Dry Powder Containing Protein Powder with Vitamins & Minerals classifiable under HSN 2106

In re Windlass Biotech Limited (GST AAR Uttarakhand)

‘Dry Powder Containing Protein Powder with Vitamins & Minerals‘ being manufactured by M/s Windlass Biotech Limited, 40/1, Mohabewala Industrial Area, Dehradun, Uttarakhand under the name ‘Protowits’ is a Food supplement which is fit to be classified under HSN 2106.

Read AAAR Order: Dry Powder Containing Protein Powder with Vitamins & Minerals classifiable under Chapter 21

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, UTTARAKHAND

1. This is an application under Sub-Section (1) of Section 97 of the Central Goods and Services Tax Act, 2017 and Uttarakhand State Goods & Service Tax Act, 2017 (hereinafter referred to as CGST/SGST Act) and the rules made thereunder filed by M/s Windlass Biotech Limited ,40/1, Mohabewala Industrial Area, Dehradun, Uttarakhand (hereinafter referred to as ‘the applicant’) registered with the GSTIN having Registration No. 05AAACW3417C1Z and seeking advance ruling on the following question:

1) Classification and Rate of Applicable GST on product manufactured by the applicant i.e. ”Dry Powders containing Protein Powder with Vitamins & Minerals”.

2. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act.

3. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

4. As per the said subsection (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of:-

(a) Classification of any goods or services or both

(b) Applicability of a notification issued under the provisions of this Act,

(c) Determination of time and value of supply of goods or services or both,

(d) Admissibility of input tax credit of tax paid or deemed to have been paid

(e) Determination of the liability to pay tax on any goods or services or both

(f) Whether the applicant is required to be registered

(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term.

5. Since applicant has sought advance ruling on classification of service and applicability of notifications, therefore, in terms of said Section 97(2)(a) of the Act, the application filed by the applicant has been admitted.

6. On perusal of records submitted by the applicant, we find that the applicant is registered in Uttarakhand having GSTIN bearing no. 05AAACW3417CIZV. In their written submission submitted by the applicant along with their application, they have submitted that:-

1) The applicant is a Limited Company engaged in manufacture and supply of Pharmaceutical Formulations/ Nutraceuticals under its own brands for being marketed by the applicant on its own. That apart from above, the applicant is also engaged in manufacture of Pharmaceutical Formulations for others on P To P basis as well as on Loan Licence Basis.

2) The applicant has obtained Drug Licence bearing number 1/UA/SC/P/2001 and 2/(JA/2001 both renewed and valid upto 26.05.2026 and FSSAI licence bearing number 10018012000504 dated 16.06.2020. Copies of licences have also been submitted.

3) Further for manufacture of pharmaceutical formulations/ nutraceuticals, the applicant has obtained specific product approvals from Drug Authority / FSSAI as applicable.

4) The applicant has ventured for manufacture of “Dry Powders containing Protein Powder with Vitamins & Minerals”. That the applicant has obtained product approval from Drug Controlling & Licencing Authority (Mfg.) of Uttarakhand. A copy of the same has also been submitted.

5) Since the product is manufactured in terms of Drug Licence and since the product is for “Prophylactic Use Only” therefore the applicant shall be specifically mentioning on the product itself that the product is for “Prophylactic Use only”. A sample copy of the label devised has also been submitted.

6) It is pertinent to mention here that the product approval has been granted in terms of Entry Serial No. 138 of the FDC (Fixed Dose Combination) List dated 12.07.2018 under Category C of the Drugs & Cosmetics Act. A copy of the same has also been submitted.

7) Since the product contains Protein Powder as well as Vitamins and Minerals, therefore to seek clarity as to whether this product is eligible to be classified under HSN 3004 or not, present application is being filed by the applicant before the Honourable Authority for Advance Ruling, Uttarakhand.

7. The applicant has further submitted that the product in question shall be manufactured by them in terms of Licence to manufacture for sale or distribution of drugs specified in Schedule C and C(1) at the premises situated at 40/1, Mohabewala Industrial Area, Dehradun and the same has been issued in Form 28 by the Drug Controller and Licencing Authority (Mfg), Uttarakhand. That since the product has “Prophylactic” use therefore, the said product merits classification under HSN 3004 and is eligible to be supplied on payment of GST Reliance is further placed on Order passed by the Honorable Himachal Pradesh Authority for Advance Ruling bearing number 12-23/2019-20-EXN-ARA-GST-615/5-30201 dated 21.11.2019, wherein the Honourable Authority with regard to product namely “Protein Powder with Vitamins and Minerals” has held that the same is classifiable under HSN 3004, A copy of the same has been submitted as Annexure-6.

8. Accordingly hearing was fixed on 29.07.2021 which was attended by Mr. Rajesh Gupta, Chartered Accountant on behalf of the applicant and he reiterated the facts as stated by the applicant in their application. Following the discussions held during the course of hearing Mr. Rajesh Gupta has submitted further clarifications on 09.08.2021 wherein he has clarified that:

1) The applicant has considered certain reputed brands of protein powder to substantiate the difference in product manufactured by the applicant with that of other players. The basic difference is the content of Protein in the respective products. That we are furnishing below a chart indicating protein content in various Protein Powders:

2) From the above chart, it is amply clear that the protein content in any of the other reputed ”Brands” ranges between 32% to 78.95%, whereas our product has a content of 16.67% which makes it different from other products. That in case a person needs to have high protein diet, the said person shall not opt for our product as the protein content in our product is much less than any other product in market. This low protein content specifically makes our product distinct from other products available in market. Further it is categorically used for Prophylactic Uses and recommended by Physicians.

3) In various notifications issued in GST it has categorically been stated that for interpretation of classification of any item, the provisions of Customs Tariff Act shall apply. That in terms of the same it is submitted that in Chapter 30 HSN 3004 50 certain preparations of Vitamins, Minerals and their supplements, etc. have been classified as a medicament. That if the intention of legislature was to keep all the items containing vitamins/ minerals in the category of Food Supplements under HSN 2106, there was no need to insert HSN 3004 50 in Customs Tariff Act. That since there is a specific entry in HSN 3004 50, therefore the products which are having minerals, vitamins and their supplements in Fixed Dose Combinations, which are duly approved by the Drug Authorities shall merit classification in HSN 3004 50 and not in 2106.

4) If our product in question is analysed, it is amply clear that our product, apart from protein, contains minerals and vitamins in Fixed Dose Combination, which is duly approved by the Drug Controlling & Licencing Authority of Uttarakhand. Therefore, the said product merits classification under HSN 3004 50.

5) It is pertinent to mention that apart from Newtramax Healthcare, there are other players also in the market, who are manufacturing and supplying identical product under authority from Drug Department in Fixed Dose Combination and are discharging the burden of GST @12% under HSN 300450. That, just to substantiate this aspect, we have purchased Protein Power from Zeelab Pharmacy Pvt Ltd online (copy of invoice alongwith label of the product submitted as Annexure-7).

6) Since the protein content in our product is much less than other players (which makes it different from other products), since we are manufacturing the product in Fixed Dose Combination under Authority from the Drug Controlling & Licencing Authority of Uttarakhand, since the Honourable AAR of HP has already held that this classification in 3004 and since there is specific inclusion of such products in HSN 50, therefore, our product merits classification in HSN 3004 50.

7) That since we have submitted detailed submissions as desired, therefore it is prayed that this Honourable Authority, may kindly be pleased to appreciate the same and give Ruling on the issues raised by us in our application for Advance Ruling.

Views of Concerned Officer Mrs. Preeti Manral;

The applicant has mentioned that the product approval has been granted in terms of entry Serial No. 138 of the FDC (Fixed Dose Combination) list dated 12-07-2018 under category C of the Drugs & Cosmetics Act. However, going by list given by applicant, Protowits the products under question does not meet the Fixed Dose Combination criteria as laid out in entry 138.

It is pertinent to mention here that approval under serial No. 138 is for a combination of Protein Hydrolysate 20% 5mg+Calcium 225mg+Phophorus 174mg+Pyridoxine Hydrochloride IP 0.5 mg +Cyanocobalamin IP 1 mcg+viatamin D3 IP 100IU Niacinamide IP 15mg+Folic Acid IP 0.3 + Zinc 5mg+ Iron 7.5 mg per 30 gm powder.

While applicant’s products in addition to above combination also contains- Magnesium Sulphate USP 1.5 mcg, Magnesium Oxide IP 4mg, Cupric Sulphate USP 2.5mg, Chromium as Chromium Chloride USP 25 mcg, Selenium Dioxide Monohydrate USP 20mcg, Potassium Chloride IP 5mg, Sodium Chloride IP 33mg, Iodine as Potassium Iodide IP 100mcg, Excipients. Therefore, the product in not as per entry No. 138 and hence, does not meet the Fixed Dose Combination criteria.

Further, the bills of other comparable products like Calcimax D which is a combination of minerals & vitamins and Threptine which is a combination of protein, Vitamins and carbohydrate are being submitted by me for your kind perusal as Annexure 1 & 2 with the details of their contents and uses. Both the above mentioned products are generally prescribed for prophylactic as well as therapeutic purposes.-

> Calcium supplement Calcimax D contains minerals and vitamin D3 in fixed combination (Calcium carbonate IP eqvt. to elemental calcium 500mg, Magnesium Hydroxide IP eqvt. to elemental magnesium 75mg. Zinc sulphate Monohydrate I.P eqvt. to elemental Zinc 4mg, Vitamin D3 IP 1000 l.U) as attached along with annexure-1 and is used to prevent or treat low blood calcium levels. It is used to treat conditions as Osteoporosis, Osteomalacia/Rickets, Hypoparathyroidism, and Latent Tentany and is required for the’ proper growth and maintenance of bones. Its guidelines for use also mention “Recommended dose is as advised by your doctor”. In the GST invoice no. C046-21- 01621697 dated 08-07-2021 attached as Annexure 1, the product is being charged with 18/ GST

> Threptin Micromix Powder which is a combination of protein, Vitamins and carbohydrate (Composition attached along with annexure-2) is used for the treatment, control, prevention & improvement of the following condition and symptoms:- Hyperthyroidism, Alopecia, Growth and development in children, Skeletal development, Attention deficit hyperactivity disorder, Anemia, treatment of megaloblastic anemia’s due to a deficiency of folic acid etc. In the GST invoice no. C046-21-01783088 dated 20-07-2021 attached as Annexure 2, the product is being charged with 18% GST.

It is pertinent to mention here that applicant has not mentioned any such details about the product in question regarding what it treats, controls or prevents. Further, even if such details are provided, the product ‘Protowits’ will remain at health supplement like above cited examples and no medical prescription is needed for buying the product in question. Therefore, it is subject to 18% GST. To further support this contention article dated 05-jul-2017 of NUTRA ingredients asia.com published at the outset of GST regime is attached for your kind perusal which states “nutraceuticals, as well as health and fitness supplements, are now subject to 18% GST” (Annexure 3). Therefore, it is submitted that ‘Protowits’ the product in question which is a mix of 21 protein powder, Vitamins and Minerals attracts GST rate @ 18%.

DISCUSSION & FINDINGS;

1. We have gone through the application filed by the applicant for Advance ruling and the supporting documents submitted by them as well as oral submission made by the Authorised Representative of the applicant, Mr. Rajesh Gupta, Chartered Accountant, at the time of personal hearing held on 29.07.2021 and written submission filed by the applicant on 09.08.2021. We have also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant’s interpretation of law.

2. On going through the application for advance ruling, we find that the product namely “Dry Powder Containing Protein Powder with Vitamins & Minerals” under the name ‘Protowits’ is being manufactured by the applicant after obtaining the Licence from drug controlling & Licensing Authority (Mfg.) of Uttarakhand. As per said Licence bearing no. 1/UA/SC/P-2001, aforesaid product has been licensed to be manufactured by the applicant being drugs specified in Schedule C and C(l) [excluding those specified in Schedule X] to the Drugs & Cosmetics Rules 1943. But on perusal of said Schedule C and C(l), we find that product containing protein is not mentioned in the said schedules.

3. The applicant has further claimed that the product approval has been granted in terms of Entry Serial No. 138 of the FDC (Fixed Dose Combination) List dated 12.07.2018 under Category C of the Drugs & Cosmetics Act. On going through the said FDC list, we find that SI. No. 138 of the said list does not cover the product which contains all the ingredients viz Protein Hydrolysate 20% – 5g, Calcium – 225mg, Phophorus – 174mg, Pyridoxine Hydrochloride IP – 0.5 mg, Cyanocobalamin IP 1 mcg, Vitamin D3 IP – IOOIU, Niacinamide IP – 15mg, Folic Acid IP – 0.3mg, Zinc as Zinc Sulphate Heptahydrate IP – 5mg, Iron as Ferric Ammonium Citrate IP 7.5 mg, Manganese Sulphate USP – 1.5 mcg, Magnesium Oxide IP – 4mg, Cupric Sulphate USP – 2.5mg, Chromium as Chromium Chloride USP 25mcg, Selenium Dioxide Monohydrate USP – 20mcg, Potassium Chloride IP – 5mg, Sodium Chloride IP – 33mg, Iodine as Potassium Iodide IP -100mcg, Excipients – q.s. per 30 gm powder. Serial No. 138 of the FDC List covers only the product which contains Protein Hydrolysate 20% – 5g, Calcium 225mg, Phophorus – 174mg, Pyridoxine Hydrochloride IP – 0.5 mg, Cyanocobalamin IP 1 mcg, Vitamin D3 IP – IOOIU, Niacinamide IP – 15mg, Folic Acid IP – 0.3mg, Zinc – 5mg, Iron – 7.5 mg per 30 gm powder. Therefore we find that product namely ‘Protowits’ is not being manufactured as per FDC list.

4. We also agree with the views put forth the by the concerned officer Mrs. Preeti Manral and also find her views correct that applicant has not mentioned any such details about the product in question regarding what it controls or prevents even declaring it for “Prophylactic Use Only”

5. The applicant also submitted that the products which are having minerals, vitamins and their supplements in Fixed Dose Combinations, which are duly approved by the Drug Authorities shall merit classification in HSN 3004 50 and not in 2106. In this regard we find it proper that without going into the criteria of giving approval by the competent authority to a product which is not covered under Schedule C and C(l) to the Drugs & Cosmetics Rules, 1943 as well as all the ingredients contained in it also not covered by Sl.No. 138 of the FDC (Fixed Dose Combination) List dated 12.07.2018, we prefer to look into the taxability of that product under proper chapter heading of GST tariff to decide whether the said product is a food supplement or medicament. As per GST law, taxability is decided as per HSN code of the said product and not as per the license issued for manufacture of the said product by any other competent authority. HSN code 3004 50 as per GST tariff reads as under:

On going through above chapter headings, we find that sub-heading nos. 3004 50 10 and 3004 50 20 cover “Haematinic and Erythropoietin preparations” and “Preparations of minerals and their supplements” respectively and sub-heading nos. 3004 50 31 to 3004 50 90 cover only “Preparations of vitamins” as described under these sub-headings. There is no mention of any substance which contains protein in any form. However, protein concentrates and textured protein substances are covered under chapter heading no. 2106 which reads as under:

6. In view of above findings, we are of the considered view that the product “Dry Powder Containing Protein Powder with Vitamins & Minerals” being manufactured by the applicant under the name ‘Protowits’ is a Food supplement which is fit to be classified under HSN code 2106 with 18% GST rate.

Ruling

“Dry Powder Containing Protein Powder with Vitamins & Minerals” being manufactured by M/s Windlass Biotech Limited, 40/1, Mohabewala Industrial Area, Dehradun, Uttarakhand under the name ‘Protowits’ is a Food supplement which is fit to be classified under HSN 2106.