2020 (7) TMI 304 - AAR - GST

Classification of goods - Hand Sanitizers - whether covered under HSN 30049087 or not - rate of GST - HELD THAT - Hand Sanitizers manufactured by the applicant are of the category of Alcobased hand sanitizers and are classifiable under heading 3808 of HSN to which rate of GST applicable is 18%. Exemption form GST - HELD THAT - As far as exempting hand sanitizers 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 exempting such Goods from GST.

Summary

Issues: Classification of Hand Sanitizer under HSN Code, Rate of GST Applicable, Exemption from GST as an Essential Commodity

Classification of Hand Sanitizer under HSN Code:
The applicant, a registered partnership firm manufacturing Hand Sanitizers, sought an Advance Ruling on the classification of Hand Sanitizer under the HSN Code. The applicant believed that Hand Sanitizers fall under HSN Code 30049087 and should be taxed at 12% under GST. However, the Authority determined that the Hand Sanitizers manufactured by the applicant, being alcohol-based, are classifiable under heading 3808 of the HSN. This classification attracts a GST rate of 18%.

Rate of GST Applicable:
The Authority analyzed the submissions made by the applicant and the provisions of the GST Act to ascertain the appropriate GST rate for Hand Sanitizers. It was concluded that alcohol-based Hand Sanitizers manufactured by the applicant fall under HSN 3808 and are taxable at the rate specified in Notification No. 1 Central Tax (Rate) dated 28/06/2017. Therefore, the applicable GST rate for the Hand Sanitizers in question is 18%.

Exemption from GST as an Essential Commodity:
The applicant also sought clarification on whether the Hand Sanitizers supplied by them could be classified as an essential commodity and thus be exempt from GST. While the Ministry of Consumer Affairs, Food and Public Distribution had classified Hand Sanitizers as an essential commodity, the Authority pointed out that mere classification as an essential commodity does not automatically exempt the goods from GST. Exempted goods are covered by Notification no.2 /2017/- Central Tax (Rate) dated 28/06/2017. Therefore, despite being classified as an essential commodity, Hand Sanitizers are not exempt from GST.

Conclusion:
In conclusion, the Advance Ruling Authority determined that the Hand Sanitizers manufactured by the applicant are to be classified under HSN 3808 and taxed at the rate specified in Notification No. 1 Central Tax (Rate) dated 28/06/2017, which is 18%. The classification as an essential commodity did not warrant exemption from GST, as per the relevant provisions.