In re Eskag Pharma Pvt Ltd (GST AAR West Bengal)
The labels of the products mentioned under Sl Nos. 2 to 13 of the above table describe them as dietary/health supplements. The labels of the products mentioned under Sl No. 7, 10,11 and 12 specifically mention that these products are not to be consumed as medicine or for treatment, cure or prevention of any disease. It is, therefore, clear that the products mentioned under the above serial numbers of the table above are being offered as food supplements and sometimes with specific declaration that they are not meant for use as medicine for treatment of any disease. Note 1(a) of Chapter 30 excludes food supplements from Chapter 30. These products are not, therefore, classifiable as medicament under HSN 3004.
Moreover, according to section 3(b) of the Drugs and Cosmetics Act, 1940, “drug” includes inter alia all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals. Section 18(c) of the said Act prohibits manufacture, stocking or sale of any drug without a license procured under the Act. The Applicant has failed to show any such license for the manufacture and sale of the products mentioned under Sl Nos. 2 to 13 of the above table. These products cannot, therefore, be lawfully offered to the consumers as medicines having therapeutic or prophylactic uses.
Food supplements are not specifically covered under any HSN. The Section or Chapter Notes or the Explanatory Notes to the Tariff Act do not contain any specific reference to inclusion of food supplements. The products mentioned under Sl Nos. 2 to13 of the above table are, therefore, classifiable under HSN 2106, being food preparations not elsewhere specified or included, and taxable under Sl No. 23 of Schedule III of the Rate Notification, as amended vide Notification No. 41/2017-CT(Rate) dated 14/11/2017 (corresponding State Notification No. 2019-FT dated 14/11/20174).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, WEST BENGAL
1. Admissibility of the Application
1.1 The Applicant is stated to be a manufacturer of pharmaceuticals, APIs and other medicaments. He seeks a ruling on classification of fifteen products. Advance ruling is admissible on classification of any goods or services or both under section 97(2)(a) of the GST Act.
1.2 The Applicant declares that the issue raised in the application is not pending nor decided in any proceedings under any provisions of the GST Act. The officer concerned from the revenue has raised no objection to the admissibility of the Application.
1.3 However, the West Bengal Appellate Authority for Advance Ruling (hereinafter the WBAAAR), while disposing the appeal against the ruling pronounced by this Authority in the matter of Akansha Hair & Skin Care Herbal Unit Pvt Ltd (Appeal Case No. 2/WBAAAR/Appeal/2018 dated 01/08/2018), cautioned this Authority against accepting a single application for classifiaction of multiple products, where such products cannot be clubbed together into a single category.
1.4 The Applicant argues that section 97(2)(a) of the GST Act allows filing of an application seeking advance ruling on classification of any goods or services or both. Neither the Act nor the rules framed there under prohibits filing a single application for seeking classification on multiple products. The above instruction of the ld WBAAAR is, therefore, unlawful. An order without any legal support has no binding effect as contemplated in Art 141 of the Constitution. In support of his argument the Applicant refers to several judgments of the apex court: Siddharam Satlingappa Mhetre [Criminal Appeal No. 2271 of 2010], Synthetics and Chemicals Ltd [(1991) 4 SCC 139], Thota Sesharathamma –vs-Thota Manikyamma (Dead) [(1991) 4 SCC 312] and B. Satyanarayana Rao (Dead) [Civil Appeal 883 of 1993].
1.5 The common thread in the above judgments is reference to the rule of per incurium. It can be applied when a court omits to consider a binding precedent of the same court or of the superior courts, or when the court omits to consider the relevant statutory provisions. In such situations the decision of the court is said to be given per incurium, and has no binding effect of law. It is a decision given sub-silentio in the sense that the court has not applied its mind to the particular points of law involved. “A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Art 141” [Synthetics and Chemicals Ltd; (1991) 4 SCC 139].
1.6 The decision of a court is limited to the dispute or the question on which a judgment, decree or ruling is given. In Akansha Hair & Skin Care Herbal Unit Pvt Ltd (supra) the ld WBAAAR decided whether the ruling passed by this Authority, classifying several products, was valid. The ld WBAAAR concurred with this Authority on most of the issues, and modified the ruling on certain points. The ld WBAAAR did not modify the ruling of this Authority on the issue of classifying multiple products in a single application. The Applicant’s reference to the above judgments of the apex court is not, therefore, relevant in the present context. While passing a judgment, decree or ruling, the court may touch upon different issues that are not the subject matter of the dispute or decision thereon. An instruction to this Authority, given in course of discussing the appeal case, is one such point.
1.7 While issuing an instruction to the subordinate court – a power inherent to the authority of a higher court, the ld WBAAAR is not bound to discuss the relevant statutory provisions etc. Of course, the instruction must not be illegal. The instruction of the ld WBAAAR to limit the ruling to a single category of goods or services or both while disposing an application on classification, does not deny the applicant his right to seek an advance ruling on multiple products. It does not, therefore, violate section 97(2)(a). This Authority is, therefore, bound to follow the instruction.
1.8 The table below contains information about the composition and category of the products as provided in the Application. The Serial numbers of this table are the same as that of Table I of the Application.
