Beecham Foods Ltd v Commissioners of Customs and Excise
Jurisdiction | England & Wales |
Judge | Lord Reid,Lord Morris of Borth-y-Gest,Lord Wilberforce,Lord Pearson,Lord Diplock |
Judgment Date | 26 January 1972 |
Judgment citation (vLex) | [1972] UKHL J0126-1 |
Date | 26 January 1972 |
Court | House of Lords |
[1972] UKHL J0126-1
House of Lords
Lord Reid
Lord Morris of Borth-y-Gest
Lord Wilberforce
Lord Pearson
Lord Diplock
Upon Report from the Appellate Committee, to whom was referred the Cause Commissioners of Customs and Excise against Beecham Foods Limited, that the Committee had heard Counsel as well on Monday the 1st, as on Wednesday the 3d, Thursday the 4th and Monday the 8th, days of November last, upon the Petition and Appeal of the Commissioners of Customs and Excise, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 3d of December 1970, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Beecham Foods Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 3d day of December 1970, complained of in the said Appeal, be, and the same is hereby Reversed, and that the Judgment of the Honourable Mr. Justice Ungoed-Thomas of the 9th day of May 1969, thereby Discharged, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Chancery Division of the High Court of Justice, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is further Ordered, That there be no Order as to Costs in the Court of Appeal: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
The question in this case is whether purchase tax is payable in respect of sales of Ribena. It is a syrup the composition of which is shewn on the label on the bottles in which it is sold:
Per cent. | |
Syrup of Blackcurrant B.P.C. … … … | 70 |
Syrup B.P. … … … … … | 25·6 |
Vitamin C added … … … … … | ·19 |
and it is said to contain not less than 75 mg. Vitamin C per fluid ounce. Dilution is advised with water, soda water or milk.
The Appellants maintain that it is taxable under the Purchase Tax Act 1963 Schedule I Group 35 as a manufactured syrup for the preparation of a beverage. I think that it clearly comes within this class. When diluted the syrup makes a pleasant fruit drink. We have to determine the character of the goods at the stage of sale by the wholesaler to the retailer. This syrup has been on the market for many years. Sales have been very large and there has been widespread publicity and advertising. Any retailer when buying it would know the types of customers who buy it. Some will buy it without regard to any medicinal quality, simply as a pleasant fruit drink. It is rather expensive as a mere fruit drink and no doubt many will buy it with more or less regard to its medicinal properties, and more or less regard to its quality as a pleasant beverage. Some may buy it chiefly for its medicinal qualities. I can see no reason why the fact that a beverage has medicinal qualities should prevent it from falling within this group. It must be a question of fact and degree whether a particular product does fall within the group. Here I think there can be no reasonable doubt.
But that is only the first step in determining whether this product is taxable. Group 33 comprises drugs and medicines manufactured or prepared (excluding toilet preparations) and it contains an exemption of goods specified in what is now the Purchase Tax (No. 2) Order 1968, 1968 S.I. 1511. If Ribena comes within this Order admittedly the effect is not only that it is exempt from tax under Group 33 but that it is also exempt from tax under any other Group including Group 35.
So the real question in this case is whether Ribena comes within the scope of that Statutory Instrument. Head II comprises the substances described under this head (one of which is vitamins) and also preparations consisting of one of these substances and one or more of the following things, namely an excipient, vehicle, base or preservative. The Respondents maintain that Ribena consists only of a vitamin and a vehicle. I cannot agree. I think that "vehicle" must mean a substance which being mixed with the active substance—here vitamin C—serves as a convenient means of conveying the active substance from the manufacturer into the body of the consumer.
I cannot regard the blackcurrant syrup as being in the whole circumstances a vehicle within the meaning of the provision. Typically a vehicle would be an inactive substance which is of no independent value to the consumer. It would be too narrow so to confine the term: e.g. the flavour of the vehicle may be important to the consumer. But I think that the vehicle must be ancillary to the active substance. I do not think that that can be said of the blackcurrant juice in Ribena. Taking all the factsfrom whatever point of view one looks at the matter the blackcurrant juice appears to me to be a main element and probably the most important element in the product.
The problem can also be approached by asking whether Ribena is in any true sense a medicine within the meaning of Group 33 and the Order. There is no definition of "medicine" so it must be construed as an ordinary word of the English language. One must look at the whole picture and decide whether, even giving to medicine a wide meaning, Ribena can be so regarded.
It is said for the Appellants that Ribena is a mere dietary supplement. I do not think that that is at all helpful. Suppose a person needs or thinks he needs more vitamin C than he is likely to get from his ordinary diet. He may take orange juice which to my mind is plainly not a medicine, or he may take tablets of ascorbic acid which to my mind plainly is a medicine. Ribena comes somewhere between the two. Whether it is a medicine must I think be decided on wider grounds.
No doubt it is capable of being used as a medicine. The label on the bottle tells you how much to take if you need or think you need a particular quantity of vitamin C. But equally one could by enquiry discover how much orange juice to take to get a particular amount of the vitamin.
It appears to me that really the only points in favour of the Respondent's contention are that Ribena is carefully prepared according to a pharmaceutical formula and that it contains a fairly large amount of the vitamin. So it is more convenient for use for medicinal purposes than other natural or manufactured foods or drinks which contain this vitamin. But I do not think that that makes it a medicine. The fact that a preparation contains some substance which by itself or in a different preparation would clearly be a medicine does not get one very far. Indeed I think that the same preparation sold with one get-up, method of marketing and advertising and user might not be a medicine while the same preparation sold with a different get-up and method of marketing, advertising and user might properly be regarded as a medicine. As with so many English nouns there is no clear limit to the denotation of the word medicine. All the circumstances must be considered and there may be cases where it is extremely difficult to decide whether or not the term medicine is properly applicable. But here I think that however one approaches the matter it would be a misuse of language to call Ribena a medicine and I would therefore allow the appeal. I agree with the view of my noble and learned friend Lord Wilberforce as to costs.
My Lords,
In his careful judgment the learned judge helpfully analysed the provisions of sections 1 And 2 of the Purchase Tax Act 1963 and the relevant provisions of Schedule 1. As a consequence I find it unnecessary to refer other than briefly to certain of the issues which have arisen. If Ribena comes within the general description of the goods comprised in Group 33 but is included in the goods mentioned under a heading "Exempt" then Ribena would be exempt from all charge to tax even though it comes within the general description of goods comprised in another Group.
I turn then to consider Group 33 which is a group comprising drugs and medicines manufactured or prepared (except toilet preparations). It is common ground that Ribena is either manufactured or prepared and that it is not a toilet preparation. If it comes within the general description of being either a drug or medicine then it will be exempt from tax if it is mentioned under a heading "Exempt".
There are two exempt classes. The first is "Goods complying with the Provisions of Part II of this Schedule". Part II is headed "Conditions of Exemption of Drugs and Medicines comprised in Group 33 under Paragraph (1) of Heading 'Exempt' in that Group". One condition (no. 4) in Part II is that "There must not appear in the get-up of the goods or on the goods "apart from any get-up—(a) any trade mark as defined in the Trade Marks Act 1938 …". This condition was not satisfied because the trade mark Ribena does so appear. But had this condition been satisfied and if the other conditions were satisfied then it seems as though it was conceded in the Court of Appeal that on that basis Ribena would have been "exempt". Such a concession...
To continue reading
Request your trial-
SiS (Science in Sport) Ltd
...v Texas Commerce International Bank Ltd ELR[1982] QB 84 Bioconcepts Ltd VAT[1995] BVC 545 C & E Commrs v Beecham Foods Ltd UNK[1972] 1 All ER 498 GUS Merchandise Corp Ltd (1978) VATTR 28 L'Arome International Ltd (in receivership) VATNo. 14,419; [1996] BVC 4374 McCormick (UK) plc VATNo. 15,......
-
Rivella (UK) Ltd
...following cases were referred to in the decision: Bioconcepts Ltd VATNo. 11,287; [1995] BVC 545 C & E Commrs v Beecham Foods Ltd UNK[1972] 1 All ER 498 Orchid Drinks Co Ltd VATNo. 14,222; [1996] BVC 4324 Smith Kline Beecham plc VATNo. 13,674; [1996] BVC 4198 Snapple Beverage Corp (now Quake......
-
Bio Oil Research Ltd
...Tribunal Bio Oil Research Ltd The following cases were referred to in the decision: Beecham Foods Ltd v C & E Commrs UNK(1972) 1 All ER 498 Duke of Buccleuch ELR(1889) 15 PD 86 Evans VAT(1976) 1 BVC 1050 R v Ramsgate (Inhabitants) ENR(1827) 6 B & C 712 Zero-rating - Drugs, medicines etc. - ......
-
TC03754: Lees of Scotland Ltd; Thomas Tunnock Ltd
...[1997] BVC 408. (Ferrero 2) [2]R & C Commrs v Procter & Gamble UKVAT [2009] BVC 461. (Pringle 2) [3]C & E Commrs v Beecham Foods LitdWLR [1972] 1 WLR 241 (Beecham) [4]Marks & Spencer plc v C & E CommrsVAT [2005] BVC 503. (M&S4) [5]Marks & Spencer plc v C & E CommrsVAT [2009] BVC 106. (M&S3)......