Authority: High Court of Judicature at Madras

Order Date: 24-07-2026

Case Overview

  • Parties: Petitioner – M/s. Vestige Marketing Private Limited, Puducherry; Respondent – Union Territory of Puducherry, represented by its Commissioner of Commercial Tax.
  • Proceedings: Revision petition (T.C.(R). No.48 of 2016 & C.M.P.No.16344 of 2016) filed under Section 51(2) read with Rule 40(1)(a) of the Puducherry Value Added Tax Act, challenging the Sales Tax Appellate Tribunal’s order dated 17‑03‑2016 (T.A.No.16 of 2015) which levied VAT at 14.5% on certain goods.
  • Goods in Dispute:

1. Vestige Spirulina Capsules

2. Vestige Noni Capsules

3. Vestige Ganoderma Capsules

4. Vestige Amla Capsules

5. Vestige Aloe Vera Capsules – all manufactured by M/s. Cosmic Nutracos Solution (P) Ltd., Himachal Pradesh, with a valid state licence.

6. Vestige Neem Oil

7. Vestige Flax Capsules – manufactured by M/s. Softech Pharma (P) Ltd., Daman, with a valid Union Territory licence.

  • Registration Details: The petitioner holds TIN No. 34510017303 issued under the Puducherry VAT Act, 2007, and is a registered dealer under the Central Sales Tax Act, 1956 for inter‑state redistribution of food supplements, printed materials, CDs, cosmetics, soaps and shampoos.
  • Petitioner’s Claim: While filing CST returns, the petitioner declared the above products as “food supplements” for inter‑state purchase but argued that they should be classified as “proprietary Ayurvedic medicines” and taxed at 5% instead of the 14.5% residuary rate.
  • Assessing Officer & Tribunal Findings: The Commercial Tax Officer held the classification as food supplements correct and levied 14.5% tax. The Appellate Authority and the Tribunal affirmed this assessment.
  • Substantial Questions of Law Raised:

1. Whether the Appellate Tribunal can dismiss an appeal with costs.

2. Whether the Tribunal erred in finding the petitioner failed to produce records despite annexures of 93 pages of testimonials and distributor details.

3. Whether the Tribunal ignored the exemption from drug‑licence requirements for Ayurvedic drugs under Section 33A, Chapter IV‑A of the Drugs and Cosmetic Act.

4. Whether the Tribunal erred by classifying the goods under the residuary item despite a specific entry (46/Part A of First Schedule) for drugs.

5. Whether the Tribunal was correct in presuming the goods were “food supplements” rather than “drugs”.

6. Whether the Tribunal ignored Supreme Court and Apex Court decisions on the interpretation of “Ayurvedic drug”.

  • Court’s Reasoning:
  • Q1 – The Tribunal’s power to impose costs is not barred by the VAT Act; therefore, dismissal with costs is permissible, but the court found no excess of jurisdiction.
  • Q2 – The petitioner’s documents only proved the manufacturers held drug licences; the ingredient composition, not the producer, determines classification. The petitioner’s own CST registration covered only food supplements, not drugs, so the Tribunal’s finding of non‑production of requisite records was correct.
  • Q3 – Section 33A merely exempts Chapter‑VI of the Drugs and Cosmetic Act for Ayurvedic, Siddha, Unani drugs; Chapter‑IV‑A still applies, making a drug licence mandatory. The petitioner’s reliance on Section 33A was unsustainable.
  • Q4 – No evidence showed the petitioner possessed a licence to deal in medicines/drugs. A product’s character cannot change from food supplement to medicine without such licence; the Tribunal’s classification under the residuary item was upheld.
  • Q5 – The “Common Parlance Test” alone is insufficient; the “Authoritative Test” also applies. The products lack therapeutic claim and are not marketed as drugs, so they remain food supplements.
  • Q6 – The Tribunal correctly applied prevailing jurisprudence; the petitioner’s arguments were rejected.
  • Final Outcome: The High Court dismissed the revision petition, upheld the Tribunal’s classification of the goods as residuary items taxed at 14.5%, and ordered that there be no order as to costs. The connected miscellaneous petition was also closed.

Topics: Tax Classification, Ayurvedic Medicines