M/S RECKITT BENCKISER (INDIA) LTD. versus COMMISSIONER COMMERCIAL TAXES & ORS. on 10 April 2023

M/S RECKITT BENCKISER (INDIA) LTD.

v.

COMMISSIONER COMMERCIAL TAXES & ORS.

(Civil Appeal No.1335 of 2010)

APRIL 10, 2023

[M. R. SHAH AND KRISHNA MURARI, JJ.]

Kerala VAT Act, 2003 – s. 6(1)(d), Entry No.44(5)of the IIISchedule – Entry 27(4) and 66 of notification SRO 82/06 –Appellant’s case that the products (i) Mosquito Mats, Coils andVaporizers; and (ii) Mortein Insect Killers; (iii) Harpic Toilet Cleanerand Lizol Floor Cleaners were classifiable under Entry No. 44(5)of the III Schedule to the Kerala VAT Act as being ‘pesticides,insecticides’ corresponding to HSN Code 3808 and therefore subjectto VAT at the rate of 4% – With respect to the product at (iv) DettolAntiseptic Liquid, it was the case on behalf of the appellant that‘Dettol Antiseptic Liquid’ is correctly classifiable under Entry 36(8)(h) (vi) being medicaments corresponding to HSN Code 3004.90 ofthe III Schedule, and thus also subject to tax at the rate of 4% –Held: It is required to be noted that HSN Code 3808 has been deletedfrom Entry 44(5) w.e.f. 01.07.2006 and from 21.01.2006 the aforesaidproducts would fall under Sl. No.66 namely ‘Mosquito repellant’,which is the specific entry and subject to VAT at 12.5% – Therefore,Mosquito Mats, Coils and Vaporizers and Mortein Insect Killersproducts shall not be classifiable under Entry 44(5) as insecticides– Further, after introduction of SRO 82/06 w.e.f. 22.01.2006 theHarpic and Lizol would fall under Sl. No. 27(4) of SRO 82/06. Sl.No.27(4) thus is a specific entry – What is required to be consideredis the dominant use which is cleaning and removal of stains of floorand the toilet – Thereafter, the same shall not fall under Entry 44(5)– HSN Code No.3808 as insecticides or disinfectant – Entry 27(4)of SRO No. 82 of 2006 is with respect to stain busters, stain removers,abir, blue and all kinds of cleaning powder and liquids includingfloor and toilet cleaning – Therefore, Harpic and Lizol shall not beclassifiable under Entry 44(5) and shall be classifiable under Entry27(4) of SRO 82/2006 chargeable to tax at 12.5% – As far as (iv)Dettol Antiseptic Liquid is concerned, Dettol is used as an antiseptic

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Aand is used in hospitals for surgical use, medical use and midwiferydue to therapeutic & prophylactic properties the same would fallunder Entry 36(8) (h) (vi) as claimed by the appellant.

Interpretation of Statute – Principles of classification whichare fundamental to any matter relating to classification under theBtaxing statute are: (a) Plain meaning to be given to the taxingprovision; (b) burden to prove classification in a particular entry isalways on the Revenue; (c) any ambiguity has to be resolved infavour of the assessee and in case of a reasonable doubt, theconstruction most beneficial to the assessee must be adopted; (d)specific entry would override a residuary entry; and (e) resort toCresiduary entry is to be taken as a last measure, only when by liberalconstruction the specific entry cannot cover the goods in question.

Partly allowing the appeal, the Court

HELD: 1. It is required to be noted that HSN Code 3808Dhas been deleted from Entry 44(5) w.e.f. 01.07.2006 and from21.01.2006 the aforesaid products would fall under Sl. No.66namely ‘Mosquito repellant’, which is the specific entry andsubject to VAT at 12.5%. The insecticides under Entry 44(5)therefore can be said to be a general entry. Once there is a specificentry the ‘Mosquito Repellant’, thereafter one is not required toEgo to the definition under another Act namely Insecticides Act.Sl.No.66 of Notification SRO 82/06 dated 21.01.2006 issued underSection 6(1)(d) of the Kerala VAT Act which covers “MosquitoRepellants”. [Para 9][74-H; 75-A-B]

2. It is required to be noted that Entry 44(5) which includesFinsecticides relates to products operations. In the present caseunder the KVAT Act there is a specific Entry Mosquito repellantso far as the product electric or electronic mosquito repellents,gadgets and insect repellents, devices and parts and accessoriestherefore the thereof said are specific concerned entry shall andGbe applicable in any case, the same cannot be said to beinsecticides. The view taken by the High Court is right thatMosquito Mats, Coils and Vaporizers and Mortein Insect Killersproducts shall not be classifiable under Entry 44(5) as insecticides.[Para 9.1][75-B-D]

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3. It is required to be noted that after introduction of SRO82/06 w.e.f. 22.01.2006 the Harpic and Lizol would fall under Sl.No. 27(4) of SRO 82/06. Sl. No.27(4) thus is a specific entry. [Para9.3][75-G-H]

4. Considering the dominant use of Dettol and the activeingredients of Dettol referred to hereinabove and that the Dettolis used as an antiseptic and is used in hospitals for surgical use,medical use and midwifery due to therapeutic & prophylacticproperties the same would fall under Entry 36(8) (h) (vi) asclaimed by the appellant and would not fall under the residuaryentry as claimed by the Revenue. [Para 9.10][78-B]

5. As per the settled position of law while considering aparticular entry the principles of classification which arefundamental to any matter relating to classification under thetaxing statute are: (a) plain meaning to be given to the taxingprovision; (b) burden to prove classification in a particular entryis always on the Revenue; (c) any ambiguity has to be resolved infavour of the assessee and in case of a reasonable doubt, theconstruction most beneficial to the assessee must be adopted;(d) specific entry would override a residuary entry; and (e) resortto residuary entry is to be taken as a last measure, only when byliberal construction the specific entry cannot cover the goods inquestion. [Para 9.8][77-D-G]

Ponds India Ltd. vs. CTT (2008) 8 SCC 369 : [2008] 9SCR 496; Bombay Chemicals Pvt. Ltd. vs. CCE 1995Supp. (2) SCC 646 : [1995] 3 SCR 369; ICPA HealthProducts (P) Ltd. vs. CCE, Vadodara (2004) 4 SCC 481: [2004] 1 Supp. SCR 409; Sujanil Chemo Industriesvs. CCE & Customs, Pune (2005) 4 SCC 189; SonicElectrochem vs. STO (1998) 6 SCC 397 : [1998] 3 SCR1102 – referred to.

Knight Queen Industries Pvt. Ltd. vs. State of UP, 2005SCC Online All 1214; Order dated 14.07.2006 passedby Supreme Court in State of UP vs. Knight Queen A

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AIndustries Pvt. Ltd.; Ashok Agencies vs. State ofKarnataka 2008 SCC Online Kar 141; State ofKarnataka vs. Godrej Consumer Products Ltd. (2014)80 Kar LJ 328; Reckitt Benckiser India Ltd. vs. Stateof Andhra Pradesh (Tax Revision Case No.10 of 2007,Andhra Pradesh High Court); Reckitt Benckiser IndiaBLtd. vs. Assistant Commercial Taxes Officer & Ors.(STR-11/2012, Rajasthan High Court) – referred to.

Case Law Reference

From the Judgment and Order dated 17.12.2008 of the High Courtof Kerala at Ernakulam in OTA No. 6 of 2006.

Siddharth Bawa, R. Jawahar Lal, Anuj Garg, Mohit Sharma,EBrajkishore Mishra, Ms. Aparna Jha, Advs. for the Appellant.

C. K. Sasi, Abdulla Naseeh V. T., Ms. Meena K. Poulose, R.Sathish, Advs. for the Respondents.

The Judgment of the Court was delivered by F

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 17.12.2008 passed by the High Court of Kerala atErnakulam in OT Appeal No.6 of 2006 by which the High Court hasdismissed the said appeal and has upheld the order passed by theGCommissioner with respect to the classification of the goods in question,the assessee has preferred the present appeal.

2. At the outset, it is required to be noted that the issue pertains tothe classification of the appellant’s products namely (i) Mosquito Mats,Coils and Vaporizers; and (ii) Mortein Insect Killers; (iii) Harpic ToiletH

Cleaner and Lizol Floor Cleaners; and (iv) Dettol Antiseptic Liquid forthe purposes of Kerala VAT Act, 2003 (hereinafter referred to as “KVATAct”). It was the case on behalf of the appellant that the products at (i)to (iii) were classifiable under Entry No. 44(5) of the III Schedule to theKerala VAT Act as being ‘pesticides, insecticides’ corresponding to HSNCode 3808 and therefore subject to VAT at the rate of 4%. With respectto the product at (iv) hereinabove, it was the case on behalf of theappellant that ‘Dettol Antiseptic Liquid’ is correctly classifiable underEntry 36(8) (h) (vi) being medicaments corresponding to HSN Code3004.90 of the III Schedule, and thus also subject to tax at the rate of4%.

2.1 However, the Commissioner of Commercial Taxes, rejectedthe contention of the appellant holding that the products (i) MorteinMosquito Coil, Mat and Liquid Vaporizer is classifiable under Entry 66of Notification SRO 82/06 dated 21.01.2006 issued under Section6(1)(d) of the Kerala VAT Act which covers “Mosquito Repellants,electric or electronic mosquito repellants, gadgets and insect repellants,devices and parts and accessories thereof” corresponding to HSN Code8516 79 20; (ii) Mortein Insect Killer is subject to tax at the rate of12.5% under the residuary entry i.e. under SL No.103 of theNotification SRO 82/06 on the ground that they are not specificallyclassifiable under the Second and the Third Schedule; (iii) Harpic ToiletCleaner and Lizol Floor Cleaner are classifiable under SI No. 27(4) ofthe said Notification SRO 82/06; and (iv) Dettol Antiseptic Liquid isclassifiable under Entry 103 of the said Notification SRO 82/06 i.e.residual entry on the ground that the said product is not in the nature ofa medicine having therapeutic or prophylactic properties, but is usedonly for cleaning purposes.

2.2 The order passed by the Commissioner of Commercial Taxesholding the above was the subject matter of appeal before the HighCourt. The High Court by the impugned judgment and order has dismissedthe said appeal confirming the order passed by the Commissioner ofCommercial Taxes. The impugned judgment and order passed by theHigh Court is the subject matter of the present appeal.

2.3 Before we consider the submissions made on behalf of therespective parties the relevant entries relied upon by the respective partiesare required to be referred to which are as under:

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A“Entry 44 of the Third Schedule reads as follows:

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(d) Entry 36(8)(h)(vi) of the Third Schedule reads as under:

Entry 66 of Notification No. SRO No. 82/2006, G.O.(P) No. 4/2006/TD Dated 21[st] January 2006.H

M/S RECKITT BENCKISER (INDIA) LTD. v. COMMISSIONERCOMMERCIAL TAXES & ORS. [M. R. SHAH, J.]

LIST OF GOODS

3. Shri Siddharth Bawa, learned counsel has appeared on behalfof the appellant and Shri C.K. Sasi, learned counsel has appeared onbehalf of the respondents.

4. Learned counsel appearing on behalf of the appellant hasvehemently submitted that in the facts and circumstances of the casethe High Court has materially erred in not accepting the case on behalfof the appellant that the products item nos.1 to 3 hereinabove shall beclassifiable under Entry 44(5) of III Schedule of KVAT Act.

4.1 It is submitted that the High Court has materially erred inaccepting the case on behalf of the Commissioner that the aforesaidproducts nos. (i) to (iii) shall fall under Item No.66 of SRO 82/2006 andtherefore liable to be taxed at 12.5%

4.2 It is further submitted that the High Court has also erred inholding that the product Dettol will fall under the residual entry i.e.Sl.No.103 of SRO 82/2006 and not under Entry 36(8) (h) (vi) of IIISchedule of the KVAT Act.

4.3 Now so far as the product Mortein range & Mortein Spray isconcerned, it is vehemently submitted by learned counsel appearing onbehalf of the appellant that even after introduction of SRO 82/2006,Mortein range & Mortein Spray continue to be classifiable as insecticides,as they are manufactured under an insecticides license issued under theInsecticides Act. It is submitted that the Mortein Spray kills insects,hence even according to the respondents’ interpretation, Mortein Spraycannot fall under Item No.66 of SRO/2006, as Item no.66 deals onlywith Mosquito repellants.

4.4 In support of his submissions learned counsel appearing onbehalf of the appellant has heavily relied upon the decision of this Court AB

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Ain the case of Ponds India Ltd. vs. CTT (2008) 8 SCC 369 (Para35). He has also relied upon the following decisions of the AllahabadHigh Court and Karnataka High Court; Knight Queen IndustriesPvt. Ltd. vs. State of UP, 2005 SCC Online All 1214 (Para 23 to36); Sl. No. 22 @ page 282-297; Order dated 14.07.2006 passedby this Court in State of UP vs. Knight Queen Industries Pvt. Ltd.;BSl. No. 23 @ page 298-300; Ashok Agencies vs. State ofKarnataka 2008 SCC Online Kar 141 (Para 8 to 12); Sl. No. 24 @page 301-307; State of Karnataka vs. Godrej Consumer ProductsLtd. (2014) 80 Kar LJ 328 (Para 15); Sl. No. 25 @ page 308-313.

4.5 It is submitted by learned counsel appearing on behalf of theCappellant that it is a case on behalf of the respondents that from21.01.2006 Mortein range and Mortein Spray would fall under Sl. No.66(mosquito repellant), which is the specific entry and subject to VAT at12.5% and insecticide (Entry 44(5) of the III Schedule) is a generalentry.DIt is submitted that therefore the issue of classification betweentwo competing entries i.e. Entry 44(5)(insecticide) and Sl. No.66(mosquito repellant) introduced w.e.f. 21.01.2006. It is submitted thattherefore according to Revenue, the judgment of the High Court withrespect of Mortein repellant /Moretin range shall not be applicable, asEthe entries under the other VAT Acts, do not have a specific entry for“mosquito repellents”.

4.6 It is submitted that however the appellant rightly relied uponEntry 44(5) of the said Schedule claiming the tax at 4%.

4.7 So far as the product Harpic & Lizol is concerned, it is theFcase on behalf of the appellant that the State of Kerala issued a notificationdated 24.10.2006 retrospectively effective from 07.01.2006 omitting HSNCode 3808 from Entry 44(5) of III Schedule of KVAT Act. It is submittedthat Harpic & Lizol would still continue to fall in Entry 44(5) even afterdeletion of HSN Code 3808, as they are disinfectants under the DrugsG& Cosmetics Act/Rules and manufactured under the licence granted asa disinfectant, under the said act. In support of the above, he has reliedupon the decision of this Court in the case of Ponds India Ltd. (supra)and Bombay Chemicals Pvt. Ltd. vs. CCE 1995 Supp. (2) SCC646 and the decision of the Andhra Pradesh High Court in the caseofReckitt Benckiser India Ltd. vs. State of Andhra Pradesh in TaxHRevision Case No.10 of 2007.

4.8 Now so far as the product Dettol is concerned, it is the caseon behalf of the appellant that the Dettol is an antiseptic liquid,manufactured under a Drug License and it prevents infection. It issubmitted that it is considered as an essential drug and hence its pricewas controlled under DPCO and the MRP of Dettol continues to bemonitored under DPCO, 2013.

4.9 It is submitted that Dettol falls under HSN 3004 90 specificallyincorporated in Entry 36(8)(h)(vi) of Schedule III, therefore Dettol isclassifiable as a drug/medicine under Entry 36(8)(h)(vi) of ScheduleIII. It is submitted that in Note 23 of the Rules of interpretation underEntry 36 of Schedule III, the only exclusion is dietary food, diabeticfood, food supplements, medicated soaps, blood albumin etc. are notexcluded.

4.10 It is further submitted that most importantly HSN Code wasnot deleted from Entry 36(8)(h)(vi) of Schedule III, even though by virtueof notification K.G. Ext.NO.1670 dated 24.10.2006 (retrospectivelyeffective from 01.07.2006), HSN Code was deleted in Entry 44(5) ofSchedule III under which the appellant has classified Mortein range,Mortein spray, Harpic & Lizol. It is submitted that therefore the Dettolcontinue to fall under Entry 36(8)(h)(vi).

4.11 It is further submitted that the active ingredients of Dettolare Chloroxylenol IP, Terpineol BP, Alcohol Absolute IP (denatured) andit is an antiseptic having germicidal properties; it kills germs, bacteriaand it prevents infection therefore it is applied on wounds, cuts, grazes,bites and stings and is used in hospitals for surgical use, medical use andmidwifery, due to therapeutic & prophylactic properties.

4.12 It is submitted that this Court in the case of ICPA HealthProducts (P) Ltd. vs. CCE, Vadodara (2004) 4 SCC 481 has heldthat the said products are used for disinfecting the skin prior to surgery.It is submitted that as per Concise Oxford Dictionary, 9[th] Edition theterm “prophylactic” would mean, “intending to prevent diseases, apreventive medicine or course of action”. It is submitted that as theaforesaid products are used as a cleanser for cleaning of wounds andabrasions and minor cuts and to disinfect the skin prior to surgery, theyhave therapeutic and prophylactic properties. It is submitted that applyingthe legal principles enunciated by this Court qua Dettol, the Dettol is adrug/medicine.

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A4.13 It is further submitted that this Court in the case of SujanilChemo Industries vs. CCE & Customs, Pune (2005) 4 SCC 189(para 6) in the context of Licel used for killing lice in human hair hasheld that any medicine which kills disease or is a palliative or curative istherapeutic. It is submitted that Licel cures the infection of lice in humanhair and is thus therapeutic. It is submitted that applying the same theBDettol is also a medicament.

4.14 It is submitted that in the case of Ponds India Ltd. (supra)in respect of the classification under the Trade Tax/VAT Laws this Courthas taken into consideration the definition of ‘Drug’ as defined under theDrugs & Cosmetics Act, 1940 and the fact that the product is sold underCa drug licence since drug or medicine is not defined under the TradeTax/VAT Laws. It is submitted that the Dettol is manufactured under adrug licence issued under the Drugs & Cosmetics Rules and its pricehas been regulated by the National Pharmaceutical Pricing Authorityunder Drug Price Control Orders issued from time to time includingDDPCO, 2013.

4.15 It is submitted that Rule 123 of the Drugs & Cosmetics Rulesprovides for certain exceptions to the drugs falling under Schedule K tothe extent provided therein. Entry 39 deals with Liquid Antiseptics forhousehold use. The appellant submits that Dettol being an antisepticEfalls under Entry 39 of Schedule K provided under Rule 123 of the Drugs& Cosmetics Rules. It is submitted that this Court in the case of PondsIndia Ltd. (supra) has considered the aforesaid aspect and had heldthat Vaseline White Petroleum Jelly to be a drug as it falls under Entry28 of Schedule K provided under Rule 123 of the Drugs & CosmeticsAct/Rules.F

4.16 It is further submitted that the impugned judgment fails toconsider the well settled principles of classification which arefundamental to any matter relating to classification under a taxing statutenamely viz. (a) plain meaning to be given to the taxing provision; (b)burden to prove classification in a particular entry is always on theGRevenue; (c) any ambiguity has to be resolved in favour of the assesseeand in case of a reasonable doubt, the construction most beneficial tothe assessee must be adopted; (d) specific entry would override aresiduary entry; and (e) resort to residuary entry is to be taken as alast measure, only when by liberal construction the specific entry cannotHcover the goods in question.

4.17 It is further submitted that the Gawahati High Court as wellas the Rajasthan High Court in the case of Reckitt Benckiser IndiaLtd. vs. Assistant Commercial Taxes Officer & Ors., STR-11/2012 have held Dettol to be a drug under the respective entries of AssamVAT Act and Rajasthan VAT Act and have rejected the submission ofthe Revenue in those States that the Dettol falls under the residuaryentry. It is submitted that the SLPs against the decision of the RajasthanHigh Court by the Revenue have been dismissed by this Court.

5. Making above submissions and relying upon the above decisions,it is prayed to allow the present appeal.

6. While opposing the present appeal Shri Sasi, learned counselappearing on behalf of the Revenue has vehemently submitted that theproduct Mortein range and Mortein Spray would not be classifiable underEntry No. 44(5) as insecticides as contended on behalf of the appellant.It is submitted that “Mortein Mosquito coil, mat and liquid vaporizer”cannot be classifiable as an insecticide and the same is unsustainable inview of the decision of this Court in the case of Sonic Electrochemvs. STO, (1998) 6 SCC 397 wherein this Court has held that theproduct ‘Jet Mat’ which is a trade name containing ‘d-Allethrin 4%’ andis commercially known as “Mosquito Repellent Mat” is a mosquitorepellent notwithstanding the fact that it not only repels the mosquitoesbut also is capable of killing the mosquitoes and it is difficult to hold thatit is an insecticide. It is submitted that the product “Mortein MosquitoCoil, mat and liquid vaporizer” would definitely come under Entry 66“Mosquito Repellent”.

6.1 It is submitted that the appellant – assessee is relying Entry44(5) in support of their case products Mortein range and Mortein Sprayshall fall as insecticides under Entry 44(5). It is submitted that Entry 44related to products which are used in agricultural operations. It issubmitted that all the products in that Entry are used in the agriculturalfield in relation to growing of agricultural products and controlling ofpets, insecticides etc. which attacked the plants.

6.2 It is submitted that the product such as Harpic Toilet Cleanerand Lizol Floor Cleaner are not used in relation to controlling pets andinsecticides in the agricultural field. It is submitted that the name ofthese products contains the words “Toilet Cleaner and Floor Cleaner”.It is submitted that the use of “Harpic Toilet Cleaner” and “Lizol Floor A

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ACleaner” is exclusively for cleaning of toilet and floor respectively andtherefore cannot be treated as insecticide.

6.3 It is submitted that so far as the reliance placed upon thedecision of this Court in the case of Bombay Chemicals Pvt. Ltd.(supra) is absolutely misplaced and shall not be applicable in the factsBof the instant case. It is submitted that in the case of Bombay ChemicalPvt. Ltd. (supra) this Court was dealing with Entry “Insecticides,Pesticides, Weedicides and Fungicides etc.” under the Central ExerciseSalt Act, 1944. It is submitted that the said Entry is different from Entry44 of the KVAT Act which are products exclusively dealing with theproducts in agricultural operations.C

6.4 Now so far as the product Dettol antiseptic liquid is concerned,it is submitted that the same cannot be classified as an item used forMedicament for therapeutic or prophylactic uses. It is submitted that amedicament is an item used for therapeutic or prophylactic treatmentfor prevention and cure of diseases. It is submitted that the High CourtDhas specifically found that the appellant has no case that Dettol is able toprevent or cure any disease and therefore has rightly held the Dettol isnot a medicament. It is submitted that therefore the Dettol would fallunder residuary Entry.

7. Making above submissions it is prayed to dismiss the presentEappeal.8. We have heard the learned counsel appearing on behalf of therespective parties at length.

9. So far as the product Mosquito Mats, Coils and Vaporizers andMortein Insect Killers are concerned, it is the case on behalf of theFappellant that the said products would fall in Entry 44(5) of III Scheduleof KVAT Act and would fall under HSN Code 3808. Therefore, it is thecase on behalf of the appellant that the aforesaid products shall beclassifiable as insecticides under Entry 44(5) and therefore chargeableto tax at 4%. It is the case on behalf of the appellant that as the aforesaidGproducts are manufactured under the licence granted under theInsecticides Act and therefore the said products can be said to beinsecticides classifiable under Entry 44(5). The aforesaid has nosubstance. It is required to be noted that HSN Code 3808 has beendeleted from Entry 44(5) w.e.f. 01.07.2006 and from 21.01.2006 theaforesaid products would fall under Sl. No.66 namely ‘MosquitoH

repellant’, which is the specific entry and subject to VAT at 12.5%. Theinsecticides under Entry 44(5) therefore can be said to be a generalentry. Once there is a specific entry the ‘Mosquito Repellant’, thereafterone is not required to go to the definition under another Act namelyInsecticides Act. Sl.No.66 of Notification SRO 82/06 dated 21.01.2006issued under Section 6(1)(d) of the Kerala VAT Act which covers“Mosquito Repellants”.

9.1 Even otherwise it is required to be noted that Entry 44(5)which includes insecticides relates to products which are used inagricultural operations. All the products in the Entry are used in theagricultural field in relation to growing of agricultural products andcontrolling of pets, insecticides etc. which are attacking the plants.Therefore, in view of the specific Entry 66 of Notification SRO 82/06dated 21.01.2006 the aforesaid products namely Mosquito Repellants,electric or electronic mosquito repellants, gadgets and insect repellants,devices and parts and accessories thereof are rightly classified asMosquito repellants. Now so far as the reliance placed upon the decisionof this Court in the case of Bombay Chemicals Pvt. Ltd. (supra) isconcerned, the said decision shall not be applicable to the facts of thecase on hand while dealing with the specific entries under KVAT Act. Itwas a case under the Central Excise Act and the Entry corresponding tothe Excise Act. In the present case under the KVAT Act there is aspecific Entry Mosquito repellant so far as the product electric orelectronic mosquito repellents, gadgets and insect repellents, devicesand parts and accessories thereof are concerned and therefore the saidspecific entry shall be applicable in any case, the same cannot be said tobe insecticides. We are in complete agreement with the view taken bythe High Court that Mosquito Mats, Coils and Vaporizers and MorteinInsect Killers products shall not be classifiable under Entry 44(5) asinsecticides.

9.2 Now so far as the products Harpic and Lizol is concerned, itis the case on behalf of the appellant that the same is classifiable underEntry 44(5) of III Schedule of KVAT Act - HSN Code 3808 and the saidproducts are also classifiable as insecticides.

9.3 However, it is required to be noted that after introduction ofSRO 82/06 w.e.f. 22.01.2006 the Harpic and Lizol would fall under Sl.No. 27(4) of SRO 82/06. Sl. No.27(4) thus is a specific entry.

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A9.4 Even the High Court has also considered the use of theaforesaid two products. The aforesaid two products are used for cleaningthe floor and toilet. As noted by the High Court and even from the productdescription and the nature of use statedin the products, the said twoitems are essentially used as stain removers and deodorants. MerelyBbecause they kill germs as well, the same cannot be said to be insecticidesclassifiable under Entry 44(5). What is required to be considered is thedominant use which is cleaning and removal of stains of floor and thetoilet. Thereafter, the same shall not fall under Entry 44(5) – HSN CodeNo.3808 as insecticides or disinfectant. Entry 27(4) of SRO No. 82 of2006 is with respect to stain busters, stain removers, abir, blue and allCkinds of cleaning powder and liquids including floor and toilet cleaning.In that view of the matter Entry 27(4) being a specific entry the sameshall be applicable and the aforesaid two products namely Harpic andLizol shall not be classifiable under general Entry 44(5) and in any casethe same cannot be classifiable under Entry 44(5) as insecticides. WeDare in complete agreement with the view taken by the High Court thatthe product Harpic and Lizol shall not be classifiable under Entry 44(5)and shall be classifiable under Entry 27(4) of SRO 82/2006 chargeableto tax at 12.5%.

9.5 However, so far as the product Dettol is concerned, it is theEcase on behalf of the appellant that Dettol is an Antiseptic Liquid andtherefore is classifiable as a drug/medicine under Entry 36(8)(h)(vi).The active ingredients of Dettol are Chloroxylenol IP, Terpineol BP,Alcohol Absolute IP (denatured) and it is an antiseptic having germicidalproperties and it kills germs, bacteria and it prevents infection thereforeit is applied on wounds, cuts, grazes, bites and stings. It is also used inFhospitals for surgical use and medical use.

9.6 Thus the Dettol is used as an antiseptic liquid and is used inhospitals for surgical use, medical use and midwifery, due to therapeutic& prophylactic properties. Therefore, the same can be said to be anitem of medicament to be treated as a drug and medicine. Here also theGdominant use is a relevant consideration.

9.7 In the case of Ponds India Ltd. (supra) this Court has heldthat while deciding the issue whether any particular item would be coveredunder relevant entry or classification, different tests viz. the dictionarymeaning, technical meaning, user’s point of view, popular meaning etc.H

M/S RECKITT BENCKISER (INDIA) LTD. v. COMMISSIONERCOMMERCIAL TAXES & ORS. [M. R. SHAH, J.]

are to be applied. In paragraphs 35 & 38 it is observed and held asunder:

“35…..while interpreting an entry in a taxing statute, the court’srole would be to consider the effect thereof upon considering thesame from different angles. Different tests are laid down forinterpretation of an entry in a taxing statute, namely, dictionarymeaning, technical meaning, user’s point of view, popular meaning,etc.”

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“38. Whether a product would be a drug or a cosmetic sometimesposes a difficult question and, thus, answer thereto may not beeasy. For the said purpose, the court may not only be required toconsider the contents thereof, but also the history of the entry, thepurpose for which the product is used, the manner in which it hasbeen dealt with under the relevant statute as also the interpretationthereof by the implementing authorities.”

9.8 Thus, as per the settled position of law while considering aparticular entry the principles of classification which are fundamental toany matter relating to classification under the taxing statute are:

(a) plain meaning to be given to the taxing provision; (b) burden to prove classification in a particular entry is alwayson the Revenue;

(c) any ambiguity has to be resolved in favour of the assesseeand in case of a reasonable doubt, the construction most beneficialto the assessee must be adopted; (d) specific entry would override a residuary entry; and (e) resort to residuary entry is to be taken as a last measure, onlywhen by liberal construction the specific entry cannot cover thegoods in question.

9.9 At this stage it is required to be noted that the Guwahati HighCourt and the Rajasthan High Court have held the Dettol to be a drugunder the respective entries of Assam VAT Act and Rajasthan VAT Actand have rejected the submission of the Revenue that the Dettol fallsunder the residuary entry. It is to be noted against the decision of the A

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ARajasthan High Court, the Revenue had preferred the SLPs before thisCourt which are dismissed by this Court.

9.10 In view of the above and considering the dominant use ofDettol and the active ingredients of Dettol referred to hereinabove andthat the Dettol is used as an antiseptic and is used in hospitals for surgicalBuse, medical use and midwifery due to therapeutic & prophylacticproperties the same would fall under Entry 36(8) (h) (vi) as claimed bythe appellant and would not fall under the residuary entry as claimed bythe Revenue. To that extent the impugned judgment and order passedby the High Court deserves to be quashed and set aside.

C10. In view of the above and for the reason stated above, presentappeal succeeds in part. The impugned judgment and order passed bythe High Court in so far as the products Mosquito Mats, Coils andVaporizers and Mortein Insect Killers; Harpic Toilet Cleaner and LizolFloor Cleaners is hereby confirmed. So far as the impugned judgmentand order passed by the High Court with respect to Dettol AntisepticDLiquid is concerned, the impugned judgment and order passed by theHigh Court is set aside and it is held that the product Dettol would fallunder Entry 36(8) (h)(vi) of Schedule III of the KVAT Act and shall beliable to be taxed at 4%.

Present appeal is accordingly partly allowed to the aforesaidEextent. However, in the facts and circumstances of the case there shallbe no order as to costs.

F

Ankit Gyan

(Assisted by : Mahendra Yadav, LCRA)

Appeal partly allowed.

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H