Telangana High Court passes its verdict after 20 years on the issue between the Revenue Department and Himani and Emami the sister companies.
The case has been pending since 1997 in which the the then AP sales tax department classified some of the company's product as cosmetics and levied 20% sales tax. As of the new GST rules that states If the products fall under the category of a cosmetic it faces GST at the rate of 20 per cent. On the other hand, if these products are to be treated as drugs they would be levied duty at the rate of 10 per cent.
Hence, by this ruling of the division bench of Justices P Sam Koshy and N Tukaramji the companies would be exempted from a 20% sales tax burden and would be subjected to only 10% GST as the five products are categorized as Drugs and not cosmetics.
The decision was given by the bench for the five products (Navratna oil, Gold Turmeric ayurvedic cream, Boroplus antiseptic cream, Boroplus prickly heat powder, and Sonachandi chawanprash) after thorough research on composition, marketing claims, and regulatory licenses of the products, and it was found that they have predominant medicinal properties and therapeutic benefits therefore these products fall under the purview of drugs and not cosmetics as per the Andhra Pradesh General Sales Tax Act, 1957.
As per the new GST and sales tax rules products, cosmetic products are levied with 20% sales tax, and products falling in the category of drugs i.e. products with medicinal properties and therapeutic benefits are imposed with only 10% sales tax according to which the sister companies Himani Limited and Emami Limited were exempted from additional 10% tax on the mentioned products.
(Input from various sources)
(Rehash/Tushar Pandey/MSM)
