New Delhi, Jul 7 (IANS): The Karnataka Appellate Authority of Advance Ruling (AAAR) has ruled that 18 per cent GST is payable on alcohol-based hand sanitisers as it has properties of disinfectant and cannot be classified as a "medicament".
The appellate authority verdict came while dismissing a plea by Ce-Chem Pharmaceuticals.
The AAAR observed that isopropyl rubbing alcohol IP and chlorhexidine gluconate & isopropyl alcohol solution merit classification under 'Chapter Heading 3808' and attract 18 per cent GST.
The appellant submitted the alcohol-based hand sanitisers are classifiable under 'Heading 3004' and it is the intention of the Directorate General of Foreign Trade (DGFT) to identify the same as medicaments.
D.P. Nagendra Kumar and M.S. Srikar, while upholding the AAR's ruling, held that the rate of tax on isopropyl rubbing alcohol and chlorhexidine gluconate and isopropyl alcohol solution are goods falling under 'Chapter Heading 3808' and attract a tax rate of 9 per cent CGST and 9 per cent SGST.
With effect from June 14, 2021 up to September 30, 2021, the GST rate on hand sanitiser falling under 'Chapter Heading 3808.94' has been reduced to 5 per cent GST (2.5 per cent CGST and 2.5 per cent SGST) through a notification dated June 14, 2021.
"We state that a DGFT Notification is not an authority for determining the classification of goods under GST law. Classification of goods is to be determined based solely on the description of goods given in the First Schedule to the Customs Tariff Act read together with the relevant Section Notes and Chapter Notes. Moreover, the conditions and restrictions contemplated by one statute having a different object and purpose should not be mechanically imported and applied to a fiscal statute," the ruling said.
"The reference to the ITC HS Code for Alcohol-based hand sanitisers which has been made in the DGFT Notification dated 6-5-2020 is not a standard for interpreting the classification of goods as per the Customs Tariff Act. We, therefore, reject this submission of the appellant."