which has the effect of curing a disease.  While

interpreting  an  entry in  a taxing  statute,  the Court’s  role  would  be to

consider  the  effect  thereof,  upon  considering  the  same from different

20

angles.    Different tests are laid down for interpretation of an entry in a

taxing statute namely dictionary meaning, technical meaning, users point

of view, popular meaning etc.   

It is true that the Court must bear in mind the precise purpose for

which the statute  has been enacted,  namely, herein for  the  purpose of

collection of tax, but the same by itself would not mean that an assessee

would be made to pay tax although he is not liable therefor, or to pay

higher rate of tax when is liable to pay at a lower rate.   

An  exemption  notification  may  require  strict  construction,  but

where a statute merely provides for different rates of tax, application of

the principles of strict construction may not be appropriate.   

Whether a product would be a drug or a cosmetic sometimes poses

a difficult question and, thus, answer thereto may not be easy.   For the

said purpose, the Court may not only be required to consider the contents

thereof,  but  also  the  history  of  the  entry,  the  purpose  for  which  the

product  is used, the manner in which it has been dealt  with under the

relevant  statute  as  also  the  interpretation  thereof  by the implementing

authorities.

21

22. Pharmacopeia of India, Third Edition, Volume -1, page 362  deals

with Yellow Soft Paraffin and White Soft  Paraffin.   White petroleum

jelly is included in the term white soft paraffin.    Standards therefor had

been laid  down.    We have  noticed  hereinbefore  that  the product  has

specifically  been  mentioned  in  Schedule  “K” of  the  Rules.   It  comes

within the purview of the exemption envisaged under Rule 123 of the

Rules.    

23. Mr. Dwivedi referred to Wikipedia in respect of white petroleum

which describes the product in the following terms :

“Petroleum jelly, vaseline, petrolatum or soft paraffin is  a  semi-solid mixture  of hydrocarbons (with  carbon numbers  mainly higher  than  25),  originally  promoted  as  a topical  ointment for  its  healing  properties.  Its folkloric  medicinal  value  as  a  "cure-all"  has since  been  limited  by  better  scientific understanding of appropriate and inappropriate uses  (see  Uses below).  However,  it  is recognized  by  the  U.S.  Food  and  Drug Administration (FDA) as an approved over-the- counter (OTC)  skin protectant  and  remains widely  used  in  cosmetic skin  care.   It  is commonly  referred  to  as  Vaseline  as  a genericized trademark.”

22

24. Contention of Mr. Dwivedi is that it is merely a skin protectant and

remains widely used in cosmetic skin care and thus it does not have any

curative value.

Wikipedia,  like  all  other  external  aids  to  construction,  like

dictionaries etc,  is  not  an authentic source,  although the same may be

looked at  for the purpose of  gathering  information.  Where  an express

statutory  definition  of  a  word  exists,  a  Wiki  definition  cannot  be

preferred.  It cannot normally be used for the purpose of interpreting a

taxing statute or classification of a product vis-à-vis an entry in statute.

However, as a source of authority, Wikipedia is frequently cited by

judges around the world. This is not restricted to India alone. The New

York Times reports that beginning in 2004, more than 100 opinion in the

States have cited Wikipedia, including 13 from federal appeals courts.  

Is this a good thing? There’s a split of authority. Let us notice

some.

• Said the Seventh Circuit’s  Judge Posner, who recently cited  the

online  encyclopedia  in  this  opinion:   Wikipedia  is  a  terrific

resource  .  .  .  Partly  because  it  so  convenient,  it  often  has  been

23

updated recently and is  very accurate.  He added: It  wouldn’t  be

right to use it  in a critical issue. If the safety of a product is  at

issue, you wouldn’t look it up in Wikipedia.

• Cass Sunstein  , a visiting professor at Harvard Law who once fixed

an error on Posner’s Wikipedia entry: I love Wikipedia, but I don’t

think it is yet time to cite it in judicial decisions . . . it doesn’t have

quality control.” He told the Times that “if judges use Wikipedia

you  might  introduce  opportunistic  editing”  to  influence  the

outcome of cases.

• Kenneth  Ryesky  ,  a  New York tax attorney,  says “citation of  an

inherently unstable source such as Wikipedia can undermine the

foundation not only of the judicial opinion in which Wikipedia is

cited, but of the future briefs and judicial opinions which in turn

use that judicial opinion as authority.  

• Stephen Gillers  ,  NYU law professor  and legal  ethics  guru:  The

most critical fact is public acceptance, including the litigants, he

said.  A judge should  not  use  Wikipedia  when the public  is  not

prepared to accept it as authority. He said it’s best used for “soft

facts.”

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• Lawrence Lessig  , a Stanford law professor urges using a system

such www.webcitation.org that captures in time online sources like

Wikipedia, so that  a reader sees “a stable reference” — i.e.,  the

same material that the writer saw.  

These points must be kept in mind by us when we intend to rely on

Wikipedia as a source of authority.

The said material itself shows that it helps keep the outside world

out  and it  protects the skin from the effects of weather and exposure.

Secondly, it acts like a sealant to help keep the inside world in.    

25. It is, therefore, accepted that if used as a preventive measure, of

course, it would have a curative value.  In any event having regard to the

definition  of  drugs,  any product  which  prevents  a  disorder  of  human

function would also come within the purview of drug.   

If the submission of Mr. Dwivedi is taken to its logical conclusion,

even a Plaster of Paris or other ingredients used for setting a fractured

right bone may not be treated to be coming within the purview of the

definition of “drug”.    

26. This  Court  in  Chamanlal  Jagjivandas  Sheth Vs.  State  of

Maharashtra [(1963)  Supp.  1  SCR  344],  opined  that  even  absorbent,

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cotton  wool,  roller  bandages  and  gauze  would  be  drugs  within  the

meaning of the provisions of the Act, stating :

“…..The expression “substances”, therefore, must be something other than medicines but which are used for treatment.   The part  of the definition  which is material for the present case is “substances intended to  be  used  for  or  in  the  treatment”.      The appropriate meaning of the expression “substances” in the section is “things”.   It cannot be disputed, and indeed it is not disputed, that absorbent cotton wool, roller  bandages  and gauze are “substances” within the meaning of the said expression. If so, the next question  is  whether  they  are  used  for  or  in “treatment”.    The  said  articles  are  sterilized  or otherwise treated to make them disinfectant and then used  for  surgical  dressing;  they  are  essential materials for treatment in surgical cases.    Besides being  aseptic  these  articles  have  to  possess  those qualities  which  are  utilized  in  the  treatment  of diseases.   Thus, for instance, in the case of gauze – one of the articles concerned in this appeal – it has to conform to a standard of absorbency in order that it might serve its purpose: otherwise the fluid which oozes is left to accumulate at the site of the wound or sore.   The Legislature designedly extended the definition  of  “drug”  so  as  to  take  in  substances which  are  necessary  aids  for  treating  surgical  or other  cases.    The  main  object  of  the  Act  is  to prevent  sub-standards  in  drugs,  presumably  for maintaining  high  standards  of  medical  treatment. That  would  certainly  be  defeated  if  the  necessary concomitants of medical or surgical treatment were allowed to be diluted: the very same evil which the Act intends to eradicate would continue to subsist.”

26

27. We may, however, place on record that in State of Goa and Others

Vs.  Leukoplast (India) Ltd. [(1997) 4 SCC 82] while considering Entry

77 of the Sales Tax Act which spoke of  drugs and medicines, including

all  I.V.  Drips  to  hold  that  Zinc  Oxide  Adhesive  Plaster  BPC

(Leukoplast), Surgical Wound Dressing (Handyplast); Belladona Plaster

BPC;  Capsicum  Plaster  BPC  and  Cotton  Crape  Bandages  BPC

(Leukocrapes) were held to be not ‘medicine’ or ‘drug’.   Apart from the

fact  that  this  Court  did  not  take  into  consideration  the  decision  in

Chimanlal (supra), it was opined;

“The assessee’s contention that it has got a licence to manufacture these products under the Drugs and Cosmetics Act and its production is controlled at every stage by the Drug Control Authorities does not  conclude  the  matter.    The  question  is  how these  terms are  understood  by people  generally? For example, can a bandage be treated as a drug or a medicine?  Will  the position be different if the bandage is medicated?   These questions cannot be decided by reference to any definition of the Drugs and  Cosmetics  Act  or  product  control  licence issued  by  the  Drugs  Controller.   There  is  no definition given in the Local Sales Tax Act or in the Central Sales Tax Act of these terms.  It has to be  found out  how these products  are  understood and  treated  in  the  market.    In  the  ordinary commercial sense, are these articles considered as drugs or medicines?  These are basically questions of fact.”

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28. The said decision, therefore, in our opinion, cannot be held to be

of  any assistance  for  determining  the  issue  involved  herein.   For  the

purpose of finding out the definition of ‘drug’, within the meaning of the

Sales Tax Act, this reference to the statutory meaning contained in the

Act would be permissible.  However, if the definition contained therein

does not fit in with the object and purport for which an entry had been

introduced under the local Sales Tax Act, the matter would be different.

It has not been suggested nor could it be that even the ordinary meaning

of ‘medicine’ cannot be read into the taxing statute while interpreting an

Entry made therein.   

It is interesting to note that in Leukoplast (supra), this Court itself

observed;

“12.  Lord Reid pointed out that in the Purchase Tax Act, “medicine” had not been defined. So it had  to  be  understood  as  an  ordinary  word  of English language. Lord Reid observed:  

“As with so many English nouns there is no  clear  limit  to  the  denotation  of  the word  medicine.  All  the  circumstances must  be  considered  and  there  may  be cases  where  it  is  extremely  difficult  to decide whether or not the term medicine is  properly  applicable.  But  here  I  think that  however one approaches the matter it would be a misuse of language to call

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Ribena a medicine and I would therefore allow the appeal.”  

13.  Lord  Morris  who  delivered  a  dissenting judgment tried to define the term “medicine” in the following manner:  

“What then is a medicine? The learned Judge  (1969)  1  WLR  at  p.    1527 pointed  to  a  dictionary  definition  of medicine  (when  used  in  a sense  other than a substance) as ‘the science and art concerned  with  the  cure,  alleviation, and prevention of disease, and with the restoration and preservation of health’. In line  with  the  learned Judge I  think that  a  fair  approach  is  to  regard  a medicine  as  a  medicament  which  is used to cure or to alleviate or to prevent disease  or  to  restore  health  or  to preserve health.”  

14.  Lord  Wilberforce,  who  agreed  with  Lord Reid,  pointed  out  that  the  fact  that  a  drug  was present  in  something  did  not  convert  that preparation  as  a  whole  into  a  drug.  Merely because Vitamin C was present in Ribena, it did not become a drug.”

29. Mr. Dwivedi has placed strong reliance on a decision of this Court

in  Shree  Baidyanath  Ayurved  Bhavan  Ltd. Vs.  Collector  of  Central

Excise,  Nagpur  etc. [(1996)  9  SCC 402].   This  Court  therein  applied

common sense test in relation to ‘Dant Manjan’ (Tooth powder) to hold

that it is not a medicine, opining :

29

“3. We have heard the learned counsel at some length. He also invited our attention to the provisions of the Drugs  and Cosmetics  Act,  1940,  the  opinion  of  the experts, the statements of a few consumers as well as the description given in certain Ayurvedic books and contended that the preparation would fall within the relevant  entry  in  the  exemption  notification.  The Tribunal rightly points out that in interpreting statutes like the Excise Act the primary object of which is to raise revenue and for which purpose various products are differently classified, resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, that is to say the meaning attached to them by those using the product. It is for this reason that the Tribunal came to  the  conclusion  that  scientific  and  technical meanings  would  not  advance  the  case  of  the appellants if the same runs counter to how the product is understood in popular parlance.”  

30. Tooth powder is never treated to be a medicinal preparation.  It is a

toiletary  preparation.   No evidence on record therein was produced to

prove that common man who uses ‘dant manjan’ daily to clean his teeth

consider it as a medicine and not as a toilet requisite. It does not have a

limited use for a limited time.  The said decision, in our opinion having

regard to the entry contained in the Schedule “K” appended to the Drugs

and Cosmetics Rules cannot be said to have any application in the instant

case.    

The product, in question, however, is treated to be a “drug”.   For

its production, a license is required.   Further, it  finds place in Indian

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Pharmacopeia;  and  it  does  not  contain  any  perfume.    A  cosmetic

ordinarily would contain some perfume.    

31. Reliance  has  also  been  placed  by  Mr.  Dwivedi  on  Alpine

Industries Vs.  Collector  of Central  Excise,  New Delhi [(2003)  3  SCC

111],  wherein  this  Court  was  considering  a  product  known  as  “Lip

Salve”.  It was principally to be used by the soldiers stationed at a high

altitude.   It was, however, found to be used as protection from dry, cold

weather or sun rays.   It was noticed that it is neither prescribed by any

doctor  nor  obtained  from the  chemist  or  pharmaceutical  shops  in  the

market.   This Court, categorically noticed that under Chapter 30 of the

Central Excise Rules, pharmaceutical product was a “medicament” under

Heading  30.03,  what  was  covered,  having  regard  to  the  provisions

contained  in  the  Chapter  Note,  that  even if  they have “therapeutic  or

prophylactic properties”,  are excluded therefrom.   “Medicament” was

defined in Note 2 as item in “goods which are either products comprising

two  or  more  constituents  which  have  been  mixed  or  compounded

together  for  therapeutic  or  prophylactic  use”.    It  is  on  the

aforementioned premise this Court opined;

”13.  Reading  the  above  italicized  portions  of  Note  2 and  Note  5  with  Entry  33.04,  we  find  ourselves  in agreement  with  the  majority  opinion  of  the  Tribunal that the product “Lip Salve” is a kind of “barrier cream”

31

or a protective cream against skin irritants. It, therefore, clearly  falls  under  Entry  33.04  and  conforms  to  the description  “  preparations  for  the  care  of  the  skin (other than medicaments) ”. The learned counsel of the appellant  has  not  been able  to  persuade  us  to  take  a different  view  from  the  one  taken  in  the  majority opinion of the Tribunal.  We confirm that  the product “Lip Salve” is essentially a preparation for protection of lips  and  skin  and  is  not  a  “medicament”.  Such preparations  which  have  a  subsidiary  curative  or prophylactic  value  clearly  fall  under  Entries  33.03  to 33.07  as  per  Note  2  under  Chapter  33.  The  product clearly is covered by Entry 33.04 read with Note 5 of Chapter  33,  it  essentially  being  a  preparation  for protection of lips or skin. We have also gone through the minority opinion expressed by one of the members of  the  Tribunal  and  the  reasoning  therein  supported before us  on  behalf  of  the appellant.  For  the  reasons aforesaid,  we  are  unable  to  agree  with  the  minority view. In the result,  we find no merit  in these appeals and the same are hereby dismissed.”  

The said decision, therefore, is also not applicable to the facts of

the instant case.     

32. “Lip Salve” was found to have no Ayurvedic ingredient and it was

perfumed,  whereas,  the  production,  in  question  finds  place  in  Indian

Pharmacopeia, and is also not perfumed.    

33. The learned senior counsel has also placed reliance on the decision

of this Court in State of Goa & Anr. Vs. M/s. Colfax Laboratories Ltd. &

Anr. [JT 2003 8 SC 203].   This Court therein inter alia followed  BPL

Pharmaceuticals (supra).  In that case, this Court was dealing with “after

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shave  lotion”  which  has  been  considered  as  a  cosmetic  and  toilet

preparation by the Excise Commissioner who was an expert in the field.

It is in that view of the matter, the decision of the Excise Commissioner

was not interfered with.

Answer to the questions posed therein, therefore, must be found

having regard to the facts and circumstances of the cases noticed supra.

34. In  the  context  of  Ayurvedic  Products,  vis-à-vis  their  medicinal

value came up for consideration in Puma Ayurvedic Herbal (P) Ltd. Vs.

Commissioner, Central Excise, Nagpur [(2006) 3 SCC 266], wherein it

was stated:

“20.  It  will  be  seen  from  the  above  definition  of “cosmetic”  that  the  cosmetic  products  are  meant  to improve appearance of a person, that is, they enhance beauty, whereas a medicinal product or a medicament is  meant  to  treat  some  medical  condition.  It  may happen  that  while  treating  a  particular  medical problem, after the problem is cured, the appearance of the  person  concerned  may improve.  What  is  to  be seen is the primary use of the product. To illustrate, a particular Ayurvedic product may be used for treating baldness.  Baldness is  a medical  problem. By use of the product  if  a  person is  able  to  grow hair  on  his head, his ailment of baldness is cured and the person’s appearance  may improve.  The  product  used  for  the purpose  cannot  be  described  as  cosmetic  simply because it  has  ultimately led to improvement in the appearance  of  the  person.  The  primary  role  of  the

33

product  was to  grow hair  on his  head and  cure his baldness.”  

35. The  authorities  referred  to  hereinbefore  clearly  show that  there

does  not  exist  difference  of  opinion  on  legal  principles.     What  is

however required is the application thereof to the fact of each case and

the statute involved.

36. In determination  of  the  question  involved  herein,  we cannot  be

oblivious of the fact that Revenue itself thought 100 per cent pure white

petroleum  jelly  of  I.P.  grade  (non-perfumed)  to  be  a  pharmaceutical

preparation from 1981 to 1989.  No material change has occurred after

the said period.    

The  question  was  referred  to  by a  learned  Single  Judge  of  the

Allahabad  High  Court  in  M/s.  Balaji  Agency,  Gorakhpur Vs.

Commissioner of Sales Tax [1994 UPTC 184]., wherein only on the basis

that  vaseline  finds  place in  Entry 26A of the  Schedule  as inserted by

notification  dated  14.4.1974,  it  was  held  to  be  a  cosmetic  or  a  toilet

requisite.  

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37. Submission  of  Mr.  Dwivedi  that  in  Balaji (supra),  common

parlance  test  was  also  applied  to  Vaseline,  is  stated  to  be  rejected.

Vaseline is dealt with in paragraph 5 of the judgment which was on the

premise that it  was included in the entry in question.   With regard to

other products, namely Emami Naturally etc., the “user test” was applied.

Only in view of the said decision, an application was filed in terms of

Section 22 of the Act.   The Tribunal and the High Court took a different

view  only  having  regard  to  Balaji (supra),  without  noticing  the

distinctive features thereof.    

38. There cannot be any doubt whatsoever that artificial definition of a

term under a statute is permissible in law, but when goods which were

included in  one  notification  is  consciously  taken out  in  the latter,  the

same meaning cannot be attributed thereto simply on the basis of judicial

interpretation.

39.  When a case of obvious intent on the part of the Legislature is

made out, a meaning which subserves the legislative intent must be given

effect to.   It is however also well known that when a word is defined by

the legislature  itself,  the  same meaning may be attributed even in  the

changed situation.  

35

Entry  5  relates  to  “cosmetics”  and  “toilet  preparation”.  If  the

common parlance test  is  to be applied,  vaseline must come within the

purview of cosmetic  or  toilet  preparation.   With  a view to satisfy the

requirements  of  the  said  definition,  it  must  be  held  to  be  used  for

beautification  or  care  of  the  skin  in  the  normal  circumstances.  If  the

product, in question does not satisfy the aforementioned twin tests, it is

difficult  to presume any legislative intention in this  behalf  despite the

fact that Vaseline had been deleted from the entry relating to cosmetic

and toilet preparation.    

This Court in  The Commissioner of Sales Tax, Madhya Pradesh,

Indore Vs.  M/s.  Jaswant  Singh  Charan  Singh [AIR  1967  SC  1454],

clearly held;

“….There were two items in the Schedule, namely, item 6, “vegetables”, and item 36, “betel leaves”, and subsequently item No. 36 was deleted by an amendment of the Act.   This Court held that the use  of  two  distinct  and  different  items,  i.e., “vegetables’ and “betel leaves” and the subsequent removal  of  betel  leaves  from the  Schedule  were indicative  of  the  Legislature’s  intention  of  not exempting betel leaves from taxation.”

36

40. Even if the Tribunal or the High Court did not apply the common

parlance  test,  what  should  necessarily  be  applied  is  the  commercial

meaning test or the meaning in common parlance test.    

It is interesting to note that application of common parlance test

was  applied  in  M/s.  Jaswant  Singh (supra) stating  that  only  because

“charcoal” contains the word ‘coal’, the same would not mean to be a

species of coal.

41. Reliance has rightly been placed for the said proposition on  His

Majesty the  Kind  v.  Planters  Nut  and Chocolate  Co.  Ltd.  [1951 CLR

(Ex) 122] wherein it is stated:

“It  will  be  noted  that  none  of  these  definitions  of ‘fruit’ and ‘vegetable’ (except in the strictly botanical sense) include ‘nuts’ of any sort.   

It is of considerable interest, also, to note that in the tariff rates under The Customs  Act  (which, as a revenue Act,  I consider  to be in pari  material), separate items are set up for fruits, for vegetables, and also  for  ‘nuts  of  all  kinds,  not  otherwise  provided, including  shelled  peanuts.’   This  would  seem  to indicate that in the minds of the legislators, nuts were not included in the categories of fruits or vegetables, and also that peanuts fell within the category of nuts. I do not think that their view of the matter differs at all from the common understanding of the words.  

37

My findings  must  be  that  as  products  and  as general  commodities  in  the  market,  neither  salted peanuts nor cashews, or nuts of any sort, are generally denominated or known in Canada as either fruits or vegetables.  I think it may be assumed, therefore, that if  Parliament  had  intended  to  include  ‘nuts’  among the exempted foodstuffs, the word ‘nuts’ would have appeared  in  the  schedule.   That  being  so,  it  must follow that salted peanuts and cashew nuts, which as I have said above are considered generally in Canada to be within the category of ‘nuts,’ do not fall within the exemptions  provided  for  fruit  and  vegetables  in Schedule III.”

In  M/s.  Asian Paints  India  Ltd. Vs.  Collector  of  Central  Excise

(1988) 2 SCC 470], this Court opined;

“8. It is well-settled that the commercial meaning has to be given to the expressions in tariff items. Where definition  of a word has not  been given,  it  must be construed in its  popular sense.  Popular sense means that sense which people conversant with the subject- matter  with  which  the  statute  is  dealing,  would attribute to it. See CIT v. Taj Mahal Hotel. This Court observed in Indo International Industries v. CST that in interpreting items in statutes like the Excise Act or Sales  Tax  Acts,  whose  primary object  was  to  raise revenue  and  for  which  purpose  to  classify  diverse products, articles and substances, resort should be had not  to  the  scientific  and  technical  meaning  of  the terms  or  expressions  used  but  to  their  popular meaning, that is to say, the meaning attached to them by those dealing in them.  

9. Justice Cameron of the Canadian Exchequer Court in  King  v.  Planter’s  Co.  and  the  decision  of  the United  States  Supreme  Court  in  “  Two  Hundred

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Chests  of  Tea  ”  emphasised  that  commercial understanding in respect of the tariff items should be preferred. It was observed that the legislature does not suppose our merchants to be naturalists or geologists, or botanists.”  

{See  also  Shri  Bharuch  Coconut  Trading  Co.  and  Others Vs. Municipal  Corporation  of  the  City  of  Ahmedabad  and  Others [1992 Supp. (1) SCC 298]. }

42. The assessee had filed a large number of affidavits.  The deponents

of the said affidavits have not been cross-examined.  It is even from that

point of view the application of common parlance test stood satisfied in

the instant case.  

43. Furthermore, an expert in the field has also given his opinion in

favour  of  the  appellant.   This  Court  in  Quinn  India  Ltd. Vs.

Commissioner  of  Central  Excise,  Hyderabad [(2006)  9  SCC  559],

classified  a  product  relying,  inter  alia,  on  the  report  of  the  clerical

examiner as under :

“7...The Tribunal has completely ignored the report of the Chemical Examiner dated 6-10-1981 and the final opinion of the Chief Chemist dated 2-4-1992 coupled  with  the  classification  issued  by  the Department regarding use of wetting agents  in the textile  industries  falling  under  Sub-Heading 3402.90. Test reports of the Chemical Examiner and Chief Chemist of the Revenue unless demonstrated

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to  be  erroneous,  cannot  be  lightly  brushed  aside. The Revenue has not made any attempt to discredit or  to  rebut  the genuineness  and correctness  of the reports of the Government, Chemical Examiner and Chief Chemist. Thus, the reports are to be accepted along with other documentary evidence in the form of classification issued by the Department regarding use of wetting agents in the textile industries to hold that the product  Penetrator 4893 possessed surface active  properties  and,  therefore,  is  covered  by Exemption Notification No. 101/66 dated 17-6-1966 as amended from time to time.”  

In this case also, the report of the Chemical Examiner is in favour

of the assessee.   Furthermore, in a case of this nature, where the revenue

itself has been holding the assessee to be a producer of a pharmaceutical

product, the burden would be on the Revenue to establish that the goods

cease to fall under a given entry.   For the said purpose, no material was

placed by the Revenue which was imperative.    

In Hindustan Ferodo Ltd. Vs. Collector of Central Excise, Bombay

[(1997) 2 SCC 677], this Court held;

”4. It is not in dispute before us, as it cannot be, that the  onus  of  establishing  that  the  said  rings  fell within  Item  22-F  lay  upon  the  Revenue.  The Revenue  led  no  evidence.  The  onus  was  not discharged.  Assuming  therefore,  that  the  Tribunal was  right  in  rejecting  the  evidence  that  was produced  on  behalf  of  the  appellants,  the  appeal should, nonetheless, have been allowed.  

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5. It is not the function of the Tribunal to enter into the arena and make suppositions that are tantamount to the evidence that the party before it has failed to lead. Other than supposition, there is no material on record that  suggests  that  a small-scale or medium- scale  manufacturer  of  brake  linings  and  clutch facings  “would  be  interested  in  buying”  the  said rings  or  that  they are marketable  at  all.  As to  the brittleness of the said rings, it was for the Revenue to demonstrate that the appellants’ averment in this behalf  was  incorrect  and  not  for  the  Tribunal  to assess their brittleness for itself. Articles in question in an appeal are shown to the Tribunal to enable the Tribunal to comprehend what it is that it is dealing with. It is not an invitation to the Tribunal to give its opinion thereon, brushing aside the evidence before it.  The  technical  knowledge  of  members  of  the Tribunal makes for better appreciation of the record, but not its substitution.”  

Yet again in  Union of India and Others Vs. Garware Nylons Ltd.

and Others [(1996) 10 SCC 413], this Court opined :

“…The burden of  proof  is  on  the  taxing authorities to show that the particular case or item in question is taxable in the manner claimed  by  them.  Mere  assertion  in  that regard is of no avail...”  

44. If an entry had been interpreted consistently in a particular manner

for several assessment years, ordinarily it would not be permissible for

the Revenue to  depart  therefrom, unless  there  is  any material  change.

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{See  Bharat Sanchar Nigam Ltd. and Another Vs.  Union of India and

Others [(2006) 3 SCC 1].}

45. Applying the dominant intention test, vis-à-vis, the Aspect Theory,

this Court in M/s. United Offset Process Pvt. Ltd. Vs. Asst. Collector of

Customs, Bombay and Others [1989 Supp.(1) SCC 131], opined :

“If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the  basis  of  how these  expressions  are  used  in  the trade or industry or in the market or, in other words, how these are dealt  with by the people who deal in them, provided that there is a market for these types of  goods.  This  principle  is  well  known  as classification on the basis of trade parlance. This is an accepted  form  of  construction.  It  is  a  well  known principle  that  if  the  definition  of  a  particular expression is not given, it  must be understood in its popular or common sense viz. in the sense how that expression is used everyday by those who use or deal with those goods.  

46. In Bharat Sanchar Nigam Ltd. and Another Vs. Union of India and

Others [(2006) 3 SCC 1], with respect to the dominant intention test vis-

à-vis the aspect theory, this Court held:

“…The  Courts  will  generally  adopt  an earlier  pronouncement  of  the  law  or  a conclusion of fact unless there is a new ground urged  or  a  material  change  in  the  factual

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position.  The  reason  why  Courts  have  held parties to the opinion expressed in a decision in one assessment year to the same opinion in  a subsequent year is not because of any principle of  res  judicata  but  because  of  the  theory  of precedent  or  the  precedential  value  of  the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This  mandate  is  subject  only  to  the  usual gateways of distinguishing the earlier decision or  where the  earlier  decision  is  per  incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways, may yet differ with the  view expressed  and  refer  the  matter  to  a bench of superior strength or in some cases to a bench of superior jurisdiction.”

In Imagic Creative Pvt. Ltd. v. The Commissioner of Commercial

Taxes and Ors., [(2008) 2 SCC 614] where applicability of Article 246 of

the Constitution of India, read with Seventh Schedule was in question,

the Court took recourse to various theories including the Aspect Theory.

{See  M/s  Deepak  Agro  Solution  Ltd.  v.  Commissioner  of  Customs,

Maharashtra (Civil Appeal No. 5210 of 006) disposed of on 8.5.2008 by

this Court}

47. We have noticed hereinbefore that the meaning of “drug” is very

wide and same has been held to be so in a large number of cases.  Balaji

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(supra) was clearly not applicable whereupon reliance has been placed by

the  High  Court  and/or  the  Tribunal.    In  our  opinion,  the  impugned

judgments,  for these reasons,  cannot be sustained.   They are set aside

accordingly.    

48. The  appeals  are  allowed  with  costs.   Counsel’s  fee  assessed  at

Rs.50,000/-.

……………..…………J. [S.B. Sinha]

               .………………….……J.        [V.S. Sirpurkar]

New Delhi May 16, 2008

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