The Allahabad High court has dismissed the revision petition filed by Commissioner, Commercial Tax and held that the product Boro Plus Ayurvedic Cream is Not An ‘antiseptic Cream’, 5% Tax Payable Under UPVAT.
The court held that revisional jurisdiction is not intended to be a mechanism for relitigating cases or reopening settled matters. High Courts cannot ordinarily interfere with factual findings arrived at by lower courts or tribunals unless such findings are perverse, based on no evidence, or suffer from a manifest error of law. Revisional jurisdiction does not empower High Courts to reevaluate factual evidence or substitute their own findings for those of the lower courts or tribunals. Revisional jurisdiction is aimed at correcting jurisdictional errors and excesses of law.
The concept of perversity in legal contexts refers to a situation where a decision or finding is so unreasonable or contrary to the evidence that no reasonable person could have arrived at it. When dealing with administrative and judicial reviews, including tax and regulatory matters, perversity is a crucial ground upon which decisions can be challenged or revised. However, for perversity to be successfully invoked, certain legal thresholds and evidentiary standards must be met. The departmnet has not articulated any specific grounds of perversity in its pleadings or submissions. Perversity would require demonstrating that the Tribunal’s findings were not based on a rational assessment of the evidence or that they ignored relevant legal principles or material facts. Neither was any evidence produced by the Department before the assessing officer, Commissioner, Commercial Tax and the Tribunal nor was any evidence produced before this Court to controvert the evidence produced by the respondents. Simply disagreeing with the Tribunal’s decision without substantiating such disagreement with concrete evidence or legal arguments does not meet the threshold for invoking perversity.
Background
The Commissioner, Commercial Tax filed the revision petitions under Section 58 of the Uttar Pradesh Value Added Tax, 2008 against the orders dated June 8, 2018, October 8, 2018, October 8, 2018, July 17, 2020, November 1, 2022, and April 28, 2023, passed by the Commercial Tax Tribunal, U.P., Lucknow. All the revision petitions involve the common question of law as to whether, under the facts and circumstances of the case, the Commercial Tax Tribunal was legally justified in holding that Boro-Plus Antiseptic Cream (hereinafter referred to as the ‘BPAC’) is a medicated ointment and covered under entry no. 41 of Schedule II Part (A).
The revision petition pertains to the rate of tax to be levied on the sale of BPAC.
The Assessing Authority had levied tax on BPAC at the rate of 14% after categorising it as an ‘unclassified item’.
Being aggrieved by the assessment order passed by the Assessing Authority, M/s Emami Ltd. preferred an appeal before the First Appellate Authority which was dismissed vide order dated July 26, 2016.
The Respondent then filed an appeal before the Tribunal which was allowed vide order dated June 8, 2018. The Tribunal held that BPAC falls within the category of ‘medicated ointment’ and hence is liable to be taxed at the rate of 5% under the heading ‘drugs and medicines’ in Entry 41 Schedule II.
Hence, the revision petition has been preferred by the Revisionist against the order dated June 8, 2018, passed by the Tribunal.
Conclusion
The court dismissed the revision petition and held that Tax authorities and judicial bodies are tasked with ensuring that classifications reflect the true nature and function of products to maintain fairness and consistency in taxation. This approach prevents companies from manipulating tax liabilities through strategic advertising and ensures that products are taxed based on their actual use and benefits. In the case of BPAC, the extensive evidence provided by the respondent, which details the product’s medicinal properties and its recognition as a therapeutic ointment in common parlance, sets its usage as a medicated ointment on stone. This is substantiated by the legal requirement that mandates products to be classified on the basis of their intrinsic characteristics and, thereby, removes any possibility of undue influence being used in marketing or advertising tactics whatsoever.
Case Details
Case Name: The Commissioner, Commercial Tax V/S M/S Emami Ltd.
Citation: Sales/Trade Tax Revision No. – 274 Of 2018
Court: Allahabad High Court
Coram: Justice Shekhar B. Saraf