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GST - Hand Sanitisers - Misclassification - Alert issued

By TIOL News Service

NEW DELHI, JULY 08, 2020: EVEN as contagion from COVID-19 is surging and citizens being advised to make frequent use of hand sanitisers, the CEIB has issued an alert on GST tax evasion by manufacturers of hand sanitisers (alcohol-based). As per the intelligence alert, some manufacturers 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).

In this regard, classification opinion of WCO has been relied upon. Sugar Mills and distilleries are also engaged in manufacturing/supplying alcohol-based hand sanitizers and are classifying the same under tariff heading 3004 (12% GST) of HSN whereas the same are 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 the said 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 analysed in DGGI. While the mis-classification of Hand Sanitizers produced under various established brands is being looked into by various Zonal Units of DGGI, it has been advised to the field formations that mis-classification of Hand Sanitizers manufactured/supplied by sugar factories/distilleries may kindly be verified at to plug any revenue leakages.