Multiple rates of GST have now become a point of the bone of contention between hand sanitizer manufacturers and the government. Earlier this month, the Bureau of Central Intelligence had cautioned alerted the GST authorities regarding such alcohol-based sanitizers manufacturers who we’re giving 12% GST on such products by making wrong classifications categorizing them erroneously as“medicaments “(under tariff heading 3004) rather than as” disinfectants “(under tariff heading 3008) which would have caused them to pay GST@ 18% of the cost.

In a letter dated 10.06.2020 having reference No. F. No.562/INT/DOGI/HQ/2018/17025 to 17045 to principal commissioners, the director-general of GST Intelligence has alleged that this has led to “substantial evasion” of tax. Authorities have analyzed data for 62 manufacturers and have asked field to verify if other producers, including distillers and sugar mills and, have “miss-classified” the product that is being used across households and offices.

What does the recent ruling of the Goa AAR say?

The Goa Bench of the GST Authority for Advance Ruling on Application of Springfields (India) Distilleries  has ruled out that Alcohol-based hand-sanitizers attract a GST rate of 18% and merely classifying any goods as an essential commodity will not be criteria for exempting such GST. Earlier, Springfield’s (India) distillery had sought Advance Rulings on the issue of classification of the Goods namely “Hand sanitizer” and the rate of GST to be applied. The company also sought opinion on whether Hand sanitizer supplied by it is classifiable as an essential commodity as per the notification of the Ministry of Consumer Affairs and to be exempt from GST.

Amidst debate on GST rate on alcohol-based hand sanitizer, an Authority for Advance Ruling has said that this hygiene product will attract GST at the rate of 18%.

  • The applicant, Springfield’s Distilleries moved to Goa AAR with two queries. First, the classification of hand sanitizer;
  • Secondly, whether a hand sanitizer as an essential commodity, will be exempted from GST?

However, in the opinion of the AAR when the GST administration is investigating into an allegation of some manufacturers, including alcohol-based hand sanitizer makers, including alcohol-based hand sanitizer makers, resorting to tax evasion /non-payment of  GST by misclassifying the product. There has been the apprehension of tax evasion especially by manufacturers, suppliers including sugar mills and distillers are classifying alcohol-based hand sanitizer under the tariff heading 3004 while actually it should be under tariff heading  3808 of HSN (Harmonized  System of Nomenclature).

Therefore, it was held that that in the opinion of the Authority that the hand sanitizers manufactured by the applicant are of the category of the  Alcohol-based sanitizers and are classifiable are of the category of Alcohol-based sanitizers and are classifiable under heading 3808 of HSN to which the GST is applicable @18%.

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Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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