Summary
The Supreme Court held that Medical Oxygen IP and Nitrous Oxide IP are drugs or medicines within Section 3(b)(i) of the Drugs and Cosmetics Act and therefore taxable under Entry 88 of Schedule IV to the Andhra Pradesh VAT Act, rather than as unclassified goods. Their medicinal and facilitative uses in treatment, together with pharmacopoeial and essential-medicines recognition, supported that classification. The decision concerned these medical products, not all variants of the gases.
Issues
- Whether Medical Oxygen IP and Nitrous Oxide IP were taxable as drugs and medicines under Entry 88 or as unclassified goods under Schedule V.
- How the statutory definition of drugs applies to medicinal and facilitative uses.
Provisions considered
- Schedule IV, Entry 88, Andhra Pradesh Value Added Tax Act, 2005Expressly includes drugs and medicines defined by Section 3(b)(i); the medical gases qualified without resort to the similar-articles limb. (¶¶ 10, 31, 32)
- Schedule V, Andhra Pradesh Value Added Tax Act, 2005The residual classification did not apply because the products fell within Entry 88. (¶¶ 11, 31)
- Section 3(b)(i), Drugs and Cosmetics Act, 1940Includes the medical gases used for or in diagnosis, treatment, mitigation or prevention of disease or disorder. (¶¶ 12, 13, 14, 15, 31)
Held
- The definition encompasses medicines and substances other than medicines. The conjunction between those categories is read disjunctively. The expressions for and in embrace direct medicinal use as well as use as a facilitative agent in diagnosis or treatment. (¶¶ 13, 14, 15)
- Undefined statutory words are ordinarily understood in their natural or popular sense, read in context. Medicine is understood through its curative function and use in diagnosing, treating, alleviating or preventing disease or preserving health. (¶¶ 16, 17, 18, 19)
- Pharmacopoeial standards and inclusion of oxygen and nitrous oxide in the essential-medicines list supported the medicinal character of the products. Their therapeutic, anaesthetic and related treatment uses brought Medical Oxygen IP and Nitrous Oxide IP within Section 3(b)(i), and consequently Entry 88. The inquiry did not concern all gas variants. (¶¶ 19, 20, 21, 22, 23, 29, 30, 31)
Result
State appeals dismissed; High Court classification under Entry 88 upheld for the reasons given by the Supreme Court. No costs; pending applications disposed of.