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2021 (1) TMI 564 - AAR - GSTClassification of goods - pharmaceutical products - Bulk Drugs and intermediates - Alpha-Ketoanalogue Isoleucine Calcium Salt - Alpha-Ketoanalogue Valine Calcium Salt - Alpha-Ketoanalogue Leucine Calcium Salt - Alpha-Ketoanalogue Methionine Calcium Salt - Alpha-Ketoanalogue phenylalanine Calcium Salt - classified under HSN code 2919 or not? - applicant submitted that as per Notification No. 01/2017-Ct (Rate) dated 28.06.2017 their products is liable to GST @ 5% in respect of goods specified in Schedule-I under Sr. No. 180 under Ch. 30 and under Schedule-1 List -1 Sr. No. 54 as such their product name is “Ketoanalogue preparation of essential amino acids” - HELD THAT:- As per Sr. No. 180 of Schedule-I of Notification No. 01/2017-CT (Rate) dated 28.06.2017, Drugs or medicines including their salts and esters specified in List I appended to this Schedule are eligible for GST @5%. In CGST Act 2017, the terms “Medicine” or “Drugs” have not been defined. We consider the definition “Drugs” given in Drugs and Cosmetics Act, 1940 (Central Act 23 of 1940). Clause (i) of Section 3(b) defines a ‘drug’ as all medicines for internal or external use of human beings or animals and all substances “intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human being, or animals”, including specified preparations. Thus, Sr. No. 180 of Schedule-I of Not. No. 01/2017-Ct (Rate) dated 28.06.2017, as amended, only such medicine and drugs are covered, which can be used for or in diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings - further, the term 'drugs' as per DRUGS (PRICES CONTROL) ORDER, 1979 makes it clear that bulk drugs are raw material /ingredient of pharmaceutical and they are the Active Pharmaceutical Ingredients (i.e. API) of the medicine. In other words, it is the substance responsible for the product being a medicine. The bulk drug would inevitably remain the same as it is the identity of the medicine. When the bulk drug is absent, the product is no longer a medicine and when it is changed, it is a new medicine. Bulk dugs is not defined in GST, therefore, in common parlance we can say that Bulk drugs is basically an Active Pharmaceutical Ingredients (API) meaning any pharmaceutical, chemical, biological or plant product, which is used as such or as an ingredient in any formulation. It is an admitted fact that the product being supplied by the applicant cannot be directly administered in a human being. The concessional rate of GST is applicable only to the medicine or drugs, which are ready for administering in the human being or person - In the instant case, the applicant supplies bulk drug to their customers and hence the said bulk drug becomes raw material to the said customers. The applicant contention is that their bulk drug i.e. Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt is covered under the entry No. 180 of Not. No. 01/2017-CT (Rate) dated 28.06.2017 and eligible for concessional rate of GST. In the said entry No. 180 of said Notification word “Bulk Drugs” would have been included, had the intention of the Government been to extend the benefit of concessional rate to the bulk drugs/raw material. Therefore 5% GST is not applicable to the bulk drug Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt, in terms of List I to Entry No. 180 of Schedule I to the Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017. In view of the entry No. 40 of Notification No. 01/2017-Ct (Rate) dated 28.06.2017 the goods viz. bulk drugs and intermediate i.e. Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, Alpha-Ketoanalogue phenylalanine Calcium Salt classifiable under HSN 2919 attract GST @ 18%.
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