Himani Navratna Oil And Boroplus Cream: Are They Drugs Or Cosmetics? Confirms Telangana HC

Telangana: The Telangana High Court recently ruled that five ayurvedic products, Navratna oil, Gold turmeric cream, Boroplus cream, Boroplus heat powder, and Sona chandi chyawanprash produced and marketed by Himami and Emami companies are classified as drugs, not cosmetics.

The court rejected the Revenue Department’s appeals and held that these products are medicaments (drugs) and not cosmetics under the Andhra Pradesh General Sales Tax Act, 1957.

The court examined the composition, marketing claims, and regulatory licenses of the products and found that they have predominant medicinal properties and therapeutic benefits rather than being mere cosmetic or toiletry products.

This ruling will help these two companies reduce their tax burden, as drugs are subject to a 10% GST rate compared to the 20% rate for cosmetics.

The dispute started in 1996–97, when two related companies manufactured six products. The Sales Tax Appellate Tribunal (STAT) and the assessee, Himani Ltd., entered into Tax Revision Cases against each other following the state's commercial tax department's decision to classify these products as cosmetics and impose a 20% sales tax on them.

The Sales Tax Appellate Tribunal (STAT) ruled that three products—NNavratna Oil, Gold Turmeric Ayurvedic Cream, and Nirog Dant Manjan Lal—sshould be classified as cosmetics. However, it classified the other three products—BBoroplus Antiseptic Cream, Boroplus Prickly Heat Powder, and Sona Chandi Chyawanprash—aas drugs. On the other side, the assessee challenged the exclusion of the first three products from being classified as drugs, which would have subjected them to a lower duty rate of 10%.

The court heard arguments from both sides and examined the characteristics of each product.

The division bench of Justices P. Sam Koshy and N. Tukaramji concluded that the five products fall under the category of drugs.