Page 48 - GSTL_7th May 2020_Vol 36_Part 1

6 GST LAW TIMES [ Vol. 36
(iii) Though Section 3(b)(i) of the 1940 Act includes substances that are
necessary aids for treating surgical or other cases, Entry 88 also con-
tains an exclusion clause. Entry 100(36) of Schedule IV specifically
excludes “medical grade oxygen”. Absent a specific inclusion of
Medical Oxygen IP and Nitrous Oxide IP in Entry 88, they fall with-
in the ambit of unclassified goods in Schedule V; and
(iv) Every ‘substance’ cannot be said to fall within the ambit of Entry 88
merely because it is used for medicinal purposes. For a substance to
fall within the ambit of Entry 88, it must accord with the definition
stipulated in Section 3(1)(b) of the 1940 Act.
8. Opposing the above submissions, Learned Counsel for the respond-
ents urged :
(i) Section 3(b)(i) of the 1940 Act defines a ‘drug’ broadly as a medicine
or substance used for or in the diagnosis, treatment, mitigation or
prevention of any disease or disorder. Medical Oxygen IP and Ni-
trous Oxide IP are widely known for their curative properties and
as medicines in the diagnosis, treatment, mitigation and prevention
of diseases and disorders;
(ii) Medical Oxygen and Nitrous Oxide are included in the Indian
Pharmacopoeia which prescribes standards for drugs. The Indian
Pharmacopoeia has legal status under Section 16 of the 1940 Act.
Consequently, Medical Oxygen and Nitrous Oxide are drugs within
the ambit of Section 3(1)(b) of the 1940 Act. As Medical Oxygen IP
and Nitrous Oxide IP are ‘medicines’ within the ambit of Section
3(1)(b) of the 1940 Act, they are expressly included in Entry 88 of the
2005 Act;
(iii) Goods must be classified according to their popular meaning or as
they are understood in their commercial sense. Oxygen is used
widely as an emergency medicine as well as for the delivery of med-
ical services. Nitrous Oxide is used in surgery and dentistry for an-
esthetic purposes. Applying the common parlance test, there is no
doubt that the products in question are used in the mitigation of
diseases and disorders and fall within the ambit of Entry 88 as
drugs defined in Section 3(b)(i) of the 1940 Act;
(iv) Several High Courts in the country have uniformly held that Medi-
cal Oxygen IP and Nitrous Oxide IP are medicines within the mean-
ing of their respective state enactments. These include Southern Gas
v. State of Kerala [2005 (139) STC 504 (Ker)], State of Tamil Nadu v.
Ram Oxygen [2011] 5 GST 87 (Mad HC), Panki Oxygen v. State of
Uttar Pradesh [2014 SCC Online All 2144], Chimanlal v. State of
Maharashtra [2004 (137) STC 68], Indian Oxygen v. State of Karnataka
[1990 (79) STC 351], State of Kerala v. Indian Oxygen [2003 (129) STC
471] and ACTO, Special Circle Jodhpur v. M/s. Jodhpur Gases [2009
SCC Online 2459];
(v) The National List of Essential Medicines 2011 which constitutes
Schedule-I of the Drug Price (Control) Order 2013, includes ‘Oxy-
gen’ and ‘Nitrous Oxide’ as ‘anesthesia’ under Section 1; and

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