In re M/s Strides Emerging Markets Limited (GST AAR Karnataka)
The instant product, Nicotine Polacriliex Lozenge, is rightly classifiable under the heading 38.24. Accordingly the product is covered under Serial number 97 of Schedule III to Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and attracts GST at the rate of 18% (9% CGST, 9% SGST).
Also Read- Nicotine Polacrilex Lozenge falls under Chapter Heading 38.24: AAAR Karnataka
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s Strides Emerging Markets Limited, (called as the ‘Applicant’ hereinafter), Strides house, Bilekanahally, Bannerghatta road, Bengaluru-560076 having GSTIN number 29AARCS5667D1ZQ, have filed an application for Advance Ruling under Section 97 of CGST Act’ 2017, KGST Act’ 2017 & IGST Act’ 2017 read with Rule 104 of COST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The Applicant, a Private Limited Company, registered under the Goods and Services Act, 2017, is a pharmaceutical company, engaged in the development and manufacture of generic and IP led niche pharmaceutical product& Also it is registered as a 100% Export Oriented Unit (“EOU”) in Karnataka.
3. The Applicant has developed a new product “Narcotic Chewing Tablet” (NCT) which is used to wean off the withdrawal symptoms associated from the narcotic consumption cessation. The applicant further requested, vide their letter dated 28.05.2018, to consider “Narcotic Chewable Tablet” as “Nicotine Polacriliex Lozenge” in their application. In view of the above, the applicant has sought advance ruling in respect of the following question:
What is the appropriate classification of Nicotine Polacriliex Lozenge (hereinafter referred to as “PICT’) manufactured by the Company and rate of tax applicable thereupon under Notification 01/2017-Central Tax (Rate), dated 28-06-2017
FACTS OF THE CASE:
4.1 The applicant, vide their application dated 28.04.2018, received in this office on 16.05.2018, submitted that they manufacture and sell a new product Nicotine Polacriliex Lozenge (herein after referred to as “NCT”) which is used to wean off the withdrawal symptoms associated from the nicotine consumption cessation if taken in a prescribed manner; the manner of intake of NCTs is mentioned on a usage manual which is kept inside the NCT packets & the said product is available in dosages of 2 mg and 4 mg depending on the power of the medicine.
4.2 They further stated that the primary ingredient in NCT is nicotine which is mixed with various other ingredients to add color, flavor etc., and the target customer base of NCT is addicted smokers who wish to give up or reduce smoking habit. When a person intakes tobacco products, there are various harmful chemicals which go inside the human body in addition to nicotine which cause life threatening diseases.
4.3 The primary usage of nicotine in tobacco products is its stimulant effect which acts a contributing factor to the addictive properties of tobacco smoking. In other words, presence of nicotine in tobacco contributes towards addiction of a particular person to smoke tobacco. However in NCT, the primary ingredient nicotine is present in a non-harmful quantity.
4.4 They also stated that the NCT when taken in prescribed quantum, provides the body with adequate nicotine intake; however there is a gradual decline in the dependency of the body on Nicotine. Given this, the harmful effects of smoking tobacco are nullified by taking NCT. The NCT of 2 mg dosage is available as an over the counter product, whereas NC of 4 mg dosage would be available only pursuant to a prescription from a medical practitioner.
4.5. The applicant submits that their product is classifiable under chapter heading 3004 and claims the applicable rate of 12% GST in terms of entry no.63 of schedule-II of Notification 01/2017-Central Tax (Rate) dated 28-06-2017, effective from 01.07.2017. The applicant also submits that the competing entry is under Chapter 30, whkh attracts 18% of GST, under SI_No.41 of Schedule-IlI of the Notification supra. The relevant extracts of said entries of relevant schedules are appended below:
