CRP Test kit and HbA1c Test kit to be classified under HSN code 3002 and will attract 5% GST

[CA Bimal Jain]

The AAAR, Maharashtra in the matter of IN RE: M/S. ACCUREX BIOMEDICAL PRIVATE LIMITED  - 2022 (11) TMI 389 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA set aside the order passed by AAR, Maharashtra, ruling that C-Reactive Protein (“CRP”) Test kit and Hb1Ac Test kit (“Test Kits”) fall under HSN Code 3822 and not under HSN code 3002, whereas the same are covered by. Held that the Test Kits will be attracting Goods and Services Tax (“GST”) at the rate of 5% in terms of the entry at SL No. 180 of the Schedule I to the Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017 (“the Goods Rate Notification”) read with entry at SI. No. 125 of the List I appended to the Schedule I to the Goods Rate Notification.

Facts:

M/s Accurex Biomedical Private Limited (“the Appellant”) is engaged in the business of supply of various diagnostic reagents. The Appellant filed an application for advance ruling before the AAR, Maharashtra in respect of the classification of two products i.e. Turbilatex CRP Infinite, which was a CRP Test kit and HbA1c Infinite, which was an HbA1c test kit.

The AAR vide an order dated October 11, 2021 (“the Impugned Order”) ruled that the Test Kits will not fall under HSN Code 3002 as the test kits are not agglutinating sera by themselves, rather they are diagnostic kits which may work on the principle of 'agglutinating sera'. Therefore, Test Kits will fall under HSN Code 3822 at Sr. No 80 under Schedule-II of the Goods Rate Notification as "diagnostic kits and reagents", attracting GST at the rate of 12%. The AAR also ruled that as per Sr. No. 7 of Notification No. 05/2021-Central Tax (Rate) dated June 14, 2021 (“the Concessional Rate Notification”), the GST rate on certain products, including C-Reactive Protein (“CRP”), falling under Heading 3822 has been reduced to 5% which was valid up to September 30, 2021. So, the rate of GST on CRP was reduced to 5% up to September 30, 2021 and now the rate is back at 12%.

Hence, the Appellant filed this appeal on the grounds that the Test Kits supplied by the Appellant is a composite supply and hence, the same would be classifiable under CSH 3002 and that the reliance placed on Sr. No. 7 of the Concessional Rate Notification for deciding classification of the Test Kits under CSH 3822, is absurd and perverse.

the Jurisdictional officer submitted that the CRP is a protein made reagent that does not fall under HSN code 3002 and is taxable at the rate of 12% under GST. Further, that HbA1c is haemoglobin A1c, and important diagnostic tool but it is not specified in List l appended to the Schedule I and it is also not agglutinating sera, thus, it falls under the HSN code 3822. Therefore, the GST rate applicable on supply of Test Kits is 12%.

Issue:

Whether the Test Kits fall under HSN code 3002 and taxable at the rate of 5% in terms of the entry at SL No. 180 of the Schedule I to the Goods Rate Notification?

Held:

The AAAR, Maharashtra in IN RE: M/S. ACCUREX BIOMEDICAL PRIVATE LIMITED  - 2022 (11) TMI 389 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA held as under:

• Opined that, the diagnostic kits can also be classified under the Chapter Heading 3002 where the essential component of the kit to be classified is the one falling under the Chapter head 3002.
• Observed that, the Test Kits, being in the nature of a diagnostic kit for determining inflammation and infection in the human body, and satisfies all the conditions prescribed under the said explanatory note (E) to the Chapter heading 3002, would aptly be covered under the Chapter Heading 3002.
• Further observed that, List I appended to the Schedule-I to the Goods Rate Notification enumerates only the medicines, drugs, and the diagnostic kits as mandated under the description of entry at SI. No. 180 of the Goods Rate Notification. Since it is beyond doubt that the agglutinating era cannot be construed as medicine or drug, therefore, the same is bound to be considered in the nature of diagnostic kit.
• Noted that, since the GST rate on certain products, including CRP, was reduced to 5% vide SI. No. 7 of the Concessional Rate Notification, which was in operation upto September 30, 2021, the rate of CRP kit was 12%. Though such notification was indeed in operation for certain period, the AAR has failed to appreciate that it covered both the Chapter Headings i.e. 3002 and 3822.
• Held that, the Test Kits are classified under chapter heading 3002 and will fall under entry "agglutinating sera" at SL No. 125 of the list I appended to the Schedule I to the Goods Rate Notification, attracting GST at the rate of 5% (CGST@2.5%+SGST@2.5%) in terms of the entry at SI. No. 180 of Schedule I to the Goods Rate Notification.

Relevant Provisions:

SI. No. 180 of the Schedule I to the Goods Rate Notification:

Schedule I- 2.5%

“S.no.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
180	30 or any chapter	Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 1 appended to this Schedule”

SI. No. 7 of the Concessional Rate Notification:

“Sl. No.	Chapter, Heading, Sub-heading or Tariff item	Description of Goods	Rate
7	3002 or 3822	Inflammatory Diagnostic (marker) kits, namely- IL6, D- Dimer, CRP (C-Reactive Protein), LDH (Lactate De- Hydrogenase), Ferritin, Pro Calcitonin (PCT) and blood gas reagents.	2.5%”

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