In re K. Suresh (GST AAR Tamilnadu)
Advance Ruling is required as to classification of wet wipes and rate of tax on the sales (supply) of the same
1. The product ‘Wet Wipes’ supplied by the applicant is classifiable under 3307 90 90 of the First Schedule to the Customs Tariff Act, 1975
2. The Rate of tax applicable is 14% CGST and 14% SGST as per SI No 29 of Schedule IV of Notification no. 01/2017-C.T. (Rate) dated 28.06.2017 and as per SI No 29 of Schedule IV of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017, respectively upto 14.11.2017. From 15.11.2017, the applicable tax rate is 9% CGST and 9% SGST as per Sl No 60A of Schedule III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 amended and as per Sl No 60A of Schedule III of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended, respectively.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, TAMILNADU
Note: Any appeal against this Advance Ruling order shall lies before the Tamil Nadu State Appellate Authority for Advance Rulings, Chennai as under Sub-Section (1) of CGST Act / TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
The Applicant Mr. K. Suresh, No.45/5, P.A.Koil Street, Arumbakkam, Chennai – 600 106 (hereinafter called the Applicant) is not registered under GST. The applicant has stated that he intends to manufacture “Wet Wipes” with 2% Chlorhexidine Gluconate and supply it to the dealers. They have sought Advance Ruling on the following question:
“Applicable rate of tax on the sales (supply) of ” Wet Wipes””
The Applicant has submitted the copy of application in Form GST ARA – 01 and also copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2. The applicant has stated that the “Wet Wipes”, which they intend to manufacture is made up of Non-Woven Cellulose material. It is an Anti-Bacterial Product which is used as a Sanitary towel to wipe the private parts of Male 86 Female who are bed ridden or old aged people and that this would prolong the occurrence of Bed-sore. They have further stated that this product is different from general wet wipes which are available in all Departmental Stores. This product is used only for specific purpose i.e., only for bed ridden or old aged people and sold in Medical Shop only.; that they came to understand that the dealers who are dealing in “Wet Wipes” are charging 6% CGST + 6%SGST under Entry 235(HSN Code 9619) of Schedule II of the Central Goods and Services ACT, 2017
3. The applicant was personally heard on the matter on 09.04.2019. The Authorised representative of the applicant appeared before the authority and stated that the product, which they will start trading in, is used as a medicated wipes which acts to prevent infections, treating infections and they are sold only under the prescription, the product appears to be classifiable under CTH 3004. They undertook to submit for each product, samples, manufacturing process, details of all raw materials used within 2 weeks time. They furnished a write-up on the product.
3.1 In the said write-up, the applicant has stated that
> The biggest challenge the Health Care Industry faces today is to control the infection in the hospital. One of the major infections is from MRSA (Methycillin resistant Staphylococcus Aureus) and other Hospital acquired infections. The medicated wipes are used in the hospital for patient health care.
> The medicated wipes are made of viscous material impregnated with medicaments such as Chlorhexidine Gluconate 2%, Allantoin 0.5% and Menthol 0.01%. Chlorhexidine Gluconate 2% being the main ingredient of the product has the antiseptic and antibacterial property. Antiseptic and antibacterial property pertains to the reduction and prevention (Prophylaxis) of skin infections and cross infections in patients.
> Allantoin and glycerin is used as an agent to prevent and treat dry, rough, scaly and itchy skin and minor skin irritation (eg; Diaper rashes, Radiation therapy related skin burns etc.) Since Allantoin and glycerin used in the treatment of skin rashes related issues they are therapeutic agents. ( Therapeutic agents – relating to treating, remediating or curing a disorder or disease).
> Menthol is used to give a soothing and cooling effect to the skin, Menthol helps in giving the patient a refreshing feel which helps in the betterment of the patient aiding their faster recovery. Hence considering the ingredients and their usage the product helps the patient prophylactically and therapeutically;
> This product is sold only through medical shops/pharmacies under doctor’s prescription
> According to CTH 3004 – Medicaments (excluding goods of heading 30.02, 30.05 or 30.06) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packing for retail sale, including Ayurvedic, Unani, Homoeopathy 86 Siddha or Bio-chemic systems medicaments put up for retail sale.
3.2. The applicant vide their letter dated 25.04.2019 requested for Orders and submitted the following documents (received on 29.04.2019)
i. original article published in ” The New England Journal of Medicine” about the effect on the usage of the applicant’s product.
ii. Details of raw materials used and the composition in the manufacture of their product
iii. Process Flow Chart
iv. Copy of sale bill issued to a patient by M/s. IP Pharmacy, Dr. V.Balaji Dr. V. Seshiah Diabetes Care and Research Institute, Chennai 600029 in Bill No. C01000774 dated 22/04/2019
v. Proforma Invoice
3.3 The articles furnished are on the ‘Effect of Daily Chlorhexidine Bathing on Hospital- Acquired Infection’. The composition of raw materials used in the manufacturing process of wet wipes as submitted by the applicant is tabled below:
