On an application for advance ruling by the Springfields (India) Distilleries, the Goa Bench of the Goods and Service Tax Authority for Advance Ruling (AAR) has ruled that the alcohol based hand sanitizers will attract 18% of GST.
The applicant Springfields (India) Distilleries, a registered partnership firm under the business of manufacturing Hand Sanitizers, approached the authority for an advance ruling regarding the GST of the hand sanitizers.
A bench comprising J.K.Meena and Sarita S.Gadgil, Additional Commissioners of Central Tax observed that, the hand sanitizers manufactured by the appellant will be covered under a tax rate of 18%.
Ruling under Section 98 of CGST/GGST Act,2017.
The bench has ruled the hand sanitizers manufactured by the appellant company will be covered under HSN 3808 and the appropriate tax rate as per the schedule entry is 18%
"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", asserted by the bench.
Why 18 % GST ?
The bench observed that hand sanitizers which are produced by the applicant are alcohol based and are classifiable under heading 3808 of the Harmonised System of Nomenclature (HSN). The HSN is a system developed by the World Customs Organisation (WCO) under the aspiration of classifying all the goods in the world in a structural fashion. In India after the establishment of GST system, the HSN is also heavily relied upon for the determination of tax.
The descriptions that comes under the respective head are Insecticides, rodenticides, fungicides, herbicides, anti- sprouting products and plant -growth regulators, disinfectants and similar products. The tax rate for HSN 3808 is fixed as 18%
The bench has observed that, 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%"), as claimed by the applicant, the hand sanitizers which are alcoholic based comes under HSN 3808.
"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 Alcobased hand sanitisers and are classified under heading 3808 of HSN to which rate of GST applicable is 18%.", as observed by the bench.
The Ministry of Consumer Affairs, Food and Public Distribution vide notification CG-DL- E13032020-218645 had earlier classified Hand Sanitisers as an essential commodity under the Essential Commodities Act, 1955
On the aspect of 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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