1. Whether medical oxygen and nitrous oxide can be treated as medicines for the purpose of levy of tax under the Kerala General Sales Tax Act, 1963 (for short, “the Act”) is the question involved in this case.

2. The assessee is the revision-petitioner. State is the respondent. The assessment year is 1987-88. The assessee is engaged in the manufacture and sale of medical oxygen and nitrous oxide. In the assessment for the year 1987-88 the assessee contended that the said two items are liable to be assessed at the rate of 5 per cent under the Notification G.O (Rt.) No. 242/84.TD. The assessment was originally completed by assessing “medical oxygen” at 5 per cent under the above notification and “nitrous oxide” at 6 per cent under entry No. 85 of the First Schedule to the Act as it stood at the relevant time. However, the said assessment was reopened under section 19 of the Act on the ground that “medical oxygen” and “nitrous oxide” are liable to be assessed at higher rates. In spite of the objections taken by the assessee, the assessing authority passed a revised assessment order dated July 22, 1992 (annexure A) under which “medical oxygen” was assessed at the rate applicable to “gases liquefied or not” at 8 per cent under entry No. 85 of the First Schedule to the Act which came into force with effect form July 1, 1987. The assessing authority took the view that the Notification G.O (Rt.) No. 242/84.TD dated April 2, 1984 did not survive after the introduction of entry No. 85 of the First Schedule to the Act. The assessing authority also took the view that the subsequent Notification S.R.O No. 976/89 had effect only from June 13, 1989 and therefore for the period from July 1, 1987 to June 13, 1989 “medical oxygen” has to be classified only as a “gas” as specified in entry No. 85 of the First Schedule to the Act. The contention of the assessee that “nitrous oxide” is a “medicine” was also rejected by the assessing authority by stating that it is sold by the assessee in gaseous form and this also is liable to be assessed at the rate applicable under entry No. 85 of the First Schedule to the Act. In the appeal filed by the assessee the Additional Deputy Commissioner (Appeals), Agricultural Income-tax and Sales Tax by order dated September 20, 1994 (annexure B) dismissed the appeal by affirming the order passed by the assessing authority. The further appeal filed by the assessee before the Appellate Tribunal also was unsuccessful. Hence this revision.

3. In this revision, the assessee had raised the following two questions of law.

“(i) Whether, on the facts and circumstances of the case, was the Tribunal justified in holding that medical oxygen and nitrous oxide would fall under entry No. 85 and not under entry 116 (Medicines) of the First Schedule to the KGST Act?

(ii) Should not the Tribunal have held that medical oxygen and nitrous oxide being used in treatment are taxable under the specific entry providing for “medicines” under entry No. 116 of the First Schedule to the KGST Act?”

4. The question as specified above is to the effect that the two items, namely, “medical oxygen” and “nitrous oxide”, would fall under entry No. 116 of the First Schedule to the Act and not one falling under entry No. 85 of the First Schedule to the Act. To put it differently, the question is regarding the relevant entry under which the two items “medical oxygen” and “nitrous oxide” would fall.

5. Shri A.K Jayasankar Nambiar, learned counsel appearing for the petitioner-assessee submits that “medical oxygen” is manufactured by the assessee for use in the hospitals and the dominant use of “medical oxygen” is the use in hospitals for administering it on patients. Counsel submits that “nitrous oxide” is also manufactured for use in hospitals as anesthetic agent. Counsel submitted that all those who deal in both the items understand them only as medicines. Counsel further submitted that neither the assessing authority nor the two Appellate Authorities had considered the question by applying the common parlance theory. He also submitted that even by applying the functional test as well as user test propounded by the Supreme Court in various decisions these two items would squarely fall under “medicine”. Counsel submitted that all the authorities went by the notifications issued by the Government reducing the rate of tax on “medical oxygen” initially from 7 per cent to 5 per cent and later from 8 per cent to 6 per cent. Counsel also brought to our notice the decision of the Karnataka High Court in Indian Oxygen Ltd. v. State of Karnataka, [1990] 79 STC 351 and the decision of this Court in State Of Kerala v. India Oxygen Ltd., 2003 (1) KLT SN 10. The counsel, in short, submitted that the assessing authority and the two Appellate Authorities had erroneously held that these two items would fall under entry No. 85 of the First Schedule to the Act.

6. Learned Government Pleader appearing for the respondent, on the other hand, submitted that these two items would squarely fall under entry No. 85 of the First Schedule to the Act which deals with all gases not elsewhere provided. The Government Pleader submitted that the expression “other than those specified elsewhere in this Schedule” in entry No. 85 deals only with other gases such as petroleum gases, etc., and not with reference to medicines. The Government Pleader submitted that going by the common parlance theory also “medical oxygen” and “nitrous oxide” both being gases, are understood only as gases and the assessing authority and the Appellate Authorities, have rightly found that both the above items are liable to be assessed at the rate applicable to gases under entry No. 85 of the First Schedule to the Act.

7. We have considered the rival submissions and also perused the orders of the three authorities. The assessing authority has considered this question as follows:

“From July 1, 1987 gases liquefied or not are taxable at 8 per cent as per entry No. 85 of the First Schedule. The S.R.O No. 976/89 has effect from June 13, 1989 only. Hence from July 1, 1987 up to June 13, 1989, medical oxygen can be classified only as a gas as specified in entry No. 85 of the First Schedule.

Nitrous oxide is not a medicine to be assessed at 6 per cent. The nitrous oxide sold by the assessee is in gaseous form and hence this also can only be an item covered by entry 85.”

8. The first Appellate Authority had adverted to the contentions raised by the assessee on the basis of the notification issued by the Government both before July 1, 1987 and after July 1, 1989. Prior to July 1, 1987 entry No. 85 of the First Schedule to the Act provided for the rate of tax on industrial gases at 7 per cent. It is at that time the Government issued G.O (Rt.) No. 242/84.TD dated April 2, 1984 reducing the rate of tax on “medical oxygen” to 5 per cent. From July 1, 1987 entry No. 85 of the First Schedule to the Act is “gases liquefied or not other than those specified elsewhere in the Schedule” and the rate of tax was 8 per cent. It is in those circumstances, the Government again issued Notification S.R.O No. 976/89 with effect from June 13, 1989 reducing the rate of tax to 6 per cent from 8 per cent applicable to entry No. 85. The first Appellate Authority took the view that in view of entry No. 85 as amended with effect from July 1, 1987 the notification dated April 2, 1984 ceased to have any operation thereafter. The first Appellate Authority also considered the question with reference to entry No. 116 and entry No. 85 as amended and observed that “medicine” is a substance used for curing disease, that in the commercial circles. “Medical oxygen” and “nitrous oxide” are not understood as medicines, that the use to which an item is put cannot be the sole test for determining the category to which an item falls and that when there is a specific entry, the item falling under that entry has to be excluded from any other general entries. The first Appellate Authority took the view that entry No. 85 “gases liquefied or not” is a special entry and therefore both the items fall under the said entry.

9. The Tribunal, we note, has considered this question in paragraph 4 onwards of its order and the Tribunal was carried away by the Notification S.R.O No. 976/89 and S.R.O No. 369/92. According to the Tribunal, the Government understood “medical oxygen” as one falling under entry No. 85 liable to be taxed at the rate of 8 per cent and that it is only for giving some relief so far as “medical oxygen”, the said notifications were issued reducing the rate of tax from 8 per cent to 6 per cent from June 13, 1989. It is in that view of the matter the Tribunal has taken the view that “medical oxygen” would fall under entry No. 85 of the First Schedule to the Act. The Tribunal also held that the earlier notification issued in 1984 ceased to have operation after July 1, 1987 which substituted entry No. 85 by which gases liquefied or not other than those specified elsewhere in the Schedule are brought to tax at 8 per cent So far as clarifications/circulars issued by Government are concerned, they merely represent their understanding of the statutory provisions but they are not binding on the Courts. There cannot be any estoppel against the statute. Law is what is declared by the Supreme Court and the High Court as to what a particular provision of statute say and not for the executive (Bengal Iron Corporation v. Commercial Tax Officer, [1993] 90 STC 47 (SC) : 1994 Supp (1) SCC 310 : AIR 1993 SC 2414).

10. According to us neither the assessing authority nor the two Appellate Authorities had considered the question in the proper perspective. Of course, we find that the first Appellate Authority has made an observation to the effect that entry No. 85 of the First Schedule to the Act is a special provision taking in all gases and the entry “medicine” is only a general entry. But we do not find any proper consideration on this question in the said order also.

11. As already noted, according to the assessee “medical oxygen” and “nitrous oxygen” are medicines under entry No. 116 of the First Schedule to the Act. According to the assessing authority they are gases under entry No. 85 of the First Schedule to the Act during the relevant period. Thus the question to be resolved is regarding the entry under which the above two items would fall.

12. Let us now consider the said two entries as it stood during the assessment year 1987-88. Entry Nos. 85 and 116 of the First Schedule to the Act read as follows:

“SI. No. Description of goods Rate of tax (percent) 85. Gases liquefied or not other than those specified elsewhere in this Schedule. 8 116. Medicine (i) Allopathic medicines 6 (ii) Other medicines and drugs including Ayurvedic, Homeopathic, Sidha and Unani preparations. 6 (iii) Ayurvedic herbs 6”

13. The goods must be classified according to their popular meaning or as they are understood in their commercial sense and not as per the scientific or technical meaning. How the product is identified by the class or sections of people dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable. These principles are well-settled by the decisions of the Supreme Court in Dunlop India Ltd. v. Union of India, (1976) 2 SCC 241 : AIR 1977 SC 597, Indo International Industries v. Commissioner of Sales Tax, [1981] 47 STC 359, P.A Thillai Chidambara Nadar v. Additional Appellate Assistant Commissioner, [1985] 60 STC 80 and Chiranjit Lal Anand v. State of Assam [1985] 60 STC 89. The dictionary meaning of a word can be looked into where the word has not been statutorily defined or judicially interpreted to ascertain the meaning of a word in common parlance bearing in mind that a word is used in different senses according to its context and the Court has to select the particular: meaning which is relevant to the context in which it has to interpret the word. State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213 (SC); 1985 Supp SCC 280 : AIR 1985 SC 1293.

14. There is no definition of the word “medicine” in the Act nor any judicial interpretation given to the said word was brought to our notice. Black's Law Dictionary defines the word “medicine” thus:

“Medicine.— The science and art dealing with the prevention, cure and alleviation of diseases; in a narrower sense that part of the science and art of restoring and preserving health which is the province of the physician as distinguished from the surgeon and obstetrician. Bruke v. Kansas State Osteopathic Assn., C.C.A Kan, 111 F. 2d 250, 253. The term is not limited to substances supposed to possess curative or remedial properties. People v. Kabana 32 III APP. 158, 52 N.E 2d 320”

15. Mitra's Legal and Commercial Dictionary by A.N Saha gives the meaning of the word “medicine” thus:

“Medicine” or “drug” includes—

(i) all medicines for internal or external use of human beings or animals,

(ii) all substances, intended to be used for or in the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals,

(iii) all substances intended to be used for or in the maintenance of public health, or the prevention or control of any epidemic disease among human beings or animals,

(iv) insecticides, germicides, fungicides, weedicides and all other substances intended to be used for the protection or preservation of plants.

(v) all chemical substances which are ordinarily used as intermediates in the preparation or manufacture of any of the medicines or substances above referred to. Patents Act, 1970, S. 2(1).”

16. A Dictionary of Modem Legal Usage by Bryan A. Gamer defines the word “Medicine” as follows:

“‘Medicine’, ‘medication’ ‘medicament’— Medication has traditionally meant ‘the action of treating medically’, but, through SLIPHOD EXTENSION, has recently come to mean ‘a medical substance, medicament’ a sense that careful writers avoid. Medicament (= a substance taken internally or used externally in curative treatment) are synonymous with the loose meaning of medication.”

17. The Concise Oxford Dictionary of Current English, Fifth Edition defines the word “Medicine” as follows:

“Art of restoring and preserving health, especially by means of remedial substances and regulation of diet, etc………………one taken internally………………”

Collins Cobuild English Dictionary for Advanced Learners, Major New Edition, defines the word “Medicine” thus:

“Medicine is the treatment of illness and injuries by doctors and nurses; is a substance that you drink or swallow in order to cure an illness.”

18. The common user of the gases in question is also relevant in applying the common parlance theory. In the instant case, as already noted, the assessee, who is the manufacturer of “medical oxygen” and “nitrous oxide”, has clearly stated that these two items are manufactured only for the use in hospitals and that the dominant user of these two items are only as medicines. There is also a well-known test to be applied in interpreting the entry, which is the functional test. There is no dispute that “medical oxygen” is used for administering it on patients. Similarly, the function of “nitrous oxide” is to act as an anesthetic agent. Thus, going by the user test and the functional test, it is evident that “medical oxygen” and “nitrous oxide” are served as medicines.

19. Admittedly, “medical oxygen” and “nitrous oxide” are gases which will fall under the broad categories mentioned in entry No. 85 of the First Schedule to the Act. Here it must be noted that entry No. 85 itself says “other than those specified elsewhere in the Schedule” which would mean that of any item of gas specifically falls under any other items in the First Schedule to the Act then such gas would not fall within entry No. 85 of the First Schedule to the Act. “Medical oxygen” and “nitrous oxide” are not specifically mentioned in any other entries in the First Schedule to the Act. The contention of the Government Pleader is that the expressions “not elsewhere” provided is with reference to the petroleum products particularly entry No. 140, sub-entry (xxii) and otherwise. However, we have taken the view that those two items would fall under entry No. 116 of the First Schedule to the Act— “medicine”.

20. In a case where an item falls under two entries in the Schedule in order to decide the taxable entry the question is as to which of the two is the special entry, for the special entry will exclude the general entry. [Importex International (P) Ltd. v. State Of Kerala 1990 (2) KLT 487 and Commissioner Of Sales Tax v. Food Specialities Ltd., [1991] 82 STC 298 (Ker.)]. The Karnataka High Court in Indian Oxygen Ltd.'s case [1990] 79 STC 351, took the view that “medical oxygen” is distinct from “industrial oxygen”. Entry No. 85 deals with all kinds of gases. If as a matter of fact a particular category of gas, in the instant case, “medical oxygen”, has got the exclusive user as a medicine and if there is an entry relating to medicine, the item so carved out from the general entry relating to “gases” will have to be brought under the entry medicine and it has to be assessed under that entry. Here, as we have already noted, entry No. 85 deals with all kinds of gases, “medical oxygen” is one of the items of gases dealt with in entry No. 85. However, “medical oxygen” being medicine, certainly, it has to be assessed as a special item falling under the entry relating to medicine. Thus “medical oxygen” and “nitrous oxide” are to be treated as a special category falling under entry medicine in entry No. 116 of the First Schedule to the Act. In this view of the matter, the above two items are to be assessed only at the rate applicable to medicines.

21. Since “medical oxygen” and “nitrous oxide” fall under entry No. 116 relating to medicine it is specifically excluded from entry No. 85 of the First Schedule to the Act. Though the assessee had raised a contention that even after the substitution of entry No. 85 with effect from July 1, 1987, the notification of 1984 has application, it cannot be accepted in view of the fact that the notification of 1984 was issued in the context of entry No. 85 of the First Schedule to the Act as it stood at that time and the rate of tax was at 7 per cent and the notification reduced the tax from 7 per cent to 5 per cent. Since under the new entry the rate of tax was 8 per cent, necessarily, the earlier notification has no application. Probably, it is in this view, the Government thought of giving relief by issuing Notification S.R.O No. 976/89 granting reduction in the rate of tax in respect of medical oxygen from 8 per cent to 6 per cent. These notifications at the most can only show that the Government entertained the view that “medical oxygen” will fall under entry No. 85 of the First Schedule to the Act. Since this view is against the assessee it cannot bind the assessee if in law “medical Gxygen” in fact falls under entry No. 116 relating to medicine. Hence we are unable to agree with the view taken by the Tribunal. In the view which we have already taken in the matter, we hold that “medical oxygen” and “nitrous oxide” have to be assessed under entry No. 116 of the First Schedule to the Act as it stood at the relevant time. The assessing authority will modify the assessment by applying the rate applicable under entry No. 116 of the First Schedule to the Act in respect of “medical oxygen” and “nitrous oxide”.

22. The above tax revision case is disposed of as above.