Reckitt Benckiser India Pvt. Ltd vs. State of Assam and Others, [2012] 56 VST 452 (Gauhati)

Facts
The petitioner company engaged in the business of various household products, sold “Harpic and Lizol”; “Dettol” and paid tax @ 4% being covered by schedule entries relating to pesticides and drugs and medicine respectively. The vat authority in assessment levied higher rate of tax of 12.5% being covered by residual entry. The petitioner company filed writ petition before the Gauhati High Court against the impugned assessment order.

Held
The products “Harpic and Lizol” are admittedly disinfectants. By giving broader meaning of the term pesticides, disinfectants which primarily kill germs and bacteria would be covered within the meaning of “pests” and therefore liable to tax @ 4% under entry 19 of Pat A of Schedule II relating to pesticides. As regards sale of “Dettol” the High Court held that the main purpose of use of “Dettol” is to prevent infections which may occur due to minor cuts, injuries, abrasions, grazes, insect bites, etc. Thus by applying “users test”, it would be squarely falling under the definition of “Drugs’ as defined in Drugs and Cosmetics Act, as well as under the definition of Section of the Medicinal and Toilet Preparations (Excise Duty ) Act, 1955. The “Dettol” cannot be considered to be a cosmetic substance because the purpose of use of “Dettol” is to prevent infection and for sanitation because of its therapeutic and prophylactic properties. Accordingly, it was held as “Drugs and Medicine” covered by the entry 21 of the Schedule IV of the act and will not fall within the excluded category relating to cosmetic and toilet preparations under the Explanation. The High Court accordingly allowed the writ petition filed by the petitioner company and set aside the assessment orders passed by the department with direction to take consequential actions in accordance with law.