HEINZ INDIA LIMITED versus THE STATE OF KERALA

Citation: [2023] 6 S.C.R. 425 · Decided: 04-05-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Dismissed

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Judgment (excerpt)

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HEINZ INDIA LIMITED
v.
THE STATE OF KERALA
(Civil Appeal No(s). 2338-2339 of 2010)
MAY 04, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
Kerala General Sales Tax Act, 1963 – Entry 79, 127 – Tamil
Nadu General Sales Tax Act, 1959 – s. 3, Entry 20-(A) of Part C of
First Schedule; Entry 1(iii) of Part-F of First Schedule – Drugs and
Cosmetics Act, 1940 – s. 3(aaa), 3(b) – Whether medicated talcum
powder is medicine or drug, or a cosmetic, or in terms of the statutes
in question, medicated talcum powder – In the first set of appeals,
the revisional authority was of the view that the order of assessment
passed by the assessing authority (levying tax at 8% on ‘Prickly
heat powder’) was prejudicial to the interest of revenue by treating
it as a medicine and tax at 20% was to be applied as applicable to
“Medicated talcum powder” – Kerala High Court concurred with
the view adopted by the Revenue – In the second set of appeals, the
Madras High Court relied on the decision of the Kerala High Court
holding that medicated talcum powder includes prickly heat powder
and answered the issue in favour of the Revenue and against the
assessee – Before the Supreme Court, the Revenue contended that
in the Kerala case, that Nycil prickly heat powder is “medicated
talcum powder” since there is separate entry for medicated talcum
powder (Entry 127), it has to be classified under Entry 127 of the
first schedule to the KGST Act – In the Tamil Nadu case, it is
contended that the exclusion of products capable of being used as
cosmetics from Entry 20 in Part C, on the one hand, and the inclusion
of talcum powder, in Entry 1 of Part F, as cosmetics, read with
explanation to Entry 1, is decisive that the proper classification of
the product is as a cosmetic – Held: The court has to, as a principle,
interpret the concerned statutes, in the light of their plain words,
and having regard to their internal guides or aids – In Kerala case,
the use of the term “includes” after talcum powder, followed by
“medicated talcum powder” in the Court’s opinion can lead to only
one inference, which is that the clear legislative intent was that all
kinds of talcum powders, which contained medications (irrespective
[2023] 6 S.C.R. 425
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SUPREME COURT REPORTS
[2023] 6 S.C.R.
of the proportion, or at any rate, not containing predominant
proportions) should necessarily be treated as cosmetics, falling
under Entry 127 – The clear legislative intent, of inserting a
carefully worded entry, which was a “hybrid” one, i.e. describing
an article that contained medicinal ingredients, as well as those
used for cosmetics, and yet placing such a creature (“neither beast
nor fowl” so to say) in the category of cosmetics, ruled out altogether
any interpretive scope of classifying it as a medicinal preparation,
or drug or medicine – In the Tamil Case, the TNGST was consciously
amended to include talcum powder, whether or not medicated in the
specific entry or class of entries, enumerating cosmetics – Hence,
like in the Kerala case, the plain meaning of that taxation head or
entry had to be given, as there was no ambiguity – Consequently,
the findings recorded by the High Courts are justified.
Interpretation of Statutes – A salutary rule for fiscal legislation
interpretation is that words used in the statute must be given their
plain meaning and the court’s function is not to give a strained and
unnatural meaning to the provision.
Dismissing the appeals, the Court
HELD: 1. According to the literature made available to the
court, there are medicinal ingredients in Nycil prickly powder,
which is also manufactured under a Drug License. Yet, the State
Legislature, in Entry 127, thought it fit to include, while dealing
with cosmetics, such as shampoos, “talcum Powder including
medicated talcum powder.” There can be no two opinions that
talcum powder ipso facto is classifiable as a cosmetic. Yet, the
expression “including” used in Entry 127 has the effect of bringing
in [or “pulling in”] an entirely different product, which ordinarily
may not have been in the same class, i.e. medicated powder. To
rule out any ambiguity, the legislature specifically referred to a
sub class of medicated powders, i.e. medicated talcum powder.
Such specific entries have not come up for consideration, before
this court; as noticed, predominantly, the courts have ruled that
in the context of broad descriptions such as cosmetics or
medications, if there are medical ingre

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