Division Bench of the Hon’ble Supreme Court presided by Justice M R Shah and Justice Krishan Murari held that Entry 44 of Schedule 3 to the Kerala VAT Act (KVAT), 2003, shall cover Mosquito Mats, Coils, Vaporizers, Mortein Insect Killers, Harpic Toilet Cleaner and Lizol Floor Cleaners in the category of insecticides and hence they shall attract a VAT 12.5 % as stated in the 2006 notification.
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Background
The appellant filed an appeal before the Supreme Court against the judgment of the High Court of Kerala which had upheld the order of the Commissioner with respect to classification of goods in question.
Issue was related to classification of goods like (1) Mosquito Mats, Coils and Vaporizers; and (2) Mortein Insect Killers; and (3) Harpic Toilet Cleaner and Lizol Floor Cleaners; and (4) Dettol Antiseptic Liquid under the KVAT.
The appellant before the Commissioner had contended that the products (1) to (3) are classifiable under Entry 44(5) of the 3rd Schedule to KVAT as ‘pesticides’ and ‘insecticides’ and therefore are subject to VAT at the rate of 4%, however, with respected to (4) i.e.; Dettol Antiseptic Liquid, the appellant accepted that it is correctly classifiable under Sentry 36(8) (h) and thus also subjected to a VAT of 4%.
However, his contention was rejected by the Commissioner of Commercial Taxes and held that products (1) and (2) are classifiable under Entry 66 which covers Mosquito Repellants, electric or mosquito repellants, gadgets and insect repellants, devices etc and hence, are subjected to 12.5% tax rate; and on the ground that (3) Harpic Toilet Cleaner and Lizol Floor CLeaner and (4) Dettol Antiseptic Liquid are not in the nature of a medicine which have a therapeutic or prophylactic properties but are only used for cleaning purposes shall fall within the residuary entry.
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Against the said order, the appellant went in appeal before the High Court, which upheld the order of the Commissioner.
Hence, the appellant filed an appeal before the Supreme Court against the impugned judgement.
Submission made by the appellant
Learned counsel, Shri Siddharth Bawa, appearing on behalf of the appellant submitted that as per the facts and circumstances of the case, the High Court materially erred, and that item no. (1) to (3) should be covered under Entry 44 of the KVAT learned counsel
It was also submitted that as far as products of Mortein range and Mortein Spray are concerned, they should also be classified as ‘insecticide’ only, as their licences are issued under the Insecticides Act, hence they should fall under the general entry and encaptures a VAT of 4%.
The appellant also with respect to Product of Harpic and Lizol, will continue to fall under Entry 44 as per the notification issued by the State of Kerala in 2006.
With respect to Dettol, the appellant explained its ingredient list and submitted that being a ‘medicament’, is should continue to fall under Entry 36 which attracts a 4% VAT.
The Supreme Court’s Verdict and Entry 44
After exhaustively going through the submissions made by the appellant and reading the Entire Schedule 3 of the KVAT, the Hon’ble Court held that submissions of the appellant that Mosquito Mats, Coils and Vaporizers; and Mortein Insect Killers fall under Entry 44 of schedule 3, hold no substance and are not classifiable as insecticide.
The Supreme Court, regarding Harpic and Lizol held that they are mainly used as stain removers and deodorants, and if along with it they kill germs does not make them an insecticide, hence they will also not fall under Entry 44 rather Entry 27.
With respect to Dettol, the Supreme Court accepted submissions made by the appellant and held that it is a ‘medicament’, used as an antiseptic and even for surgical use and shall continue to fall under Entry 36(8) and hence liable to be taxed at 4%; and to this extent the Supreme Court set aside the impugned judgment of the High Court.
Case Title: M/s Reckitt Benckiser (India) Ltd. vs. Commissioner Commercial Taxes & Ors. (2024 SC)
