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2021 (9) TMI 1289 - AAAR - GSTClassification of goods - rate of tax - Micro-manipulator system - Intracytoplasmic Sperm Injection (ICSI) with ejaculated, epidymal or testicular spermatozoa used in Assisted Reproductive Technology Procedures - classifiable under tariff heading 9018 or 9011? - HELD THAT - Chapter Heading 9011 covers compound optical microscope as used by amateurs, teachers etc. and those for industrial use or for research laboratories, whether or not they are presented with their optical elements (objectives, eyepieces, mirrors etc.). This Chapter Heading also include Surgical microscopes for use by surgeons when operating on a very small portion of the body, in which their light sources result in independent light paths which provide a three-dimensional image. It has specifically been mentioned that this Chapter Heading excludes Ophthalmic binocular- type microscope (heading 90.18). Chapter Heading 9018 covers a very wide range of instruments and appliances, which in the vast majority of cases are used only in professional practice (e.g. by doctors, surgeons, dentists, veterinary surgeons, midwives) either to make a diagnosis, to prevent or treat an illness or to operate etc. Instruments and appliances for anatomical and autoptic work, dissection etc. and for dental laboratories (under certain conditions) are also included in this Chapter Heading. It has specifically been mentioned that this Chapter Heading does not cover Microscopes etc. of heading 9011 or 9012 - The Explanatory Notes for Chapter Heading 9018 also provides that the group Instruments and appliances for human medicine and surgery includes Ophthalmic instruments , which falls into various categories, including Diagnostic instruments such as opthalmoscopes; binocular loupes with head bands and binocular type microscopes, consisting of a microscope, an electric lamp with a slit, and a head rest, the whole being mounted on an adjustable support, for the examination of the eyes; tonometers (for testing the intra-ocular tension) eye specula . The MM System is also known as IVF technology in the medical world; that the MM System is a device which is used to physically interact with a sample under a microscope, where a level of precision of movement is necessary which cannot be achieved by the unaided human hand and may typically consist of an input joystick (a mechanism for reducing the range of movement) and an output section with the means of holding a micro-tool to hold, inject, cut or otherwise manipulate the object as required; that mechanism for reducing the movement usually requires the movement to be free of backlash which is achieved by the use of kinematic constraints to allow each part of the mechanism to move only in one or more chosen degrees of freedom, which achieves a high precision and repeatability of movement, usually at the expense of some absolute accuracy - MM System is a device used in ICSI procedure, IVF procedure or ART. It also appears that MM System consists of above mentioned five main components / elements which include inverted microscope , micro manipulator and micro injector . In case the MM System is supplied in unassembled or disassembled form, still the classification will be the same in view of Rule 2(a) of General Rules for the interpretation of the CTA, 1975, which provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article; that it shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled - MM System supplied by the appellant is appropriately classifiable under Chapter Heading 9018 of the CTA, 1975. Rate of Goods and Services Tax - HELD THAT - As per N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 and N/N. 1/2017-State Tax (Rate) dated 30.06.2017, Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments falling under Chapter Heading 9018 attracts Goods and Services Tax of 12% vide Sr. No. 218 of Schedule II of the said Notifications. Therefore, MM System supplied by the appellant are chargeable to Goods and Services Tax of 12%.
Issues Involved:
1. Determination of the correct classification of the product Micro Manipulator System (MM System). 2. Determination of the Goods and Services Tax applicable on the MM System. Comprehensive, Issue-Wise Detailed Analysis: Classification of Goods: 1. Appellant's Submission: - The appellant classified the MM System under Chapter Heading 9018 of the Customs Tariff Act, 1975 (CTA, 1975), arguing it is an instrument used in medical science for procedures like Intracytoplasmic Sperm Injection (ICSI) and Assisted Reproductive Technology (ART). - The MM System is described as a device used to interact with samples under a microscope with precision, consisting of components such as an input joystick and an output section for holding micro-tools. 2. GAAR's Ruling: - GAAR classified the MM System under Chapter Heading 9011, considering it a surgical microscope essential for IVF procedures. 3. Appellant's Arguments Against GAAR's Ruling: - The appellant contended that GAAR did not consider the functionality tests under HSN 9018 and relied solely on the absence of a specific mention of the MM System in the heading. - The primary function of the MM System is to carry out the ICSI procedure, with the microscope serving only as a visual aid, not the main function. - Reference was made to Chapter Note 3 of Chapter 9 and Notes 3 and 4 to Section XVI, emphasizing that the principal function of the MM System is medical and not magnification. 4. Explanatory Notes and Competing Chapter Headings: - Chapter Heading 9011 covers compound optical microscopes used for various purposes, including surgical microscopes. - Chapter Heading 9018 covers a wide range of medical instruments and appliances, explicitly excluding microscopes of heading 9011 or 9012 but including instruments equipped with optical devices. 5. Detailed Analysis: - The MM System, used in ICSI and IVF procedures, consists of multiple components, including an inverted microscope, micromanipulators, microinjectors, and other elements necessary for precise medical procedures. - Letters from various organizations and professionals confirmed the medical use of the MM System, emphasizing its role in ART and ICSI procedures. - The Explanatory Notes for Chapter Heading 9018 indicate that instruments used exclusively in professional medical practice, equipped with optical devices, fall under this heading. 6. Conclusion on Classification: - The MM System is appropriately classifiable under Chapter Heading 9018 of the CTA, 1975, as it is primarily used in medical procedures and the microscope is merely an aiding component. - This classification holds even if the MM System is supplied in unassembled or disassembled form, as per Rule 2(a) of the General Rules for the interpretation of the CTA, 1975. Determination of Goods and Services Tax: 1. Applicable GST Rate: - As per Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 1/2017-State Tax (Rate) dated 30.06.2017, instruments and appliances used in medical sciences falling under Chapter Heading 9018 attract a GST rate of 12% (CGST 6% + SGST 6%). 2. Final Decision: - The Advance Ruling No. GUJ/GAAR/R/22/2020 dated 02.07.2020 is modified to classify the MM System under Chapter Heading 9018. - The MM System supplied by the appellant is chargeable to 12% GST as per the relevant notifications. Summary: The judgment determined that the Micro Manipulator System (MM System) used in medical procedures like ICSI and ART is classifiable under Chapter Heading 9018 of the Customs Tariff Act, 1975. Consequently, the applicable Goods and Services Tax (GST) rate for the MM System is 12% (CGST 6% + SGST 6%). The ruling by the Gujarat Authority for Advance Ruling (GAAR) was modified accordingly.
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