The Hindu Business Line : Will the taxman read first chapter in history of medicine?

THIS story is on saffron confusion. Not what a political party may chronically be suffering from, but about what brought Khosala Kesharwala (KK) to Bombay High Court recently.

KK, a registered dealer under the Bombay Sales Tax Act, 1959 (BST), purchased kesar (saffron) from Kashmir and sold it in Maharashtra. KK was of the view that saffron is an ayurvedic medicine in natural form, covered under a 1985 exemption Notification, and that it attracted sales tax at 4 per cent.

But the sales tax officials were of the view that saffron is not ayurvedic medicine, and that, therefore, no benefit was available as claimed by KK. The product fell under an entry that spoke of `culinary and favouring essences', and liable to tax at 15 per cent, said the Department.

Aggrieved by the order, KK approached the Maharashtra Sales Tax Tribunal; it set aside the Department's order, and held that the saffron sold by KK is an ayurvedic medicine in natural form covered by the notification. Not inclined to give up, the Department knocked the doors of the High Court.

Saffron, for starters

There are only two or three places in the world where saffron grows, and Kashmir has the privilege of being one of these, informs www.kashmirhub.com. Saffron, the costliest spice in the world, has the botanical name, crocus sativus, and blooms in autumn. "Orange stigmas of the saffron plant are harvested as saffron and used as flavouring and colouring agent in various recipes. Saffron is added to Kahwa — the traditional saffron tea drunk by people in Kashmir."

Gernot Katzer's Spice Pages (www.uni-graz.at) lists dozens of translations of kesar (such as Zafren in Yiddish, Koma koma in Malay, and Faan huhng faa in Chinese). "Approximately 1,50,000 flowers are needed for one kilogram of dried saffron; typically, one would need 2,000 m{+2} field area per kg harvest." Spain and Iran are the largest producers, accounting together for more than 80 per cent of the world's production, which is approximately 300 tonnes per year, informs the site. Don't miss the useful links there.

A detailed page on saffron in Wikipedia traces the word to the 12th century Old French word safran, which derives from the Latin word safranum. "Saffron contains in excess of 150 volatile and aroma-yielding compounds. It also has many non-volatile active components, many of which are carotenoids, including zeaxanthin, lycopene, and various - and - carotenes," one learns. "Cleopatra used saffron in her baths so that lovemaking would be more pleasurable. Egyptian healers used saffron as a treatment for all varieties of gastrointestinal ailments."

Flavour of the Department

Vinay Sonpal, arguing for the Department, pointed out that saffron was specifically included along with spices during the period 1981 to 1990, and under `food dyes and colours, culinary and flavouring essences whether in a concentrated or diluted form' during 1992. Accordingly, even before the issuance of the exemption notification, "saffron was always considered to be an item of spice used in cooking as colouring and flavouring material," said Sonpal.

By ruling that saffron was an ayurvedic medicine in the natural form, the tribunal had erred, argued Sonpal. Saffron, like turmeric, ginger, cloves and so on, may have some medicinal properties but that itself would not make these items ayurvedic medicines, he said.

The Revenue made a reference to a book on ayurvedic medicine written by Raghuvanshi; it seems `several day-to-day items' such as mangoes, pineapples, walnuts, and sugarcane were shown in that book as items of ayurvedic medicine. Sonpal, therefore, submitted that there was a basic distinction between the substances that are themselves medicines, and substances that have medicinal properties. The fact that kesar has medicinal properties does not make it an ayurvedic medicine in the natural form covered by the exemption notification, said Sonpal.

Another reference that was relied upon by the Department was a quote from a book written by Chopra: that in European medicines saffron is used to a very limited extent. "If at all, it is used mainly in cookery as a colouring and flavour material." Sonpal contended that even in India "saffron is mainly used in cookery as a colouring and flavouring material in the manufacture of kesarbhaat, shrikand and other sweets," and that the item was rightly included with spices for sales tax purposes.

The ayurvedic argument

N. R. Badheka spoke for KK. It is well settled in law that the burden of establishing that kesar falls under a particular entry is upon the Department, and if the item falls under two entries, then the one which is beneficial to the assessee should be applied, she argued.

To match the references to books that the Department had produced, Badheka too drew support from a classic authoritative book called Indigenous Drugs of India, quotations from Aushadh Dravya Gyankhand, a standard ayurvedic textbook and also "the State Government Notification, being the enumeration by a `committee for standard and genuine ayurvedic herbs & drugs' appointed by the then Government of Bombay, wherein kesar is considered to be a drug". Badheka also relied upon an article from Dharma Yug to show that in the trade parlance kesar is considered as ayurvedic drug.

"She submitted that like ayurvedic and unani drugs, kesar couldn't be used by itself by swallowing it or eating it. Therefore, most of the ayurvedic drugs which are potent in the natural form are used either after powdering, grinding, and taken along with honey, milk, water, ghee, butter, and so on." Even if kesar were a colouring and flavouring agent, the taxing entry that the Department was leaning against pertained to flavouring essences and not flavouring agents, pointed out Badheka.

Justices H. L. Gokhale and J. P. Devadhar heard the arguments and studied the history of the taxing provision. Since July 1, 1981, saffron has been classified by the State Government as an item of spice, they said. "Spices are used to add flavour to the food preparations."

On the question whether saffron is an ayurvedic medicine, the court concurred with the Department that there was a distinction between substances, which are medicines themselves, and substances that have medicinal properties. Exemption refers to substances that are medicines themselves and not to the substances with medicinal properties, said the court.

"Therefore, the fact that saffron is also used in ayurvedic preparations like kesari jeevan and so on would not make it to be an ayurvedic medicine." What the exemption notification referred to was "the sale or purchase of ayurvedic medicines or unani medicines in a prepared form or in the natural form," stated the court. To qualify for exemption, the item itself must be an ayurvedic medicine.

"It is not the case of the assessee that the saffron is sold as an ayurvedic medicine. In fact, in the present case, the assessee has sold saffron to a kirana merchant.

Therefore, the fact that the saffron is also used in the ayurvedic preparations would not mean that saffron itself is an ayurvedic medicine," reads the court's verdict dated December 16, 2005.

Referring to Badheka's argument (that the fact that saffron is used in cooking as a colouring and flavouring material cannot be a ground to hold that saffron is not an ayurvedic medicine in the natural form), the court observed that saffron is not used in food preparations and sweets as an ayurvedic medicine.

"There is no material on record to show that saffron has only therapeutical value. Even the books/notifications relied upon by the assessee which are referred to in the order of the tribunal do not set out therapeutical value of saffron as an ayurvedic medicine."

Merely because saffron finds place in some of the books, the tribunal ought not to have held that saffron is an ayurvedic medicine in the natural form, said the court. "Similarly, the fact that saffron is nowadays increasingly used in the ayurvedic preparations would not qualify saffron for being considered to be an ayurvedic medicine in the natural form. In our opinion, the decision of the Tribunal in holding that saffron is an ayurvedic medicine in the natural form even though it does not have any therapeutical value is patently erroneous and cannot be sustained," ruled the court, deciding against KK.

"Thy plants are an orchard of pomegranates, with pleasant fruits; camphire, with spikenard, spikenard and saffron; calamus and cinnamon, with all trees of frankincense; myrrh and aloes, with all the chief spices: A fountain of gardens, a well of living waters, and streams from Lebanon," reads a snatch from Song of Songs (Old Testament). "Who with thy saffron wings upon my flowers diffusest honey-drops, refreshing showers," writes the Bard in The Tempest.

If those literary finds didn't lift KK's mood, here is a line from www.nature.com: `Oldest medicinal plant identified'. It reads, "New evidence has found that the earliest use of a medicinal plant could be around 5,000 years before previously thought," and cites a paper by Gordon Bendersky and Susan Ferrence in Perspectives in Biology and Medicine (Volume 47, Number 2, Spring 2004, pp. 199-226).

Find an abstract of the paper on http://muse.jhu.edu. See also a detailed article dated March 2, 2004 by William H. Honan on www.nytimes.com, titled `Researchers Rewrite First Chapter for the History of Medicine'.

It said: "Until now, the earliest known use was around 1000 BC, with visual and written evidence for the myrtle, the lily, the poppy and others. Now, scholars say, the dating of a volcanic eruption and botanically accurate wall paintings indicate that saffron has been a versatile medicine since 3,500 years ago."

Read in Honan's article about the frescoes showing a goddess of medicine, and about records from many countries on the use of saffron in 90 illnesses over four millennia. Usefully, the site www.royalsaffron.com looks at evidence in old scriptures.

Tailpiece

"After simplification, will FBT become SFBT?"

"Simplified Fringe Benefit Tax?"

"But it could be same FBT!"

Detaxification@TheHindu.co.in

D. Murali

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