THE STATE OF ANDHRA PRADESH versus M/S LINDE INDIA LTD.

Citation: [2020] 5 S.C.R. 838 · Decided: 13-04-2020 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed
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838
SUPREME COURT REPORTS
[2020] 5 S.C.R.
THE STATE OF ANDHRA PRADESH
v
M/S LINDE INDIA LTD. (FORMERLY BOC INDIA LTD)
(Civil Appeal No. 2230 of 2020)
APRIL 13, 2020
[DR. DHANANJAYA Y CHANDRACHUD AND
AJAY RASTOGI, JJ.]
Andhra Pradesh Value Added Tax Act, 2005 – Entry 88,
Schedule IV; Schedule V – Respondent-Company registered under
the 2005 Act is engaged in manufacturing, trading of industrial
gases and also Medical Oxygen IP and Nitrous Oxide IP – Issue as
to whether Medical Oxygen IP and Nitrous Oxide IP are taxable u/
Entry 88, Schedule IV or as ‘unclassified goods’ u/Schedule V and
the resultant rate of tax to be levied on them – Held: Schedule IV
prescribes a uniform tax rate of 4%/5% for listed goods – Entry 88
includes drugs and medicines, as defined in clauses (i), (ii) & (iii)
of s.3(b), 1940 Act – Any drug or medicine that falls within the
ambit of clauses (i), (ii) & (iii) of s.3(b) falls within the ambit of
Schedule IV – Schedule V stipulates that all goods that do not fall
within the ambit of Schedules I, III, IV & VI shall be taxed @ 14.5%
– s.16, 1940 Act r/w the Second Schedule and the specification of
Medical Oxygen in the Indian Pharmacopoeia (an autonomous
institution of Ministry of Health and Family Welfare, Govt. of India,
through its publication titled “Indian Pharmacopoeia” prescribes
standards for identity, purity and strength of the drugs specified
therein) lends support to respondent’s contention that Medical
Oxygen IP is a drug as defined in s.3(b)(i), 1940 Act – Further,
2013 Prices Control Order contains the National List of Essential
Medicines 2011 – Inclusion of Oxygen and Nitrous Oxide as
Anesthesia therein lends support to its use in the diagnosis and
treatment of a disorder or disease as specified in s.3(b)(1), 1940
Act – Medical Oxygen IP and Nitrous Oxide IP are medicines used
for or in the diagnosis, treatment, mitigation or prevention of any
disease or disorder in human beings falling within the ambit of
s.3(b)(i), 1940 Act and are consequently covered in Entry 88, 2005
Act – Drugs and Cosmetics Act, 1940 – s.3(b)(i)-(iv); s.16 –
[2020] 5 S.C.R. 838
838
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Interpretation of Statutes – Essential Commodities Act, 1955 – s.3 –
Drug (Prices Control) Order 2013.
Dismissing the appeals, the Court
HELD: 1.1 Schedule IV of the 2005 Act prescribes a uniform
tax rate of 4%/5% for listed goods. Entry 88 includes drugs and
medicines, whether patent or proprietary as defined in clauses
(i), (ii) and (iii) of Section 3(b) of the 1940 Act. Any drug or
medicine that falls within the ambit of clauses (i), (ii) and (iii) of
Section 3(b) falls within the ambit of Schedule IV. Entry 88 also
stipulates that hypodermic syringes, hypodermic needles, catguts,
sutures, surgical cotton, dressing, plasters, catherters, cannulae,
bandages and ‘similar articles’ are also included, save and except
for the three specified exclusions. Schedule V stipulates that all
goods that do not fall within the ambit of  Schedules I, III, IV, and
VI shall be taxed at a rate of 14.5%. Clause (i) of Section 3(b)
defines a drug as 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 being, or animals”, including
specified preparations. Clause (iv) of Section 3(b) includes all
devices ‘intended’ for internal or external use in the diagnosis,
treatment, mitigation or prevention of disease or disorder in
human beings or animals. [Paras 10-12][846-B, E-G; 847-D]
Chimanlal Jagjivandas Sheth v. State of Maharashtra
AIR 1963 SC 665 : [1963] Suppl. SCR 344; Ishwar
Singh Bindra v. The State of UP [1969] 1 SCR 219 –
referred to.
1.2 The term “medicine” is not defined in the 1940 Act.
The ordinary or popular understanding of the term medicine is
characterized by its curative properties in general and specifically,
its use for or in diagnosis, treatment, mitigation or prevention of
any disease or disorder. [Paras 16, 18][849-G; 852-B]
State of HP v. Pawan Kumar (2005) 4 SCC 550; State
of Goa v. Leukoplast (India) Ltd. (1997) 4 SCC 82 :
[1997] 2 SCR 516 – relied on.
STATE OF A.P. v M/S LINDE INDIA LTD. (FORMERLY BOC
INDIA LTD.)
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SUPREME COURT REPORTS
[2020] 5 S.C.R.
State of Himachal Pradesh v Pawan Kumar 2005
Cr.L.J. (SC) 2008; State of Haryana v Suresh (2007)
15 SCC 186 : [2007] 7 SCR 961; State of Rajasthan v
Babu Ram (2007) 6 SCC 55
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