In re Sun Pharmaceutical Industries Ltd. (GST AAR Maharashtra)
Chapter heading 2106 of the Tariff specifically covers ‘Food preparations not elsewhere specified or included’ and in view of the submissions made by the applicant it is clear that ‘Prohance-D (Chocolate)’ is a food preparation which is meant to be consumed by people by dissolving the same in water or milk. It is thus, a “food preparation”, squarely covered under Chapter Heading 2106 of the Customs Tariff. We also find that both, the applicant as well as the jurisdictional officer are in agreement that the subject product falls under heading 2106 and we also have no doubt about the same. We however find that Prohance-D is a combination of various items as seen from the discussions above and can very clearly be treated as a compound preparation. This compound preparation is in powder form and can be consumed by direct mix with either water or milk. Further, the resultant beverage which is obtained after mixing the powder with water or milk is a non-alcoholic beverage and as such the Prohance- D will be clearly covered under the description ‘Compound preparations for making non-alcoholic beverages’ & therefore fall under Chap. Hdg 2106 90 50, thus attracting GST @ 18% as per Sch-III, Sr. No. 23.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by Sun Pharmaceutical Industries Ltd., the applicant, seeking an advance ruling in respect of the following questions.
1. What is the appropriate classification of the Applicant’s product, Prohance – D (Chocolate)?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further, henceforth for the purposes of this Advance Ruling, a reference to `GST ACT ‘would mean CGST Act I MGST Act .
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
“STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED.
M/s Sun Pharmaceutical Industries Limited (hereinafter referred to as “Applicant’) having its corporate head office at, “SUN HOUSE” Western Express Highway, Goregaon(E), Mumbai-400063 is engaged in the business of manufacturing and trading of pharmaceutical products, nutraceutical and allied products falling under Chapter 28 & 30 of the Customs Tariff Act,1975 and is registered as per the GST laws.
The Applicant is engaged in the production and marketing of a nutritional powder/food for special dietary use called Prohance – D which is specially designed to serve as a nutritional powder for people with Diabetics. The said product is sold in powder form and is required to be mixed with drinking water and used as a partial meal replacement/ Breakfast replacement / Evening snack/healthy bedtime snack or as directed by a Physician/dietician for diabetics. Prohance-D will be known in the market as “diabetic Product” as it is sugar free, low on GI (Glycemic Index) and contains Isomaltulose – a low glycemic carbohydrate that helps minimize blood sugar spikes (See Exb.-A). In other words, the Prohance -D would be marketed as Diabetic food as well as sold by the applicant specially meant for Diabetic people only. The said product provides all required macro nutrients as well micro nutrients to a Diabetic person, provides energy from high quality protein & fat, & is rich in dietary fiber and MUFA (Mono Unsaturated Fatty Acids) that support heart health. The photo of the labels containing the declaration of Prohance -D has been enclosed as “Exh – B”. The applicant proposes to produce two variants of Prohance-D, namely (ii) Prohance-D – Vanilla flavor; and (ii) Prohance-D Chocolate flavour.
Notification No.1/2017-Central Tax (Rate) dated 30.06.2017 provides for applicable rates of CGST On the supply of goods. SI. No. 46A of Schedule – H to Notification No.1/2017- Central Tax (Rate) dated 30-06-2017 reads as under:
