Ayurvedic Oils and Creams are Drugs Not Cosmetics: Telangana High Court

Hyderabad: The Telangana High Court recently held that Navratna oil, Gold Turmeric ayurvedic cream, Boroplus antiseptic cream, Boroplus prickly heat powder and Sonachandi chawanprash fall under the purview of drugs for levying GST and not cosmetics.

A division bench, comprising Justice P. Sam Koshy and Justice N. Tukaramji settled the 20 years dispute, which arose even before the GST came into force.

Since 1997, the issue has been in dispute between the sister companies Himani Limited and Emami Limited and the then AP sales tax department. The department classified them as cosmetics. When it was challenged before the then sales tax appellate tribunal (STAT), it declared that the antiseptic cream, prickly heat powder and chyawanprash were drugs and the other two items were cosmetics.

The finding of the STAT was challenged by the companies through tax revision cases before the High Court in 2004 and the sales tax department challenged the findings in some products as drugs.

While the cases have been pending before the High Court, the GST came into force. If the products fall under the classification of a cosmetic, Entry 36, then it faces GST at the rate of 20 per cent. On the other hand, if these products are to be treated as drugs, Entry 37, they would be levied duty at the rate of 10 per cent.

The bench observed that due to the medicinal compositions like ayurveda products and the way the companies are making sales can be taken into consideration in deciding whether they were cosmetics or drugs. The bench also pointed out that the sales tax department had failed to sustain their contention while contending that the products are to be considered as cosmetics and not drugs.