GST Rate Clarification for Teicoplanin & Caspofungin: AAR Telangana

In re Stanex Drugs & Chemicals Private Limited (GST AAR Telangana)

In a recent development, M/s. Stanex Drugs & Chemicals Private Limited sought clarity regarding the GST rates applicable to Teicoplanin and Caspofungin. The Authority for Advance Ruling (AAR) Telangana, in response to the application filed by M/s. Stanex Drugs & Chemicals Private Limited, has issued a significant ruling on the matter.

Background:M/s. Stanex Drugs & Chemicals Private Limited, a pharmaceutical company based in Hyderabad, Telangana, approached the AAR seeking clarification on the GST rates applicable to Teicoplanin and Caspofungin. The company, known for its robust manufacturing infrastructure and extensive range of pharmaceutical formulations, emphasized the need for clarity on the taxation of these specific products.

Application Process: The application was filed in accordance with Section 97(1) of the Telangana Goods and Services Tax (TGST) Act, 2017, accompanied by the requisite fee payment.

Question Raised: M/s. Stanex Drugs & Chemicals Private Limited sought clarification on the applicable GST rates for Teicoplanin and Caspofungin, considering their classification under the GST Act.

Personal Hearing: A personal hearing was conducted wherein the authorized representatives of M/s. Stanex Drugs & Chemicals Private Limited presented their case, emphasizing the absence of pending or previous proceedings related to the matter.

Discussion & Findings: The AAR deliberated on the classification of Teicoplanin and Caspofungin under Schedule-I of Notification 1/2017 dated June 28, 2017. These commodities were found to be taxable at a rate of 2.5% CGST and 2.5% SGST, as specified in the schedule.

Ruling: Based on the discussion and analysis, the AAR clarified that both Teicoplanin and Caspofungin are subject to a GST rate of 2.5% CGST and 2.5% SGST.

Conclusion:The ruling by the AAR Telangana provides much-needed clarity on the GST rates applicable to Teicoplanin and Caspofungin. This decision is expected to streamline tax compliance for pharmaceutical companies and ensure uniformity in the treatment of these products under the GST regime.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING,TELANGANA

1. M/s. Stanex Drugs & Chemicals Private Limited, 16-140/1, Street No 3 Prashanthi, Nagar, Uppal, Hyderabad, Telangana- 500039 (36AAICS7104A1ZQ) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules.

2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST 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 TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.

3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs. 5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act’2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act’2017.

4. BRIEF FACTS OF THE CASE:

4.1 M/s. Stanex Drugs and Chemicals Private Limited [Herein after called SDCPL] Rep. by K Bhagavan Reddy, Managing Director, Registered office of the D.NO:16-140/1, Street No 3 Prashanthi Nagar, Uppal, Hyderabad, TS-500 039, and Manufacturing place of the Plot No m112, IDS Phase 3, Cherlapally , Hyderabad 500051, and registered under the Goods and service tax Act 2017, and having the following details

4.2 M/s. SDCPL GST No. 36AAICS7104A1ZQ, is one of the fastest growing pharmaceuticals in India, It was established in the year 2004 and has seen phenomenal growth and is active in developing, Manufacturing & Marketing of Domestic and Export comprehensive range of pharmaceutical formulation such as small value parental. M/s. SDCPL valid manufacturing automation issued by the relevant competitive authorities manufacturing license and issuing authority director of drugs control administration Gove of Telangana State. M/s. SDCPL is one of the unique infrastructures in India for the manufacture of parental dosage forms. They are in the ceaseless pursuit of versatile and sophisticate product range also the M/s. SDCPL Manufactured products are exported to many of the countries. The M/s. SDCPL types of products currently manufactured on small value parental like liquid indictable (Vials) Pre-filled syringes and lyophilized products.

5. QUESTIONS RAISED:

Determination and of the liability to pay tax on any goods or services or both

M/s. SDCPL the manufacturing of the above products are taxable @ 5% by virtue of entry No.180 ( List -1 Entry No 103 ) 181 , 181A Schedule – 1 of the Notification 1/2017 dt:28.06.2017 Drugs and medicines , formulations and Medicaments comes under HSN code 3002 and 3004, respectfully submit that seeking the clarification of the above products are comes under 5% or 12%.

6. PERSONAL HEARING:

The Authorized representatives of the unit namely Smt. Nitya Kamareddy, Director and Sri M.V.L. Narasimha Rao, Advocate & AR attended the personal hearing held on 06.08.2023. The authorized representatives reiterated their averments in the application. Further, the Authorised Representative/Applicant M/s. Stanex Drugs and Chemicals Private Limited, reiterated that their case /Similar Case is not pending in any proceedings in the applicant’s case under any of the provision of the Act and have not already decided in any proceedings in the applicant’s case under any of the provisions of the Act.

7. DISCUSSION & FINDINGS:

The Applicant is a manufacturer of parental dosage forms i.e., Drugs & Medicines. They have applied for Advance ruling in order to obtain clarification regarding rate of tax under CGST & SGST Acts for the following commodities:

1. Teicoplannin

2. Caspofungin

The item Drugs or Medicines is enumerated in Schedule-I of Notification 1/2017 dt:28.06.2017 as follows:

These goods are taxable at the rate of 2.5% CGST & 2.5% of SGST further the commodity name is enumerated in the lists appended to this schedule. The commodities regarding which the clarification sort are enumerated in this list as follows:

In the view of the above discussion it is clarified that the above two (2) commodities are taxable at the rate of 2.5% CGST & 2.5% of SGST.

8. In view of the foregoing, we rule as follows:

In view of the above discussion, the questions raised by the applicant are clarified as below: