GST rate on Hand sanitizer, Goods and Services Tax - GST

[KARAN VERMA]

Sir

What is HSN code and GST rate on Hand Sanitizer.

Posts / Replies

[KASTURI SETHI]

Keeping in view of health crisis caused by Covid-19, Hand Sanitizer has become essential item. Thus this item has become indispensable item. It is suggested thar a representation may be made to the Finance Minister. In such a situation we can hope that Govt. may grant exemption from the whole of GST in public interest as well as in the interest of the whole nation. Govt. is granting exemptions from Customs duty on essential equipments, medicines, materials etc. So the querist is advised to make a representation through Trade and Industry Association.

Regarding the rate of GST on Hand Sanitizer as on today , after going through all the replies of the experts and various judgements quoted by them and also keeping in view of the multiple uses of hand sanitizer, correct classification appears to be under Chapter/Heading 3402 attracting GST @ 18% ( CGST 9% and SGST 9%) at serial no.61 A of Notification No. 1/17-CT(R) dated 28.6.17 as amended.

[YAGAY andSUN]

In addition to above mentioned replies of our experts, GST do use Customs Tariff Act for HSN and for determination of Classification of goods GIR would play an important role. These Rules need to be taken into consideration while determining classification of goods under GST Laws.

[yashika aggarwal]

CAN WE USED 12 % FOR HANDSANITIZER

[YAGAY andSUN]

GST Evasion: DGGI clarifies 18% of GST applicable on Hand Sanitizers and not 12%

The Directorate General of GST Intelligence (DGGI) clarified that 18% of Goods and Service Tax (GST) is applicable to the Hand Sanitizer and not 12% of GST. As per the World Customs Organisation (WCO), the Central Economics Intelligence Bureau (CEIB) informed DGGI that some manufacturers of “Hand Sanitizers (Alcohol-based)” are wrongly classifying the said item under tariff heading 3004 (12% GST) whereas the said item is liable to be classified under tariff heading 3808 (18% GST). It has also been informed that Sugar Mills and distilleries are also engaged in manufacturing or supplying alcohol-based hand sanitizers and are classifying the same under tariff heading 3004 (12% GST) of HSN whereas the same is correctly classifiable under heading 3808 (18% GST) of HSN. Thus, the misclassification of Hand sanitizers’ (Alcohol-based) appears to have resulted in substantial evasion of GST. “Intelligence furnished by the CEIB has been further developed in the DGGI Hqrs. A list of 62 manufacturers/suppliers of above said the item was prepared by the DGGI Headquarters by identifying the manufacturers with the help of the online shopping platforms, such as Amazon, Flipkart, Snapdeal, Paytm, etc. and has been analyzed in DGGI,” the letter said. “While the misclassification of Hand Sanitizers produced under various established brands is being looked into by various Zonal Units of DGGI, it is requested that misclassification of Hand Sanitizers manufactured/supplied by sugar factories/distilleries in your jurisdiction may kindly be verified at your end in order to plug any revenue Images,” the DGGI requested.

[KASTURI SETHI]

Classification of any product is always determined on the basis of composition of any product i.e. what ingredient pre-dominates and usage/function there of. This case is worth fighting. The burden of proof is cast upon the department. There is a plethora of case laws to the effect that the burden of proof is cast up on the department. Two Supreme Court judgements are mentioned below :-

Classification of goods is a matter relating to chargeability and burden of proof is squarely upon Revenue - If Department intends to classify goods under a particular heading or sub-heading different from claimed by assessee, Department has to adduce proper evidence and discharge burden of proof- Supreme Court in the case of H.P.L.Chemicals Ltd Vs. CCE, Chandigarh reported as 2006 (197) E.L.T. 324 (S.C.) = 2006 (4) TMI 1 - SUPREME COURT.

Yarn produced by blending sub-standard polyester fibre and viscose staple fibre is classifiable under Excise Heading 55.05 (2) Classification of goods - Proof of - Collector cannot rely on evidence gathered during his visit to manufacturing unit after many years of issuance of show cause notice to arrive at conclusion about classification

(2) The Supreme Court Bench comprising Hon’ble Mr. Justice Syed Shah Mohammed Quadri and Hon’ble Mr. Justice S.N. Variava on 3-5-2002 after condoning the delay dismissed the Civil Appeal No. D. No. 5863 of 2002 filed by Commissioner of Central Excise Goa against CEGAT Order Nos. 2793-2794/2001-WZB/C-II, dated 2-11-2001 and reported in 2002 (145) E.L.T. 324 (Tri. - Mumbai) (Atlantic Spinning & Weaving Mills Ltd. v. Commissioner) = 2001 (11) TMI 559 - CEGAT, MUMBAI.

The Appellate Tribunal in its impugned order had held that yarn produced by blending sub-standard polyester fibre and viscose fibre is classifiable under Heading 55.05 of Central Excise Tariff Act, 1985 and not under Heading 55.06 ibid.

The Tribunal further held that Collector cannot rely on evidence gathered during his visit to manufacturing unit after many years of issuance of show cause notice to arrive at conclusion about classification.

The Tribunal held that where the burden of proof for classification not discharged by department, classification as claimed by assessee accepted.

[Commissioner v. Atlantic Spinning & Weaving Mills Ltd. - 2003 (152) E.L.T. A105 (S.C.)] = 2002 (5) TMI 884 - SC ORDER

[YAGAY andSUN]

The Goa Bench of the GST Authority for Advance Ruling on Application of Springfields (India) Distilleries = 2020 (7) TMI 304 - AUTHORITY FOR ADVANCE RULING, GOA has ruled out that Alcohol-based hand-sanitizers attract a GST rate of 18% and merely classifying any goods as an essential commodity will not be criteria for exempting such GST. Earlier, Springfield’s (India) distillery had sought Advance Rulings on the issue of classification of the Goods namely “Hand sanitizer” and the rate of GST to be applied. The company also sought opinion on whether Hand sanitizer supplied by it is classifiable as an essential commodity as per the notification of the Ministry of Consumer Affairs and to be exempt from GST.

Amidst debate on GST rate on alcohol-based hand sanitizer, an Authority for Advance Ruling has said that this hygiene product will attract GST at the rate of 18%.

The applicant, Springfield’s Distilleries moved to Goa AAR with two queries. First, the classification of hand sanitizer;

Secondly, whether a hand sanitizer as an essential commodity, will be exempted from GST?

However, in the opinion of the AAR when the GST administration is investigating into an allegation of some manufacturers, including alcohol-based hand sanitizer makers, including alcohol-based hand sanitizer makers, resorting to tax evasion /non-payment of GST by misclassifying the product. There has been the apprehension of tax evasion especially by manufacturers, suppliers including sugar mills and distillers are classifying alcohol-based hand sanitizer under the tariff heading 3004 while actually it should be under tariff heading 3808 of HSN (Harmonized System of Nomenclature).

Therefore, it was held that that in the opinion of the Authority that the hand sanitizers manufactured by the applicant are of the category of the Alcohol-based sanitizers and are classifiable are of the category of Alcohol-based sanitizers and are classifiable under heading 3808 of HSN to which the GST is applicable @18%.

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