2021 (12) TMI 267 - AAR - GST

Classification of goods - rate of GST - Himsa Plus Oil which is a ayurvedic hair oil used for various hair disease and headache - beauty product or medicinal products - HELD THAT - On reconciling the Chapter Heading with Chapter Note it indicates that only those products whose curative or preventive value is substantial and the product is manufactured primarily with a view to control or cure a disease by adding suitable pharmaceutical ingredients shall be covered under Chapter 30. All other preparations and cosmetics even if they have therapeutic or prophylactic properties would not fall within the meaning of medicaments under the GST regime - the label of the product Himsa Plus Oil does not contain dosage (or a mention of as advised by the physician ) which is essentially mentioned on the label of medicaments. The said fact indicates that the said product is not a medicament. The product Himsa Plus Oil is poured on hair for beautification or promoting attractiveness as the same is in the nature of cosmetics. Moreover as per Chapter Note 1(e) of Chapter 30 of the Customs Tariff Act 1975 Chapter 30 does not cover preparations of heading 3303 to 3307 even if they have therapeutic or prophylactic properties. As such the product Himsa Plus Oil is predominantly a hair oil (i.e. preparations for use on the hair) meriting classification under Chapter sub-heading 330590 and attracts GST @ 18%.

Summary

Issues Involved:
1. Applicable GST rate on Himsa Plus Oil.

Issue-Wise Detailed Analysis:

1. Applicable GST Rate on Himsa Plus Oil:

- Applicant’s Submission:
The applicant, a manufacturer of ayurvedic medicine under a license from the Drug Licensing Authority, UP, contends that Himsa Plus Oil, an ayurvedic hair oil used for various hair diseases and headaches, should be taxed at 12% as it qualifies as an ayurvedic medicine.

- Jurisdictional GST Officer’s Opinion:
The Additional Commissioner, Commercial Tax, Kanpur Zone-Second, opined that Himsa Plus Oil falls under Chapter Heading 330590 and is taxable at 18%. The officer cited Chapter 30 notes which exclude preparations of headings 3303 to 3307, even if they have therapeutic or prophylactic properties.

- Discussion and Findings:
The authority examined the submissions and noted that the issue pertains to the classification of goods under Section 97(2)(a) of the CGST Act, 2017. The authority referenced Notification No. 1/2017-Central Tax (Rate) dated 28-Jun-2017, which categorizes goods into different schedules with varying tax rates.

- Relevant Entries and Tariff Items:
- Schedule II (6% GST):
- Chapter 30 includes medicaments for therapeutic or prophylactic uses.
- Schedule III (9% GST):
- Chapter 33 includes preparations for use on hair, such as hair oil.

- Chapter Notes:
- Chapter 30 (Pharmaceutical Products):
- Excludes preparations of headings 3303 to 3307, even if they have therapeutic or prophylactic properties.
- Chapter 33 (Essential Oils and Cosmetic Preparations):
- Includes products suitable for use as beauty or cosmetic preparations.

- Definition and Interpretation:
- The term 'medicament' is defined as a substance used for medical treatment. The authority noted that the issues addressed by Himsa Plus Oil (e.g., stress relief, headache, dandruff) do not constitute diseases or illnesses. The product label does not indicate dosage, which is typical for medicaments.
- The applicant failed to provide authoritative sources describing the formula for Himsa Plus Oil as required under Section 3(a) of The Drugs and Cosmetics Act, 1940.

- Cosmetic Definition:
- The product is intended to be applied to the human body for beautification or attractiveness, fitting the definition of a cosmetic under Section 3(aaa) of The Drugs and Cosmetics Act, 1940.

- Conclusion:
- Himsa Plus Oil is classified under Chapter sub-heading 330590 (preparations for use on the hair) and attracts GST at 18% (9% CGST and 9% SGST).

Ruling:
Himsa Plus Oil merits classification under Chapter heading 3305.90 and attracts GST at 18% (CGST 9% and SGST 9%).

Validity:
This ruling is valid within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.