The Goa bench of the Goods and Services Tax (GST)Authority of Advance Ruling (AAR) has held that 18% GST will be levied on all alcohol-based hygiene products, amid the ongoing debate over GST rate on hand sanitizers. It added that its classification as an essential commodity cannot be a criterion for exemption from GST.
The applicant Springfields Distilleries, a Hand Sanitizers manufacturing business, approached Goa AAR over classification and applicable rate of GST on the hand sanitizer. also sought an opinion on whether it will be exempt from GST as the consumer affairs ministry has classified hand sanitizers as essential commodity.
Ruling under Section 98 of CGST/GGST Act,2017.
The hand sanitizers manufactured by the appellant will be covered under HSN 3808 and the appropriate tax rate as per the schedule entry is 18%, ruled by a bench comprising J.K.Meena and Sarita S.Gadgil, Additional Commissioners of Central Tax
It was asserted by the court that, “The ruling so sought by the Applicant is according answered as under :- Alcohol based hand sanitisers manufactured by the applicant are covered by HSN 3808 and are accordingly taxable at appropriate rate as per schedule entry notified vide notification No.1 Central Tax (Rate ) dated 28/06/2017".
HSN 3808:
The alcohol-based hand sanitizers produced by the applicant are classifiable under heading 3808 of the Harmonised System of Nomenclature (HSN), observed by the Bench. The aspiration of classifying all the goods in the world in a structural manner lead the World Customs Organisation (WCO) to develop The HSN is a system.
The descriptions that come under the HSN 3808 are Insecticides, rodenticides, fungicides, herbicides, anti- sprouting products and plant -growth regulators, disinfectants and similar products. 18% is the fixed tax rate for HSN 3808.
The ruling comes at a time when the GST administration is investigating GST evasions, it was felt that, alcohol-based sanitizers manufacturer's by wrongly classifying the item under a different heading of ‘medicament’ are only paying 12% GST.
As claimed by the applicant, the alcohol-based hand sanitizers comes under HSN 3808 instead of HSN 30049087("HSN Code & rate: 30049087 - Antihypertensive drugs : Antibacterial formulations not elsewhere specified or included HS Code and Indian Harmonized System Code for which GST Rate is 12%"), observed by the bench.
The bench observes, "On going through the submissions made by the applicant and through the provisions of the GST Act this authority is of the opinion that Hand Sanitisers manufactured by the applicant are of the category of Alcohol-based hand sanitisers and are classified under heading 3808 of HSN to which rate of GST applicable is 18%".
Essential Commodity:
Regarding the essential commodity the bench has observed that, " as far as exempting Hand sanitisers as essential commodity, since it is classified as such by Ministry of Consumer Affairs, Food and Public Distribution, this authority is of the view that exempted goods are covered by notification no.2/2017/- Central Tax (Rate) dated 28/06/2017. Merely classifying any goods as essential commodity will not be the criteria for excepting such goods from GST"
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