2021-TIOL-19-AAAR-GST

Wipro Enterprises Pvt Ltd

GST - AAR had held that  that the alcohol-based hand sanitisers are to sanitise the hands and disinfect them & hence cannot be covered under Medicaments; that the hand sanitisers are correctly classifiable under Heading 3808 under the Customs Tariff Act and are liable to tax at the rate of 18% GST - Appeal to the Appellate authority.

Held: Delay of 12 days in filing appeal is condoned - U se of an alcohol-based hand sanitizer neither controls the diseases caused by the viruses/bacteria nor does it develop preventive characteristics inside the human body to fight the disease caused by the viruses/bacteria - It is merely a product recommended for use in hand hygiene practices, therefore, AAAR holds that the alcohol-based hand sanitizer cannot be considered as a 'medicament' classifiable under Chapter Heading 3004 - Insofar as issuance of licence under the Drugs and Cosmetics Act, 1940 is concerned for manufacture and sale of 'alcohol-based hand sanitiser', it is observed that regulation under the Drugs Act does not ipso facto mean that the product automatically becomes medicine - term 'drug' is defined in s.3(b) of the Act, 1940 and includes not only medicines but also any substance which is used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals; that while all medicines are drugs, all drugs are not medicines - Hand sanitiser manufactured by the appellant contains the drug ethyl alcohol in a concentration of 95% v/v, which is within the standard prescribed by the Indian Pharmacopoeia, however, the presence of a drug by itself will not make the impugned product a medicament - Applying the test of common parlance [coupled with the questionnaire survey conducted and published in the International Journal of Current Research and Review on the 'Knowledge and awareness on the role of hand sanitiser in prevention of COVID-19' which showed that almost 79% of people were aware that hand sanitiser is used for maintaining good hand hygiene and to prevent the spread of the disease during the pandemic] and the fact that the impugned product does not have any therapeutic or prophylactic properties, the alcohol-based hand sanitiser cannot be classified as a medicament under CH 3004 as claimed - AAAR agrees with the ruling given by the AAR that Alcohol-based hand sanitiser is used to disinfect externally and hence would fall within the meaning and ambit of 'Disinfectant' classifiable under heading 3808.94 - However, AAAR disagrees with the lower authority's observation that Hand Sanitiser is an alternative to  soap - Rate of tax is 18% in terms of Sl. no. 87 of Schedule III of 11/2017-CTR but w.e.f 14 June 2021 to 30 September 2021, the  rate of tax has been reduced to 5% GST vide notification 5/2021-CTR dt. 14.06.2021: AAAR

- Appeal dismissed: AAAR