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[REPORTABLE]
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.7322 OF 2021
STATE OF GUJARAT  .. Appellant
Versus
CADILA HEALTHCARE LTD. ..Respondent
J U D G M E N T
M.R. Shah, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment   and   order   dated   05.07.2016   passed   by   the   High
Court   of   Gujarat,   at   Ahmedabad   in   STR   No.4   of   2005   by
which   the   High   Court  has   answered   the   reference   in   favour
of   the   respondent   –   assessee   –   dealer   holding   that   the
product   “KADIPROL”   sold   by   the   respondent   can   be
categorized   as   “Poultry   Feed”   falling   under   Entry   25   of
Schedule I of the Gujarat Sales Tax Act (hereinafter referred
to   as   “GST   Act”)   and   not   as   a   “Drug   and   Medicine”   under

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Entry 26(1) of Schedule II Part A of the GST Act, the State of
Gujarat has preferred the present Appeal.  
2. At   the   outset   it   is   required   to   be   noted   that   the   present
proceeding   arise   out   of   the   Determination   Order   passed   by
the   Deputy   Commissioner   of   Sales   Tax   under   Section   62   of
the   GST   Act   by   which   the   Deputy   Commissioner   held   that
the   product   in   question   –   KADIPROL   would   be   covered   as
“Drug and Medicine” under Entry 26(1) of Schedule II Part A
of the GST Act.  
2.1 The   respondent   filed   an   application   before   the   Deputy
Commissioner of Sales Tax under Section 62 of the GST Act
to determine the rate of tax on “KADIPROL” sold under their
invoice  dated  20.03.1989.  The  respondent also  preferred  an
application   before   the   Assistant   Commissioner,   Food   and
Drugs   Control   Administration   regarding   whether   the
respondent   is   required   to   obtain   a   license   under   the   Drugs
and   Cosmetics   Act,   1940   (hereinafter   referred   to   as   “Act,
1940”) for manufacturing the product “KADIPROL”. That, the
Authority under the Act, 1940 informed the respondent that
the license for manufacturing of product “KADIPROL” under
the   Act,   1940   was   not   required.   However,   the   Deputy
Commissioner   of   Sales   Tax,   by   his   order   dated   16.04.1990

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held   that   the   product   in   question   contains   some   preventive
medicine  and  therefore,  categorized  as  “Drug   and  Medicine”
as per Entry 26(1) of Schedule II Part A of the GST Act. The
Tribunal upheld the order of the Deputy Commissioner. The
respondent   preferred   a   Reference   Application   under   Section
69 of the GST Act before the Tribunal for referring the matter
for   decision   of   the   High   Court.   The   reference   was   made   to
the High Court which was numbered as Sales Tax Reference
No.4 of 2005. 
2.2 By   impugned   judgment   and   order,   the   High   Court   has
answered   the   reference   in   favour   of   the   respondent   –
assessee   and   has   held   that   the   product   “KADIPROL”   would
be covered as “Poultry Feed” under Entry 25 of Schedule I of
the GST Act. 
2.3 Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment   and   order   passed   by   the   High   Court   holding   that
the   product   “KADIPROL”   manufactured   by   the   respondent
would   be   covered   by   Entry   25   of   Schedule   I   of   the   GST   Act
as   “Poultry   Feed”,   the   State   of   Gujarat   has   preferred   the
present Appeal.
3. Ms. Aastha Mehta, learned  Counsel has appeared on behalf

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of   the   appellant   –   State   of   Gujarat   and   Ms.   Kavita   Jha,
learned Counsel has appeared on behalf of the respondent –
assessee. 
4. Ms.   Aastha   Mehta,   learned   Counsel   appearing   on   behalf   of
the   appellant   –   State   of   Gujarat   has   submitted   that   in   the
facts   and   circumstances   of   the   case,   the   High   Court   has
committed   grave   error   in   overturning   the   findings   given   by
the   Tribunal   and   the   Deputy   Sales   Tax   Commissioner
holding  that the product “KADIPROL” can  be categorized  as
“Drug and Medicine”. 
4.1 It is submitted that the High Court has not given any reason
whatsoever to overturn the findings given by the Tribunal as
well as the Deputy Sales Tax Commissioner. It is submitted
that both the authorities below in fact considered the expert
literature   on   the   subject   which   ought   not   to   have   been
brushed   aside   by   the   High   Court   without   giving   any
independent reasoning.
4.2 It is submitted that the composition of “KADIPROL” for every
100   gm   was   (a)   Emporium   (Amprolium)   Hydrochloride   –   25
gm and (b) Vitamin K3 – 250 gm.

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4.3 It   is   submitted   that   the   same   product   was   used   to   provide
protection  against  coccidiosis due to  anti­coccodial  property
of emporium. It is submitted that the presence of Vitamin K
in “KADIPROL” prevents loss of blood  by ensuring  adequate
availability   of   prothrombin   and   thus   supplements   the   anti­
coccidial   action   for   emporium.   It   is   submitted   that   product
also   eliminates   subclinical  coccidian  infection   and  improves
the   health   of   the   blood.   It   is   submitted   that   therefore   the
predominant purpose for which the product in question was
used   by   persons   rearing   poultry   is   to   eliminate   subclinical
coccidian infection. It is submitted that the indirect effect of
the   said   drug   is   only   consequential   and   may   be   to   improve
the   health   of   the   poultry   or   help   in   growth   of   poultry.   It   is
submitted   that   however   that   does   not   dilute   the   main
purpose   of   the   ingredients,   the   composition   as   well   as   the
purpose   for   which   it  was   administered.   It   is   submitted   that
therefore   the   product   would   fall   under   Entry   26(1)   of
Schedule II Part A of the GST Act as “Drug and Medicine”.
4.4 It is further submitted on behalf of the State that a drug can
be   administered   either   for   prevention   or   treatment   of
disease.   The   Deputy   Sales   Tax   Commissioner   considering
the   expert   literature   specifically   held   that   the   drug   is   to

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ensure   that   an   infectious   disease   does   not   spread   and   was
administered   to   the   poultry   feed   as   a   “preventive   measure”.
It   is   submitted   that   if   the   nutrition   is   not   for   predominant
purpose, then the product cannot be ‘poultry feed’.
4.5 It   is   submitted   that   the   Tribunal   considered   the   decision   of
the High Court in the case of State of Gujarat vs. M/s. Pfizer
(India)   Ltd.   in   Sales   Tax   Reference   No.38   of   1980   in   which
the   High   Court   held   that   if   main   purpose   is   medicinal   and
not   nutrition,   then   even   if   there   is   some   indirect   help   in
increasing   production   of   eggs,   the   product   would   not   be
called “poultry feed”. It is submitted that in the present case
the   Tribunal   specifically   held   that   the   product   is   a   “non­
nutritional additive” which as per the existing literature falls
within   the   category   of   “Drug”.   It   is   submitted   that   even   in
the   case   of   M/s.   Pfizer   (India)   Ltd.   (Supra),   one   of   the
products   which   had   Terramycin   and   was   used   for   the
purpose   of   preventing   or   treating   diseases   was   held   to   be   a
“drug”.   It   is   submitted   that   in   the   case   of   M/s.   Pfizer   Ltd.
(Supra), it was specifically held that the product which does
not   have   any   nutritional   value   as   predominant   use   cannot
be   a   poultry   feed.   It   is   submitted   that   while   deciding   the
reference   in   the   case   of   M/s.   Pfizer   (India)   Ltd.   (Supra),   the

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High Court also considered its earlier decision in the case of
Glaxo   Laboratories   (India)   Ltd.   vs.   State   of   Gujarat
[(1979)   43   STC   386   (Guj)] .   It   is   submitted   that   neither
Pfizer judgment nor Glaxo judgment of the High Court have
held   that   non­nutritional   additives   would   be   considered   as
“poultry feed”.
4.6 It is submitted that the view taken by the High Court relying
on the decision in case of M/s. Pfizer (India) Ltd. (Supra) has
widened   the   ambit   of   “poultry   feed”   so   as   to   restrict   the
meaning  of  Entry  “Drug   and  Medicine”.  It  is  submitted  that
no   Entry   under   the   Schedule   can   be   interpreted   so   broadly
so   as   to   include   even   products   which   have   medicinal
properties. It is submitted that since the product is sought to
be  exempted under  Entry  25, the meaning  given to “poultry
feed” cannot be widened and has to be construed strictly. It
is   submitted   that   such   an   interpretation   gives   undue   and
subjective   power   on   dealers   to   use   any   product   as   “poultry
feed” thereby getting exemption of tax.
4.7 It   is   submitted   that   in   the   case   of   Eskayef   Limited   vs.
Collector   of   Central   Excise   [(1990   4   SCC   680] ,   it   is   held
by   this   Hon’ble   Court   that   the   products   “Neftin­50   and

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Neftin­200”   which   are   used   for   prevention   and   treatment   of
ailments   such   as   “coccidiosis”   and   “histomonoiasis”   in
poultry   cannot   be   considered   as   ‘poultry   feed’   and   ought   to
be   categorized   as   a   “drug”.   It   is   submitted   that   in   the   said
decision   it   is   specifically   held   that   merely   because   these
products   can   be   used   for   improving   egg   production   and
increase   in   growth   rate   of   broilers   would   not   in   any   way
detract   from   the   fact   that   said   products   are   medicine.   It   is
submitted that in the present case also, “KADIPROL” is used
for the purpose of prevention and treatment, with an indirect
positive consequence for the health of the poultry.
4.8 Making   above   submissions   and   relying   upon   above
decisions, it is prayed to allow the present appeal and quash
and   set   aside   the   impugned   judgment   and   order   passed   by
the   High   Court   and   restore   the   decisions   of   the   Sales   Tax
Tribunal   as   well   as   the   Deputy   Sales   Commissioner   and   to
hold   that   the   product   “KADIPROL”   can   be   categorized   as
“Drug and Medicine” under Entry 26(1) of Schedule II Part A
of the GST Act and not as “poultry feed” falling under Entry
25 of Schedule I of the GST Act.  
5. Present   appeal   is   vehemently   opposed   by   Ms.   Kavita   Jha,

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learned Counsel appearing for the respondent. 
5.1 Ms.   Jha,   learned   Counsel   appearing   for   the   respondent   –
dealer   –   assessee   has   submitted   that   as   such   as   on   date
there is no existing demand on the respondent pertaining to
the   issue   and   even   all   the   assessments   under   the   GST   Act
are   also   closed   with   respect   to   the   respondent.   It   is
submitted   that   therefore   as   such   the   issue   involved   in   the
present appeal would be academic.
5.2 Making   submissions   on   merits,   learned   Counsel   appearing
for   the   respondent   has   vehemently   submitted   that   in   the
facts and circumstances of the case, the High Court has not
committed any error in categorizing the product “KADIPROL”
as   “poultry   feed”   under   Entry   25   of   Schedule   I   of   the   GST
Act. It is submitted that while holding so the High Court has
taken   into   consideration   the   fact   that   over   a   period   of   time
concept of “poultry feed” has changed considerably.
5.3 It   is   submitted   that   the   words   “poultry   feed”   has   acquired
definite connotation in livestock farming and so also has the
concentrates and whereas the feed simpliciter is essential for
the maintenance of poultry, the concentrates i.e. vitamins in
the   food   stuff   enable   the   poultry   to   maintain   energy;   to

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perform   the   vital   process   of   life   and   provide   the   material   to
replace   the  essential   tissues;  breakdown   of   which   occurs   in
the   body   continuously.   It   is   submitted   that   the   ration   of
poultry   may   be   divided   for   convenience   into   two   parts:   (1)
maintenance   ration,   viz.   the   portion   of   the   died   which   just
enables   the   poultry   at   rest   to   carry   on   the   essential
processes of life, such as breathing and circulation of blood,
without   either   gain   or   loss   of   weight;   and   (2)   feed   supplied
over and above the maintenance requirement for augmenting
the production for growth or fattening; or for augmenting egg
laying capacity.
5.4 It   is   submitted   that   in   the   present   days   when   the
maintenance of the poultry has become so costly, the poultry
is   not   kept   in   a   farm   in   a   state   of   non­production.   It   is
submitted   that   to   make   the   poultry   financially   viable,   it   is
but necessary to  supply a balanced poultry feed to increase
the production of eggs or fat and growth if the poultry is kept
for   consumption   of   its   meat.   It   is   submitted   that   over   a
period of time, when the concept of poultry feed has changed
considerably,   it   does   not   mean   food   for   poultry   in
conventional   sense.   It   consists   not  only   of   concentrates   but
even additives, like vitamins, minerals and antibodies which

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are   essential   for   better   development   of   poultry   etc.   which   is
purpose   of   having   a   good   yield   from   such   activities.   In
support   of   above   submissions,   reliance   is   placed   on   the
following decisions.
(1)  Glaxo Laboratories (India) Limited vs. State of Gujarat
(1979) 43 STC 386 (Guj)
(2)  Glindia Ltd. vs. Union of India
1989 (22) ECC 311
(3) State of Gujarat vs. Pfizer Ltd.
(1991) 82 STC 374 (Guj)
(4) Sun   Export   Corporation   vs.   Collector   of   Customs,      
Bombay (1997) 6 SCC 564
(5) M/s.   Golden   Streak   Drug   &   Pharmaceuticals   Ltd.,    
Lucknow  vs. Commissioner Trade Tax Lucknow
2017­TIOL­2502­HC­ALL­CT
5.5 It   is   submitted   that   the   product   “KADIPROL”   is   added   to
“poultry   feed”   so   as   to   make   good   deficiency   of   Vitamin   K.
The product “KADIPROL” is aimed at preventing loss of blood
in the intestine by enhancing clotting time of blood in birds.
It is submitted that the  said product is  an essential  poultry
feed   supplement   and   is   liable   to   be   classified   as   “poultry
feed” under Entry 25 of Schedule I of the GST Act.
5.6 It   is   further   submitted   by   Ms.   Jha,   learned   Counsel
appearing   for   the   respondent   that   this   Court   has

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consistently taken the view that in determining the meaning
of an article in a tariff schedule, one principle which is fairly
well­settled   is   that   those   words   and   expressions   should   be
construed in the sense in which they are understood in the
trade   by   the   dealer   and   the   consumer.   It   is   submitted   that
therefore   while   considering   a   particular   product   /   article,   a
common   parlance   test   is   to   be   applied.   In   support   of   above
submissions,   reliance   is   placed   on   the   decisions   of   this
Court   in   the   case   of   Collector   of   Central   Excise,   Kanpur
vs.   Krishna   Carbon   Paper   Co.   [(1989)   1   SCC   150]   and
Plasmac   Machine   Manufacturing   Company   Private
Limited   vs.   Collector   of   Central   Excise,   Bombay   [(1992)
84 STC 107 (SC) : [1990] Supp 3 SCR 384] .
5.7 It   is   submitted   that   in   the   present   case,   poultry   rearing
industry, poultry feed concentrates like “KADIPROL” are not
bought   as   “Drug   and   Medicine”,   but   infact   the   same   is
bought   as   “poultry   feed”.   It   is   submitted   that   even   the
respondent is marketing its product “KADIPROL” as “not for
medicinal   use”.   It   is   submitted   that   therefore   applying
common parlance test also, the product “KADIPROL” is to be
considered as “poultry feed”.

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5.8 It is submitted that the subsequent decision of this Court in
the   case   of   Commissioner   of   Customs   (Import)   Mumbai
vs.  Dilip  Kumar  and  Company  and  Ors.  [(2018) 9  SCC  1]
by   which   this   Court   overruled   the   decision   of   this   Court   in
the   case   of   Sun   Export   Corporation   vs.   Collector   of
Customs,   Bombay   [(1997)   6   SCC   564]   to   the   extent
wherein   Sun   Export   Case   held   that   in   case   of   ambiguity,
benefit   of   exemption   notification   should   go   to   the   assessee,
shall not be applicable to the facts of the case on hand. It is
submitted   that   in   the   present   case,   it   is   not   the   case   of
respondent that the product “KADIPROL” was covered within
the   ambit   of   any   exemption   notification   and   therefore,   in
case of ambiguity, the benefit should go to the respondent. It
is   submitted   that   present   case   pertains   to   the   classification
of the product “KADIPROL” which is poultry feed supplement
as to whether the same is classifiable as “poultry feed” or as
“Drug and Medicine”.
5.9 It   is   further   submitted   by   Ms.   Jha,   learned   Counsel
appearing   for   the   respondent   that   even   under   the   Gujarat
Value   Added   Tax   Act,   2003   (hereinafter   referred   to   as
“Gujarat   VAT   Act”),   sale   and   purchase   of   “poultry   feed”   are

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exempt   from   tax   under   Entry   48   Schedule   I   of   the   Gujarat
VAT   Act.   It   is   submitted   that   even   under   the   Gujarat   VAT
Act,   food   and   dietary   supplements   are   specifically   excluded
within the ambit of Drug and Medicine. It is submitted that
thus, the same reflects intention of the legislature that entry
“Drug   and   Medicine”   will   not   imbibe   food   and   dietary
supplements   within   its   ambit.   It   is   submitted   that   by
drawing   an   analogy   in   the   present   case   as   well,   it   can   be
argued   that   even   “poultry   feed”   supplements   like
“KADIPROL”   will   not   be   covered   within   the   ambit   of   “Drug
and   Medicine”   under   Entry   26(1)   of   Schedule   II   of   the   GST
Act.
Making above submissions, it is prayed to dismiss  the
present appeal. 
6. Heard   learned   Counsel   appearing   for   the   respective   parties
at length.
7. Having heard the learned counsel appearing on behalf of the
respective   parties   and   having   perused   the   order   passed   by
the learned Tribunal as well as the impugned judgment and
order   passed   by   the   High   Court,   it   is   noticed   that   the
product in question was sold in a sachet/packet of 100 gm.

//  15  //
It was not meant to be given as a food to the poultry.  It was
required   to   be   mixed   with   the   feed   given   to   the
poultry/birds.     It cannot be directly  fed and/or  given  to the
birds.  Therefore, there is some merit in the contention of the
Revenue   that   the   impugned   judgment   and   order   does   not
deal   with   the   reasoning   given   by   the   Tribunal.     It   merely
quotes   and   relies   upon   the   two   decisions   in   the   case   of
Glaxo   Laboratories   (India)   Ltd.   (supra)   and   M/s.   Pfizer
(India)   Ltd.   (Supra)   without   a   detailed   and   an   in­depth
examination of the facts as found.   Therefore, usually in the
aforesaid background, we would have remitted the matter to
the   High   Court   for   a   fresh   decision.     However,   we   are   not
inclined to pass an order of this nature as it is accepted that
the  issue  in  question   is  of  academic  interest  and  even  if  we
decide the appeal in favour of the Revenue, it would not have
any revenue implication as there are no tax dues.  
8. In view of the above facts and as the issue in question is in
the academic interest and as there is no revenue implication
as   there   are   no   tax   dues   and   therefore   there   is   zero   tax
effect,   we   close   the   present   proceedings   keeping   the   larger
question   on   the   Common   Parlance   Test   open,   to   be
considered in an appropriate case in a like matter. 

//  16  //
With this, the present appeal stands disposed of. 
…………………………… ..J.
     [M.R. SHAH]
…………………………… ..J.
    [SANJIV KHANNA]
New Delhi,
July  11, 2022