Holding

Petroleum jelly is a 'drug' within the meaning of s. 3(b) of the Drugs and Cosmetics Act, 1940 and therefore cannot be taxed as a cosmetic under Entry 5 of the U.P. Trade Tax Act, 1948.

Summary

The appellant, Mis. Ponds India Ltd., produced Vaseline white petroleum jelly under a licence granted by the Drugs and Cosmetics Act, 1940. For assessment years 1981‑1989 the Trade Tax Tribunal classified the product as a pharmaceutical preparation (a "drug") under Entry 5 of the Uttar Pradesh Trade Tax Act, 1948, and the revenue did not challenge this classification. From 1990 onward the revenue re‑classified the product as a cosmetic, imposing a 12% tax, relying on the Balaji Agency case. The appellant argued that the product had consistently been treated as a drug, that the burden of proof lay on the revenue, and that the definition of "drug" in the Drugs and Cosmetics Act is extensive, covering substances used for prevention of disease. The Supreme Court held that petroleum jelly falls within the definition of "drug" under s. 3(b) of the Act, that the revenue failed to discharge its burden of proof, and that the earlier classification could not be altered without material change. The appeals were allowed, restoring the classification as a drug and setting aside the higher tax.

Issues considered

The correct classification of petroleum jelly (Vaseline) under the U.P. Trade Tax Act, 1948 – whether it is a 'drug' or a 'cosmetic'.
Whether the revenue bears the burden of proving a change in classification after a consistent earlier treatment.
The applicability of Entry 5 of the notification dated 7 September 1981 and the effect of the earlier notification of 14 April 1974.
The relevance of the definition of 'drug' in the Drugs and Cosmetics Act, 1940 to the tax classification.
The appropriateness of relying on the Balaji Agency judgment for re‑classification.

Legislation cited

Drugs and Cosmetics Act, 1940s. 3(aaa), s. 3(b)
Drugs and Cosmetics Rules, 1945s. Rule 123
U.P. Trade Tax Act, 1948s. Entry 26(a), s. Entry 5, s. Section 22

Subjects

drugcosmeticpetroleum jellytax classificationU.P. Trade Tax ActDrugs and Cosmetics Actburden of proofcommon parlance testentry interpretation

Judgment

[2008] 9 S.C.R. 496 .......

A MIS. PONDS INDIA LTD.(MERGED WITH H.L. LTD.)
v.
..
COMMISSIONER OF TRADE TAX, LUCKNOW
(Civil Appeal No. 3644 of 2008)
MAY 16, 2008
B
[S.B. SINHA AND V.S. SIRPURKAR, JJ.]

UP Trade Tax Act, 1948 - Vaseline White Petroleum ...
;elly - Drug or cosmetic - Determination of - Held: Is a drug -
c It protects the skin from the effects of weather and exposure -
It is accepted that if used as a preventive measure, it would
have a curative value - In any event having regard to the defi-
nition of drugs, any product which prevents a disorder of hu-
man function would also come within the purview of drug - On
facts, from 1981 to 1989, taxing Authorities themselves held
D
white petroleum jelly of I. P grade (non-perfumed) to be a phar-
maceutical preparation - There was no material change after
the said period - Burden as regards classification was on the
Authorities which they failed to discharge - Revenue could
not depart therefrom, unless there was any material change -
E Drugs and Cosmetics Act, 1940 - s.3 (aaa) and (b) - Drugs
and Cosmetics Rules, 1945 - r 123.
The question which arose for consideration in these
appeals was whether petroleum jelly is a 'drug' or a 'cos-
F metic' within the meaning of the provisions of U.P. Tirade r,
Tax Act, 1948.
Appellant-assessee was a producer of Vaseline White
Petroleum Jelly. He was granted license under the Drugs
and Cosmetics Act, 1940. With regard to assessment year
G 1981-1982, the Sales Tax Tribunal accepted the notifica-
tion of the said product as falling under Entry No.5 being
pharmaceutical preparation, thus, was not classified as
cosmetic and toilet preparation. The Government analyst
also gave report in favour of the appellant. The respon-
H 496
PONDS I. LTD. (MER WITH H.L.L.) V COMM. OF 497
TRADE TAX, LUCKNOW
~ dent-revenue did not challenge the order. For the assess- A
ment year 1984-85 to 1986-87, similar assessment order
was passed; Thereafter, the respondent filed revision ap-
plication. It prayed for re-opening of the assessment for
the years 1986-1987 to 1988-1989 relying on MIS Balaji
Agency's case. The application was dismissed. However, B
relying on MIS Balaji Agency's case authorities changed
the basis of assessment from assessment year 1989 to
;)/'
1990 onwards without producing any new material or
proof to establish that the product was not medicinal
preparation and should be classified as cosmetics. With c
regard to assessment year 1990-91, 1991-92, 1992-93, the
appellate tribunal held that the product Vaseline white
petroleum jelly should be taxed @ 12% as cosmetic and
toilet preparation. Appellant filed revision petition. High
Court dismissed the same. Henc~. the present ·appeal.
D
Appellant-Assessee contended that from 1990 on-
~
wards the product was held to be pharmaceutical/medi-
cine, and there having been no change in the subsequent
period, the purported order of classification of goods is
illegal; that the burden as regards classification of goods E
was on the Revenue and the Revenue did not place any

- material on record to discharge the burden; that the prod-
uct is a pharmaceutical preparation falling under Entry
29 as it is used for cure and treatment of various skin dis-
•• orders; that Entry 5 relating to cosmetics and toilet prepa- · F
rations cannot have any application; that the State of U.P.
having issued the notification pated 7 .9.1981 whereby
Vaseline was deleted from Entry 5, hence, could not have
been assessed as a cosmetic and toilet preparation; that
commercial meaning or meaning in common parlance
G
must prevail over the dictionary meaning or technical
meanings; that the appellant having filed a large number
"I 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 ac- ·
H
'
498 SUPREME COURT REPORTS [2008] 9 S.C.R.

A cepted; that 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; and that Mis. Balaji Agency's case being not ex-facie
applicable, the tribunal and the High Court erred in rely-
B ing thereupon despite the amendment made by the noti-
fication dated 7.9.1981.
Respondent-Revenue contended that as Entry 5 con- ..,.
tains an elusive definition, it cannot be said to have a fixed
meaning but an extended meaning; that the product be-
c ing applied for care of skin, it comes within the purview of
the definition of "cosmetics" and not within the definition
of "medicine"; that Entry 5, as inserted in 1981 would
clearly show that all drugs and cosmetics would come
within the purview thereof except those which are spe-
D cifically excluded, and in that view of the matter, Vaseline
manufactured by the appellant in a cosmetic; and that
>-
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.
E Allowing the appeals, the Court
HELD: 1.1. A license has been granted to the appel-
lant under the provisions of the Drugs and Cosmetics Act,
1940. A drug as defined in s. 3(b) of the Act, thereof would
-
F not only include a medicine which is used for external "I.

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 ex-
tensive one. It even applies to preparations applied on
human body for the purpose of killing insects like mos-
G
quitoes, which per se does not have any medicinal or any
value for curing any disease or disorder in human beings. --{
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
H
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 499
TRADE TAX, LUCKNOW.
... inclusive definition vis-a-vis restrictive definition is well A
known. [Para 15] [512-8,C,D,E]
1.2. Each question posed in each case has to be de-
termined having regard to the purport and object for which
the same had been enacted. [Para 17] [515-F]
B
Hamdard (Wakf) Laboratories Vs. Dy. Labour Commis-
sioner and Others (2007) 5 SCC 281; N.D.P Namboodripad
(Dead) by Lrs. Vs. Union of India and Others (2007) 4 SCC
502; Bharat Coop. Bank (Mumbai) Ltd. Vs. Coop. Bank Em-
ployees Union (2007) 4 SCC 685; Commercial Taxation Of- c
ficer, Udaipur Vs. Rajasthan Taxchem Ltd. (2007) 3 SCC 124;
Associated lndem Mechanical (P) Ltd. Vs. WB. Small Indus-
tries Development Corporation Ltd. and Others (2007) 3 SCC
607; Mis. Mahalakshmi Oil Mills Vs. State of Andhra Pradesh
AIR 1989 SC 335 - referred to
D
Carter v. Bradbeer (1975) 3 All ER 158 - referred to.
Principles of Statutory Interpretation by Justice G.P.Singh
- referred to.
1.3. Having regard to the provisions contained in Rule E
123 of the Drugs and Cosmetics Rules, 1945 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. Entry 5 of the notification
;·i" dated 7.9.1981 is to be interpreted. While doing so, it is F
necessary to consider that with a view to attract the ap-
plicability 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.[Para 19 and 20) [517-8,C]
Ramavatar Budhaiprasad Etc. Vs. Assistant Sales Tax G
Officer, Ako/a (1962) 1 SCR 279 - referred to.
1.4. 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 angles. Different tests
H
500 SUPREME COURT REPORTS [2008] 9 S.C.R.

A are laid down for interpretation of an entry in a taxing stat-
.... --
ute namely dictionary meaning, technical meaning, users
point of view, popular meaning etc.[Para 21] [518-B,C]
1.5. It is true that the Court must bear in mind the pre-
cise purpose for which the statute has been enacted,
B namely, 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
c where a statute merely provides for different rates of tax,
application of the principles of strict construction may not
be appropriate. [Para 21] [518-C,D,E]
1.6. Whether a product would be a drug or a cosmetic
sometimes poses a difficult question and, thus, answer
D
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
E by the implementing authorities. [Para 21] [518-E,F,G]

Pharmacopeia of India, Third Edition, Volume -1, p 362;
Wikipedia - referred to.
1.7. The product itself shows that it helps keep the -t,.
F outside world out and it protects the skin from the effects
of weather and exposure. Secondly, it acts like a sealant
to keep the inside world in. It is 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,
G any product which prevents a disorder of human func-
tion would also come within the purview of drug. [Paras
24 and 25] [520-H, 521-A,B]
1.8. For the purpose of finding out the definition of
'drug', within the meaning of the Sales Tax Act, the refer-
H
PONDS I. LTD. (MER WITH H.L.L} V. COMM. OF 501
TRADE TAX, LUCKNOW
. >-
'
ence to the statutory meaning contained in the Act would A
, 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, tlle matter would be different. It has not been sug-
gested.nor could it be that even the ordinary meaning of B
'medicine' cannot be read into the taxing statute while in-
)r terpretin'g an Entry made therein. [Para 28] [523-A,B] .
State of Goa and Others Vs. Lei.Jkoplast (India) Ltd (1997)
4 SCC 82; Shree Baidyanath Ayurved Bhavan Ltd. Vs. Col-
lector of Central Excise, Nagpur etc. (1996) 9 SCC 402; Al- c
pine Industries Vs. Collector of Central Excise, New Delhi
(2003) 3 sec 111 - distinguished.
Chamanlal Jagjivandas Sheth Vs. State of Maharashtra
(1963) Supp. 1 SCR 344; State of Goa & Anr. Vs. Mis. Colfax
0
Laboratories Ltd. & Anr. JT (2003) 8 SC 203; Puma Ayurvedic
Herbal (P) Ltd. Vs. Commissioner, Central Excise, Nagpur
(2006) 3 sec 266 - referred to.
1.9. The product, is treated to be a "drug". It finds
place in Indian Pharmacopeia; and it does not contain any E
perfume. A cosmetic ordinarily would contain some per-
fume. [Para 29] [525-8]
1.10. The Revenue itself thought 100 per cent pure
... ~
' white petroleum jelly of l.P. grade (non-perfumed) to be a
pharmaceutical preparation from 1981 to 1989. No mate- F
rial change has occurred after the said period. The sub-
mission that in Balaji's case common parlance test was
also applied to Vaseline, is 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. Only G
in view of the said decision, an application was filed in
terms of s. 22 of the Act. The tribunal and the High Court
took a different view only having regard to Balaji's case,
without noticing the distinctive features thereof. [Paras
36 and 37] [527-F, 528-A,B] H
502 SUPREME COURT REPORTS [2008) 9 S.C.R.

~
A 1.11. There cannot be any doubt whatsoever that ar-

'
tificial definition of a term under a statute is permissible in
law, but when goods which were included in one notifi-
cation is consciously taken out in the latter, the same
meaning cannot be attributed thereto simply on the basis
8 of judicial interpretation. [Para 38] (528-C]
1.12. 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 legis-
c lature itself, the same meaning may be attributed even in
the changed situation. [Para 39] [528-D,E]
1.13. Entry 5 relates to "cosmetics" and "toilet prepa-
ration". If the common parlance test is to be applied,
vaseline must come within the purview of cosmetic or
D
toilet preparation. With a view to satisfy the requirements
of the said definition, it must be held to be used for beau-
tification or care of the skin in the normal circumstances.
If the product, in question does not satisfy the aforemen-
tioned twin tests, it is difficult to presume any legislative
E intention in this behalf despite the fact that Vaseline had
been deleted from the entry relating to cosmetic and toi-
let preparation. [Para 39] [528-E,F,G]
1.14. Even if the Tribunal or the High Court did not
'T
F apply the common parlance test, what should necessar- "'
ily be applied is the commercial meaning test or the mean-
ing in common parlance test. [Para 40) [529-8)
The Commissioner of Sales Tax, Madhya Pradesh,
Indore Vs. Mis. Jaswant Singh Charan Singh AIR 1967 SC
G 1454 ;Mis. Asian Paints India Ltd. Vs. Collector of Central Ex-
cise (1988) 2 SCC 470; Shri Bharuch Coconut Trading Co.
and Others Vs. Municipal Corporation of the City of
Ahmedabad and Others 1992 Supp. (1) SCC 298 - referred
to.
H
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 503
TRADE TAX, LUCKNOW
>-
His Majesty the King v. Planters Nut and Chocolate Co. A
Ltd. 1951 CLR (Ex) 122 - referred to.
1.15. The assessee had filed a large number of affi-
davits. The deponents of the said affidavits have not been
cross-examined. It is even from that point of view the ap-
plication of common parlance test stood satisfied in the B
,,,,.. instant case. Furthermore, an expert in the field has also
given his opinion in favour of the appellant. [Paras 42 and
43] [531-A,B]
Quinn India Ltd. Vs. Commissioner of Central Excise, c
Hyderabad (2006) 9 SCC 559 - referred to.

1.16. In a case of this nature, where the revenue it-
self has been holding the assessee to be a producer of a
pharmaceutical product, the burden would be on the Rev-
enue to establish that the goods cease to fall under a D
given entry. For the said purpose, no material was placed
by the Revenue which was imperative. [Para 43] [531-G]
Hindustan Ferodo Ltd. Vs. Collector of Central Excise,
Bombay (1997) 2 SCC 677; Union of India and Others Vs.
Garware Nylons Ltd. and Others (1996) 10 SCC 413-referred
E
to.
1.17. If an entry had been interpreted consistently in
..-~ a particular manner for several assessment years, ordi-
narily it would not be permissible for the Revenue to de- F
part therefrom, unless there is any material change. [Para
44] [532-G, 533-A]
Bharat Sanchar Nigam Ltd. and Another Vs. Union of
India and Others (2006) 3 SCC 1; M/s. United Offset Process
Pvt. Ltd. Vs. Asst. Collector of Customs, Bombay and Others G
1989 Supp.(1) SCC 131; /magic Creative Pvt. Ltd. v. The
Commissioner of Commercial Taxes and Ors. (2008) 2 SCC
614; Mis Deepak Agro Solution Ltd. v. Commissioner of Cus-
toms, Maharashtra Civil Appeal No. 5210 of 2006 dated
8.5.2008 - referred to. H
..
•

504 SUPREME COURT REPORTS (2008] 9 S.C.R.
_.
~

A 1.18. The meaning of "drug" is very wide. Ba/aji's case
was not applicable whereupon reliance has been placed
by the High Court and/or the Tribunal. The impugned judg-
ments cannot be sustained and are set aside. [Para 47]
[534-C,D]
B Mis. Balaji Agency, Gorakhpur Vs. Commissioner of
Sales Tax 1994 UPTC 184 - distinguished.
CIVILAPPELLATE JURISDICTION : Civil Appeal No. 3644
of 2008
c From the Judgment and Order dated 16.5.2006 of the Trade
Tax Tribunal, Ghaziabad-Bench-First, Ghaziabad, U.P. in Sec-
ond Appeal Nos. 85, 86 , of 2001, 454 of 2001 and 844 of 1999
WITH
D C.A. Nos. 3645, 3646 and 3647 of 2008
Ashok H. Desai, Pallav Sishodia, Ravinder Narain, Sonu
Bhatnagar, Ajay Aggarwal, Nupur Singh and Rajan Narain for
the AppeJlant.

E Shail Kumar Dwivedi, Dinesh Dwivedi, Abhishek
Chaudhary, G. Venkateswara Rao, Manish Shankar, Prateek
Dwivedi and Manoj Dwivedi for the Respondents. '
li
•
The Judgment of the Court was delivered by
--r..
•
~
}
F 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. "
G 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-11-1233/X - 10(1 )-1974 dated
14.04.1974 includes petroleum jelly for the purpose of levy of
H sales tax. It was however, substituted by notification dated
PONDS I. l TD. (MER WITH H.L.L.) V. COMM. OF 505
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

7.9.1981. Wewould deal with effect thereof on the issue in- A
valved 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 3(aaa)
defines "cosmetic" as:-
B
"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 c
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 -
D
[(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 E
on human body for the purpose of repelling insects
like mosquitoes;

(ii) such substances (other than food) intended to affect
th.e structure or any function of the human body or
intended to be used for the destruction of vermin or F
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;
G
(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 H
506 SUPREME COURT REPORTS [2008] 9 SCR

A 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
8 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
C standard set out in the Second Schedule, and
(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
D 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
E amended accordingly.
5. Entry 5 of the second schedule appended thereto lays
down the standard in respect of other drugs in the following
terms;

F "5. Other drugs : - Standards of identity, pu-
,,.
•
(a) Drugs included in the rity and strength specified
Indian Pharmacopoeia in the edition of the Indian
Pharmacopoeia for the
time being in force and
G such other standards as
may be prescribed.
In case the standards of
identity, purity and strength
for drugs are not specified
H in the edition of the Indian
PONDS I. LTD. (MER WITH H.L.l.) V COMM. OF 507
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

Pharmacopoeia for the A
time being in force but are
specified in the edition of
the Indian Pharmacopoeia
immediately preceding the
standards of identity, purity B
and strength shall be those
occurring in such immedi-
ately preceding edition of
the Indian Pharmacopoeia
and such other standards
as may be prescribed.
c
(b) Drugs not included in the Standards of identity, pu-
Indian Pharmacopoeia rity and strength specified
but which are included for drugs in the edition of
in the officia I such official Pharmaco- D
Pharmacopoeia of any poeia of any other country
other country. for the time being in force
and such other standards
as may be prescribed.
In case the standards of E
identity, purity and strength
for drugs are not specified
in the edition of such offi-

.,..,
cial Pharmacopoeia for
the time being in force, but F
are specified in the edition
immediately preceding
the standards of identity,
purity and strength shall be
those occurring in such im-
G
mediately preceding edi-
tion of such official Phar-
macopoeia and such other
standards as may be pre-
scribed."
H
508 SUPREME COURT REPORTS [2008] 9 S.C.R

A 6. The Central Government, in exercise of the power con-
ferred 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 Chap-
B ter 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
c specified in that Schedule.
7. Schedule "K" as specified in Rule 123 specifies the
drugs and lays down the conditions under which such exemp-
tions are to be granted. White or Yellow Petroleum Jelly 1.P. (Non-
perfumed) has been specified in item No. 28 in the following
D terms:
"28. White or Yellow The Provisions of Chapter IV of the
Petroleum Jelly I. P. Act and the rules made thereunder
(Non-perfumed) which require them to be covered by
a sale licence subject to the condi-
E tions that such a product has been
manufactured under a valid drug
manufacturing licence."

8. The exemption granted is subject to the condition that
F such a product has been manufactured under a valid drug manu-
facturing license.
It is not denied or disputed that the appellants herein are
licensees under the said Act. It is also not in dispute that cos-
metics within the meaning of the provisions thereof are not in-
G eluded in the Schedule.
9. These cases relate to the assessment years 1981-1982
to 1988-1989.
Indisputably again, the Sales Tax Tribunal by an Order
H dated 30.3.1990 in respect of assessment year 1981-1982
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 509
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

accepted the notification of the said product as falling under A
Entry No. 5 being pharmaceutical preparation and, it was there-
fore, 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. B
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 c
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 respon-
dents herein. D
11. The Revenue prayed for re-opening of the assessment
for the years 1986-1987 to 1988-1989 which was denied, de-
spite its attention having been drawn to a decision of the learned
Single Judge of the Allahabad High Court in Mis. BalajiAgency,
Gorakhpur Vs. CST [1994 UPTC-184], stating; E

"Therefore, inthe 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 F
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
G
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. H
510 SUPREME COURT REPORTS [2008] 9 S.C.R.

A However, relying on Ba!aji (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 as-
B sessment years 1990-91, 1991-92, 1992-93 when the matter
reached the appellate tribunal, it however opined that the prod-
uct 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
c thereagainst before the Allahabad High Court has been dis-
missed 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
D 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
E 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 .., ,.
F 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.
G
(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.
H
PONDS I. LTD. (MER WITH H.L.L.) V COMM. OF 511

. (v)
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

Furthermore, the State of U.P. having issued the
notification dated 7.9.1981 whereby vaseline was
A

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 B
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 c
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 D
implausible view.
(ix) Ba/aji Agency (supra) being not ex-facie applicable,
the Tribunal and the High Court committed an error
in relying thereupon despite the amendment made
E
by reason of the notification dated 7.9.1981.
14. Mr. Dinesh Dwivedi, learned senior counsel appear-
ing on behalf of the respondent, on the other hand, would con-

.,. ., tend:
(i) As Entry 5 contains an elusive definition, it cannot be F
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" G
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 H
512 SUPREME COURT REPORTS [2008] 9 S.C.R

A 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.
B
15. Indisputably, a license has been granted to the appel-
lant 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
C 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 prepara-
tions applied on human body for the purpose of killing insects
like mosquitoes, which per se does not have any medicinal or
D 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".

E The effect of such inclusive definition vis-a-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
F "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."

Almost to the same effect is the decision of this Court in
G
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
H contexts. Standard dictionaries assign more than one
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 513
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

meaning to the word "include". Webster's Dictionary A
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 Dicti6hary of
English Language defines the word "includes" as: (i) to B
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; (iit) 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 c
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 inclt,Jdes" or "comprises"
or "consists of."
D
Yet again in Bharat Coop. Bank (Mumbai) Ltd. Vs. Coop.
Bank Employees Union [(2007) 4 SCC 685], it was held;

" ..... It is trite to say that when in th~ definition clause given
in any statute the word "means" is used, what follows is
intended to speak exhaustively. When the wor.d "means" E
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.
PS.G College of Technology.) On the other hand, when F
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 G
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 H
514 SUPREME COURT REPORTS [2008] 9 S.C.R.

A 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
B 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
c 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 in the instant case that the diesel and
D
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
E indirectly used in the process of manufacture is irrelevant
as argued by Mr Sushi! Kumar Jain."
In Associated lndem Mechanical (P) Ltd. Vs. WB. Small
Industries Development Corporation Ltd. and Others [(2007)
F 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
G separately, but also includes godowns, gardens and
outhouses appurtenant thereto and also any fur~iture
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."
H
PONDS I. LTD. (MER WITH H.L.L.) V COMM. OF 515
TRADE TAX, LUCKNOW [S.B. SINHA, J]
~
16. In Mis. Mahalakshmi Oil Mills Vs. State of Andhra A
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 B

• 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."

It was held that the same consists of two separate parts c
which specify what the expression means and also what it in-
eludes 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": D
....
" ... But the word 'include' is susceptible of another
construction, which may become imperative, ifthe context
of the Act is sufficient to show that it was not merely
employed for the purpose of adding to the natural
E
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
> '1 those words or expressions". Thus, the word include may
in certain contexts be a word of limitation." F

There cannot be any dispute with regard to the bare prin-
ciples 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.
G
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:
H
516 SUPREME COURT REPORTS [2008] 9 S.C.R.

A "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
B place exclusively or mainly used for the sale and
consumption of intoxicating liquor'. It is important to note
the word 'includes'. As used ins. 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
c 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
D
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
E 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 'f ..
F bar or a lounge bar. Such a room, it is not disputed, is 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
G
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
H a word in a sense which it does not normally bear. or to
PONDS I. LTD. (MER WITH H.LL.) V COMM. OF 517
TRADE TAX, LUCKNOW [S.B. SINHA, J]

~ make it clear that the word has a meaning about which A
otherwise some doubt might be felt."
Such a question does not arise herein for our
consideration.
19. Indisputably, having regard to the provisions contained B
in Rule 123 of the Rules, while 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 lo interpret Entry 5 of the
notification dated 7 .9.1981. While doing so, ii is necessary to c
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
D
consideration before this Court in Ramavatar Budhaiprasad
'1 Etc. Vs. Assistant Sa/es Tax Officer, Ako/a [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 E
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
¥"( F
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 G
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 H
518 SUPREME COURT REPORTS [2008j 9 S.C.R

A 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."
B 21. It is therefore, difficult to agree with Mr. Dwivedi that a
rnedicina! preparation must be one which has the effect of cur-
ing a disease. While interpreting an entry in a taxing statute, the
Court's role would be to consider the effect thereof, upon con-
sidering the same from different angles. Different tests are laid
C down for interpretation of an entry in a taxing statute namely
dictionary meaning, technical meaning, users point of view, popu-
lar meaning etc.
It is true that the Court must bear in mind the precise pur-
D pose 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.
E 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 some-
F times 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
G the interpretation thereof by the implementing authorities.
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 here-
H
PONDS i LTD. (MER WITH H LL) V. COMM. O;: 519
TR/-\DE TAX, LUCKNOW [S.B. Sl~JHA, J]
~ ).
inbefore that the product has specifically been mentioned in A
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 :
B
"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. lts folkloric
medicinal value as a "cure-all" has since been limited by c
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.
D
It is commonly referred to as Vaseline as a genericized
trademark."
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. E
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 defini- ·
,'f
tion cannot be preferred. It cannot normally be used for the pur- F
pose of interpreting a taxing statute or classification of a prod-
uct vis-a-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
G
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. H
520 SUPREME COURT REPORTS [2008] 9 S.C.R.

A Said the Seventh Circuit's Judge Posner, who l. A

recently cited the online encyclopedia in this opinion:
Wikipedia is a terrific resource ... Partly because it
so convenient, it often has been updated recently
and is very accurate. He added: It wouldn't be right
B 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
c 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
D ' "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.
E
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
F
facts." " ...
Lawrence Lessig, a Stanford law professor urges
using a system such www. web citation. org that
captures in time online sources like Wikipedia, so
G 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.

H The said material itself shows that it helps keep the out-
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 521
TRADE. TAX, LUCKNOW [S.S. SINHA, J.]

side world out and it protects the skin from the effects of weather A
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 pre- 8
vents a disorder of human function would also come within the
purview of drug.

If the submission of Mr. Dwivedi is taken to its logical con-
clusion, even a Plaster of Paris or other ingredients used for c
setting a fractured right bone may not be treated to be coming
within the purview of the definition of "drug".
26. Thi$_ Court in Chamanlal Jagjivandas Sheth Vs. State
of Maharashtra [(1963) Supp. 1 SCR 344], opined that even
absorbent, cotton wool, roller bandages and gauze would be D
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 E
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 th~ said expression. If so, the next F
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 G
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 H
522 SUPREME COURT REPORTS (2008] 9 S C.R.

.... ;
A 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
B 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."
c 27. We may, however, place on record that in State of Goa
and Others Vs. Leukop/ast (India) Ltd. [( 1997) 4 SCC 82] while
considering Entry 77 of the Sales Tax Act which spoke of drugs
and medicines, including all l.V. Drips to hold that Zinc Oxide
Adhesive Plaster BPC (Leukoplast), Surgical Wound Dress-
D ing (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 Chiman/al
(supra), it was opined;
E "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 .., .
F 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
G 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
H or medicines? These are basically questions of fact."
...... PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 523
TRADE TAX, LUCKNOW [S.S. SINHA, J.]
~)
28. The said decision, therefore, in our opinion, cannot be A
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 8
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. c
It is interesting to note that in Leukop/ast (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 D
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 E
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 Ribena a medicine and I would F
therefore allow the appeal."
13. Lord Morris who delivered a dissenting judgment tried
to define the term "rr,edicine" in the following manner:
"What then is a medicine? The learned Judge (1969) G
1 WLR at p. 1527 pointed to a dictionary definition
-t 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 H
524 SUPREME COURT REPORTS [2008] 9 S.C.R.
,..,
~

A 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
B 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."

c 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 :
D "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
E 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
F had to the scientific and technical meaning of the terms y
..
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
G
counter to how the product is understood in popular
parlance."
~
30. Tooth powder is never treated to be a medicinal prepa-
. ration. It is a toiletary preparation. No evidence on record therein
H was produced to prove that common man who uses 'dant
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 525
J . ). TRADE TAX, LUCKNOW [S.B. SINHA, J.]

manjan' daily to clean his teeth consider it as a medicine and A
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. B
The product, in question, however, is treated to be a "drug".
For its production, a license is required. Further, it finds place
in Indian Pharmacopeia; and it does not contain any perfume. A
cosmetic ordinarily would contain some perfume.
c
31. Reliance has also been placed by Mr. Dwivedi on Al-
pine Industries Vs. Collector of Central Excise, New Delhi
[(2003) 3 sec 111), wherein this Court was considering a prod-
uct known as "Lip Salve". It was principally to be used by the
soldiers stationed at a high altitude. It was, however, found to
D
~ 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 Cen-
tral Excise Rules, pharmaceutical product was a "medicament"
under Heading 30.03, what was covered, having regard to the E
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 F
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
G
-t
with the majority opinion of the Tribunal that the product
"Lip Salve" is a kind of "barrier cream" 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
H
526 SUPREME COURT REPORTS [2008] 9 S.C.R. ~

.( .1 l
A 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".
B 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
c 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."
D
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
E 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. Mis.
Colfax Laboratories Ltd. & Anr. [JT 2003 8 SC 203]. This Court )' ..
F therein inter alia followed BPL Pharmaceuticals (supra). In that
case, this Court was dealing with "after 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.
G
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-a-vis their
H
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 527
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

~ ). medicinal value came up for consideration in Puma Ayurvedic A
Herbal (P) Ltd. Vs. Commissioner, Central Excise, Nagpur
[(2006) 3 sec 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, B
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 c
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 D
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 product
was to grow hair on his head and cure his baldness."
35. The authorities referred to hereinbefore clearly show E
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.

• 'f
36. In determination of the question involved herein, we F
cannot be oblivious of the fact that Revenue itself thought 100
per cent pure white petroleum jelly of 1.P. grade (non-perfumed)
to be~ 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. G
the Allahabad High Court in M/s. Balaji Agency, Gorakhpur Vs.
Commissioner of Sa/es Tax [1994 UPTC 184]., wherein only
on the basis that vaseline finds place in Entry 26A of the Sched-
ule as inserted by notification dated 14.4.1974, it was held to
be a cosmetic or a toilet requisite. H
528 SUPREME COURT REPORTS [2008] 9 S.C.R.

~ ...
A 37. Submission of Mr. Dwivedi that in Balaji (supra), com-
mon 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 Natu-
B rally 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.
c 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 con-
sciously taken out in the latter, the same meaning cannot be
attributed thereto simply on the basis of judicial interpretation.
D
39. When a case of obvious intent on the part of the Leg is-
lature 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 mean-
ing may be attributed even in the changed situation.
E
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
F 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 legisla-
tive intention in this behalf despite the fact that Vaseline had
been deleted from the entry relating to cosmetic and toilet prepa-
ration.
G
This Court in The Commissioner of Sales Tax, Madhya
Pradesh, Indore Vs. Mis. Jaswant Singh Charan Singh [AIR
1967 SC 1454], clearly held;
" .... There were two items in the Schedule, namely, item 6,
H
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 529
TRADE TAX, LUCKNOW [S.B. SINHA, J.]
-...,>
"vegetables", and item 36, "betel leaves", and subsequently A
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 B

... exempting betel leaves from taxation."
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 par-
lance test. c
It is interesting to note that application of common par-
lance 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.
D
--I 41. Reliance has rightly been placed for the said proposi-
tion on His Majesty the King 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 E
'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 F
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
G
not think that their view of the matter differs at all from the
common understanding of the words.
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 H
530 SUPREME COURT REPORTS [2008] 9 S.C.R.

A or known in Canada as either fruits or vegetables. I think "" ,A
it may be assumed, therefore, that if Parliarj;ient 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
B 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 Ill."

In Mis. Asian Paints India Ltd. Vs. Collector of Central
c 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
D
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 lndo International
Industries v. CST that in interpreting items in statutes like
the Excise Act or Sales Tax Acts, whose primary object
E 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
F T"
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 Chests of Tea "
emphasised that commercial understanding in respect of
G
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 0th-
H ers Vs. Municipal Corporation of the City of Ahmedabad and
PONDS I. LTD. (MER. WITH H.L.L.) V. COMM. OF 531
TRADE TAX, LUCKNOW [S.B. SINHA, J.]
~.,,

' Others [1992 Supp. (1) SCC 298].} A
42. The assessee had filed a large number of affidavits.
The deponents of the said affidavits have not been cross-ex-
amined. It is even from that point of view the application of com-
mon parlance test stood satisfied in the instant case.
B
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
sec 559], classified a product relying, inter alia, on the report
of the clerical examiner as under : c
"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- D
Heading 3402.90. Test reports of the Chemical Examiner
and Chief Chemist of the Revenue unless demonstrated
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 E
Government, Chemical Examiner and Chief Chemist. Thus,
the reports are to be accepted along with other
documentary evidence in the form of classification issued
,; t by the Department regarding use of wetting agents in the
textile industries to hold that the product Penetrator 4893 F
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, G
~ 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. H
532 SUPREME COURT REPORTS (2008] 9 S.C.R.

A 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.
B 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.

c 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"
D
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
E 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,
F but not its substitution."
Yet again in Union of India and Others Vs. Garware Ny-
lons Ltd. and Others [(1996) 10 SCC 413], this Court opined :
" ... The burden of proof is on the taxing authorities to show
G that the particular case or item in question is taxable in the man-
ner claimed by them. Mere assertion in that regard is of no avail. .. "
44. If an entry had been interpreted consistently in a par-
ticular manner for several assessment years. ordinarily it would
H not be permissible for the Revenue to depart therefrom. unless
PONDS I. LTD. (MER WITH H.L.L.) V COMM. OF 533
TRADE TAX, LUCKNOW [S.B. SINHA, J.]

~,,.. there is any material change. {See Bharat Sanchar Nigam Ltd. A
and Another Vs. Union of India and Others [(2006) 3 SCC 1].}

45. Applying the dominant intention test, vis-a-vis, the As-
pect Theory, this Court in Mis. United Offset Process Pvt. Ltd.
Vs. Asst. Collector of Customs, Bombay and Others [1989
Supp.(1) SCC 131], opined: B

"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 c
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 D
well known principle that if the definition of a particular
·---1 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 E
of India and Others [(2006) 3 SCC 1], with respect to the domi-
nant intention test vis-a-vis the aspect theory, this Court held:

" ... The Courts will generally adopt an earlier
pronouncement of the law or a conclusior:i of fact unless
Jo " there is a new ground urged or a material change in the F
factual 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 G
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 H
534 SUPREME COURT REPORTS [2008] 9 S. C.R.

A where the earlier decision is per incuriam. However, these .I( · ·
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
s superior jurisdiction."
In /magic Creative Pvt. Ltd. v. The Commissioner of Com-
mercial Taxes and Ors., [(2008) 2 SCC 614] where applicabil-
ity of Article 246 of the Constitution of India., read with Seventh
Schedule was in question, the Court took recourse to various
C theories including the Aspect Theory.{See Mis 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
0
number of cases. Balaji (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.
E 48. The appeals are allowed with costs. Counsel's fee
assessed at Rs.50,000/-.
N.J. Appeals allowed.

.,. ..