Heinz India has moved the Supreme Court against the Kerala government's decision to impose a high sales tax rate on the firm's medicated prickly heat powder Nycil.
A bench headed by Justice S B Sinha has issued notice to the state government asking it to explain why Heinz should pay sales tax of 20 per cent on its prickly heat powder against 8 per cent charged for medicines and drugs.
Heinz has challenged the Kerala High Court's ruling, which held Nycil was taxable at 20 per cent as medicated talcum powder rather than at 8 per cent as medicines and drugs.
According to the petitioner, Nycil was manufactured under a drug licence issued under the Drugs and Cosmetics Act, 1940, and its active ingredient Chlorphenesin IP was meant to treat, cure and prevent fungus infection, prickly heat sores, etc.
The firm said that its prickly heat powder should be taxed at 8 per cent, as supplies to drugs and medicines, rather than 20 per cent, as demanded by the state government under the Kerala General Sales Tax Act, 1963.
Heinz also said that it had paid 8 per cent sales tax on its sales of the powder as per the consistent practice throughout the country.