In Re: Springfields (India) Distilleries - Ruling dated Jun.25, 2020 - Authority for Advance Rulings (Goa)
Query/ies: Whether hand sanitisers can be classified under HSN 3004.90.87 (viz., Antibacterial formulations, not elsewhere specified or included)? Whether hand sanitisers are exempt from GST (since they are classified as an essential commodity under the Essential Commodities Act, 1955)?
Observation: From the submissions made, the Authority has opined that the firm is engaged in manufacture of alcohol based hand sanitisers.
Ruling: Mere classification of hand sanitiser as essential commodity by the Ministry of Consumer Affairs is not a criteria for GST exemption. The alcohol based hand sanitisers are classifiable under HSN 3808. Consequently, they are chargeable with GST @ 18%.
Comment(s): The Directorate General of Foreign Trade has issued two notifications, dated May 06, 2020 and June 01, 2020, prohibiting the sale of alcohol based hand sanitisers in certain forms. From that, it is evident that such goods are classified under HSNs 3004, 3401, 3402 and 3808.94. Meanwhile, the World Health Organisation (WHO) issued a reference (viz., without legal status) in April 2020 that alcohol based hand sanitisers are classifiable under HSN 3808.94.
HSN 3004, which entails GST rate of 12%, lists medicaments for prophylactic or therapeutic use. While hand sanitisers are undoubtedly not for therapeutic use (viz., drug administered after onset of disease), can it be stated that they are for prophylactic use (viz., drug administered before onset of disease)? Are hand sanitisers comparable with the genre of medicaments listed in HSN 3004 (viz., containing penicillin, antibiotics, insulin, alkaloids, vitamins; anthlemintic drugs, anti-amoebic drugs, anti-protozoal drugs, anti-fungal drugs, anti-histaminics drugs, antacids preparations, anti-ulcer drugs, gastrointestinal drugs, anti-caner drugs; anti-tubercular drugs; anti-leprotic drugs; anti-malarial drugs; non-steroidal anti-inflammatory, analgesics and anti-pyratic drugs; anti-hypertensive drugs; anti-epiliptic drugs)?
On the other hand, HSN 3808.94 (which entails GST rate of 18%) covers insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant growth regulators, disinfectants and similar products. If the word "disinfectant" is read in association with insecticides, fungicides, herbicides, etc., would the reference to "disinfectant" herein cover floor cleaners (like Lizol / Phenyl) or hand sanitisers?
Further, HSN 3401 (which too entails GST rate of 18%) covers preparations for washing the skin like medicated toilet soaps. The latter appears proximate to hand sanitisers in common parlance.
Meanwhile, the Ministry of Finance (vide press release dated July 15, 2020) has clarified that sanitisers are disinfectants like soaps, anti-bacterial liquids, dettol, etc., which all attract GST of 18%. It remains to be seen whether this press release settles the issue or is a fodder for litigation!
