Page 53 - GSTL_7th May 2020_Vol 36_Part 1

2020 ] STATE OF ANDHRA PRADESH v. LINDE INDIA LTD. 11
“15. In our view, whether the products manufactured by the assessee can
be treated as “drugs or medicines” cannot be answered straightaway. The
medicinal content of the products, if any, has to be ascertained. Its curative
function has to be found out. Can the product be called a medicament at
all? Is it used to cure or alleviate or to prevent disease or to restore health or
to preserve health?...”
This Court held that the relevant enquiry is whether the product is understood to
be a medicine and is used to cure, alleviate or prevent disease or to restore health
or preserve health. The question in the present case does not concern all variants
of oxygen and nitrogen, but only Medical Oxygen IP and Nitrous Oxide IP.
20. Chapter IV of the 1940 Act is titled ‘Manufacture, Sale and Distribu-
tion of Drugs and Cosmetics’. Section 16 stipulates :
“16. Standards of quality. - (1) For the purposes of this Chapter, the ex-
pression “standard quality” means -
(a) In relation to a drug, that the drug complies with the standard
set out in the Second Schedule, and
(b) In relation to a cosmetic, that the cosmetic complies with such
standards as may be prescribed.”
Section 16(1)(a) stipulates that drugs that comply with the standards set out in
the Second Schedule shall be certified to be of ‘standard quality’ under the 1940
Act. The Second Schedule is titled ‘Standards to be complied with by Imported
Drugs and by Drugs manufactured for Sale, Stocked, or Exhibited for Sale or Dis-
tributed.’ Entry 5 of the Second Schedule reads :
“5. Other drugs -
Drugs included in the Indian Pharmacopeia.
Standards of identity, purity and strength specified in the edition of
the India Pharmacopoeia for the first time being in force and such other
standards as may be prescribed.
In case the standards of identity, purity and strength of the drugs are
not specified in the edition of the Indian Pharmacopoeia for the time being
in force but are specified in the edition of the Indian Pharmacopoeia imme-
diately preceding the standards of identity, purity and strength shall be
those occurring in such immediately preceding edition of the Indian Phar-
macopoeia and such other standards as may be prescribed.”
21. Drugs specified in the Second Schedule are required under the 1940
Act to comply with specified standards. Entry 5 prescribes that ‘other drugs’
means drugs included in the Indian Pharmacopoeia, for which standards are
specified therein. The Indian Pharmacopoeia Commission [IPC] is an autono-
mous institution of the Ministry of Health and Family Welfare, Government of
India. The IPC, through its publication titled ‘Indian Pharmacopoeia’ prescribes
standards for the identity, purity and strength of the drugs specified therein.
Medical oxygen (at 99.9% purity) is included as a drug termed as ‘Oxygen IP’.
Section 16, read with the Second Schedule and the specification of Medical Oxy-
gen in the Indian Pharmacopoeia lends support to the contention urged by the
respondents that Medical Oxygen IP is a drug as defined in Section 3(b)(i) of the
1940 Act.
22. Furthermore, in exercise of the powers conferred by Section 3 of the
Essential Commodities Act, 1955, the Central Government issued the Drug (Pric-
es Control) Order 2013 which came into force on the date of its publication in the
Official Gazette (15 May, 2013). Para 2(t) stipulates that the ‘National List of Es-
GST LAW TIMES  7th May 2020  53