Hand Sanitizers has been in the news since India has been hit by COVID-19 pandemic and GST appears to be no exception. There has been much buzz about the rate of GST applicable on Hand Sanitizers. Recently DGGI through an internal letter had clarified that GST @18% is applicable on alcohol based Hand Sanitizers (HSN 3808). It was stated in said letter that many suppliers are mis-classifying such sanitizers under HSN 3404 and applying 12% GST rate which is not correct.
Subsequent upon issuance of above clarification by DGGI, now Goa Authority of Advance Ruling (AAR) has also ruled that Alcohol-Based Hand Sanitizers manufactured by the applicant are covered by HSN 3808 and are accordingly taxable at the rate of 18%.
Facts of the case/ Contention of applicant:
- The applicant, Springfields (India) Distilleries is a registered partnership firm manufacturing Hand Sanitizers vide License issued by Directorate of Food and Drug Administration.
- Applicant is of the view that Hand Sanitizers are covered under HSN 30049087 and to be taxed @ 12% under GST.
- Further the applicant also of the view that Hand Sanitizers being classified as essential commodity by Ministry of Consumer Affairs,Food and Public Distribution should be exempt from GST.
Questions of which Ruling was sought:
Hand Sanitizer is covered under which HSN and what is the rate of tax applicable.
The Ministry of Consumer affairs , Food and Public Distribution in a Notification No. CG-DL-E13032020-208645 has classified Hand Sanitizers under the Essential Commodities Act, 1955 as an essential commodity and thus whether Hand Sanitizers are exempt from GST
Order of Goa AAR: Ruling
- The Goa AAR ruled that Alcohol-Based Hand Sanitizers manufactured by the applicant are covered by HSN 3808 and are accordingly taxable at the rate of 18%.
- Further in regard to exemption, the AAR stated in its order that hand sanitizers as an 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 commodities will not be the criteria for exempting such Goods from GST.
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