Summary
Under the Kerala Value Added Tax Act, 2003 the assessee claimed that its mosquito mats, coils and vaporisers, Mortein insect killers, Harpic and Lizol were insecticides under Entry 44(5) of the Third Schedule taxable at 4 per cent, and that Dettol was a medicament under Entry 36(8)(h)(vi). The Commissioner and the Kerala High Court placed the first group under the specific entries for mosquito repellents and cleaning liquids in Notification SRO 82/2006 at 12.5 per cent and Dettol under the residuary entry. The Supreme Court upheld the classification of the mosquito products and cleaners, since specific entries prevail over the general insecticides entry which concerns agricultural use, but held that Dettol, having therapeutic and prophylactic properties and used in hospitals for surgical and medical purposes, is a medicament taxable at 4 per cent.
Issues
- Whether mosquito mats, coils, vaporisers and insect killers manufactured under an Insecticides Act licence are insecticides under Entry 44(5) of the Third Schedule to the KVAT Act or mosquito repellents under Entry 66 of SRO 82/2006.
- Whether Harpic and Lizol are insecticides or disinfectants under Entry 44(5) or cleaning liquids under Entry 27(4) of SRO 82/2006.
- Whether Dettol antiseptic liquid is a medicament under Entry 36(8)(h)(vi) of the Third Schedule or falls under the residuary entry.
Provisions considered
- Entry 44(5) of the Third Schedule (pesticides, insecticides), Kerala Value Added Tax Act, 2003A general entry relating to products used in agricultural operations, from which HSN Code 3808 was deleted with effect from 01.07.2006; it yields to the specific entries for mosquito repellents and cleaning liquids. (¶¶ 9, 9.1, 9.4)
- Entry 66 (mosquito repellents) and Entry 27(4) (stain removers and cleaning liquids), Notification SRO 82/2006 dated 21.01.2006 under Section 6(1)(d) of the Kerala Value Added Tax Act, 2003Being specific entries, they govern mosquito mats, coils, vaporisers and insect killers, and Harpic and Lizol respectively, chargeable at 12.5 per cent; once a specific entry exists, resort to the definition under the Insecticides Act is unnecessary. (¶¶ 9, 9.1, 9.3, 9.4)
- Entry 36(8)(h)(vi) of the Third Schedule (medicaments, HSN 3004.90), Kerala Value Added Tax Act, 2003Dettol, whose active ingredients are chloroxylenol, terpineol and alcohol and whose dominant use is as an antiseptic on wounds and in hospitals for surgical, medical and midwifery use, has therapeutic and prophylactic properties and falls within this entry at 4 per cent rather than the residuary entry. (¶¶ 9.5, 9.6, 9.10)
Held
- Mosquito mats, coils, vaporisers and Mortein insect killers fall under the specific entry for mosquito repellents in SRO 82/2006 and not under the general insecticides entry, which concerns products used in agriculture; manufacture under an Insecticides Act licence is irrelevant once a specific entry exists, and Bombay Chemicals, decided on a different central excise entry, does not apply. (¶¶ 9, 9.1)
- Harpic and Lizol are essentially stain removers and deodorants whose dominant use is cleaning floors and toilets; that they also kill germs does not make them insecticides or disinfectants under Entry 44(5), and they fall under the specific Entry 27(4) of SRO 82/2006 at 12.5 per cent. (¶¶ 9.2, 9.3, 9.4)
- Classification under a taxing statute is governed by plain meaning, the burden on the Revenue to establish the entry, resolution of ambiguity in favour of the assessee, precedence of a specific over a residuary entry, and resort to the residuary entry only as a last measure; applying the tests in Ponds India and considering its ingredients and dominant use, Dettol is a medicament under Entry 36(8)(h)(vi), as the Gauhati and Rajasthan High Courts had also held. (¶¶ 9.6, 9.7, 9.8, 9.9, 9.10)
Result
Appeal partly allowed; High Court judgment dated 17.12.2008 confirmed as to mosquito mats, coils and vaporisers, Mortein insect killers, Harpic toilet cleaner and Lizol floor cleaner, and set aside as to Dettol antiseptic liquid, which is held classifiable under Entry 36(8)(h)(vi) of the Third Schedule to the KVAT Act and taxable at 4 per cent; no costs.