2020 (9) TMI 1245 - AAAR - GST

Appellate Authority: GST 12% for Laboratory Reagents under Heading 3822.

The Appellate Authority ruled that the concessional GST rate of 12% applies to all goods falling under Heading 3822, including laboratory reagents, in ... Classification of goods - Laboratory Reagent - classifiable under Tariff Heading 38220090 at S. No. 80 of the Schedule II, OR as Goods which are not specified in Schedule I, II, IV, V or VI” at SI. No. 453 of Schedule III under CGST Notification No. 1/2017-Central Tax (R) dated 28th June 2017? - HELD THAT:- A plain reading of the entry at Sr. No. 80 makes it clear that only the Diagnostic Kits and. Reagents of Chapter Heading 3822 have been placed under Schedule II which attracts a lower rate of GST viz. 12%. From the Heading 3822 it is clear that the same applies to Diagnostic Reagents and also to Laboratory Reagents - it is found that as per Appellant's own submission their goods are 'Laboratory Reagents' and it is very clear from the Appellant's submissions that their goods are not Diagnostic Reagents, but are other laboratory reagents. The thrust of the Appellant's submissions is that all the goods of the Heading 3822 have been described against entry 80. ibid and therefore their goods viz. 'Laboratory Reagents' are included therein. That, the word 'And' used in the description is meant to separate the 2 items viz. the 'Diagnostic kits', and the 'Reagents' - From a plain reading of the relevant entries 80 it appears that concessional rate of GST is applicable only to the 'Diagnostic kits and Reagents' and not to all the items covered under Heading 3822. TRU Circular No. 163/ 19/2021-GST dated 6th October 2021 - HELD THAT:- The Circular clarifies that It is accordingly clarified that concessional GST rate of 12%o is applicable on all goods falling under heading 3822, vide Entry at S. No. 80 of Schedule II of notification No. 1/2017-Integrated Tax (Rate) dated 28.6.2017. Thus, concessional GST rate of 12% is applicable on all goods falling under heading 3822, vide Entry at S.No. 80 of Schedule II of notification No. 1/2017-Integrated Tax (Rate) dated 28.6.2017, including to Laboratory Reagents being imported and supplied by the Appellant. Issues Involved:1. Classification of 'Laboratory Reagents' under the appropriate tariff heading.2. Applicability of the GST rate on 'Laboratory Reagents.'3. Interpretation of the term 'reagents' in the context of GST notifications.4. Timeliness and validity of the Advance Ruling.Detailed Analysis:I. Classification of 'Laboratory Reagents':The primary issue is whether 'Laboratory Reagents' should be classified under Tariff Heading 38220090 at S.No. 80 of Schedule II or under the residuary S.No. 453 of Schedule III as per CGST Notification No. 1/2017-Central Tax (Rate) dated 28th June 2017. The appellant, M/s Imperial Life Sciences Pvt. Ltd., argued that their product, 'Laboratory Reagents,' falls under Chapter Heading 3822, which covers 'Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials.'The appellant cited the Karnataka Appellate Authority for Advance Ruling's decision in the case of M/s. Chromachemie Laboratory Private Limited, which held that Heading 3822 includes both diagnostic and laboratory reagents. The appellant also referred to the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), which indicate that laboratory reagents include not only diagnostic reagents but also other analytical reagents used for purposes other than detection or diagnosis.II. Applicability of the GST Rate on 'Laboratory Reagents':The appellant contended that the relevant entry in the GST rate notification, Entry No. 80 of Schedule II, covers 'All diagnostic kits and reagents' under Chapter Heading 3822, which should encompass both diagnostic and laboratory reagents. They argued that the term 'reagents' is broad enough to include laboratory reagents, and thus, the applicable GST rate should be 12%.The appellant also pointed out that the Central Board of Indirect Taxes & Customs (CBIC) had issued a circular indicating that the GST rate on diagnostic kits and reagents would be lower than the erstwhile combined indirect tax rates, supporting their claim for a 12% GST rate.III. Interpretation of the Term 'Reagents':The appellant argued that the term 'reagents' in Entry No. 80 of Schedule II should be interpreted broadly to include both diagnostic and laboratory reagents. They emphasized that the term 'and' in the entry separates 'diagnostic kits' and 'reagents,' indicating that 'reagents' should be considered a separate category that includes laboratory reagents.The appellant further argued that there is no specific exclusion or qualification to the term 'reagent' in the entry, and therefore, both laboratory reagents and diagnostic reagents should be covered under Entry No. 80 of Schedule II.IV. Timeliness and Validity of the Advance Ruling:The appellant raised concerns about the timeliness of the Advance Ruling issued by the Authority. They pointed out that the ruling was issued almost ten months after the application was filed, which exceeds the 90-day period prescribed under Section 98(6) of the CGST Act. The appellant cited various legal precedents to argue that the delay in pronouncement of the ruling renders it invalid.Discussion and Findings:The Appellate Authority found that the appellant's goods are indeed 'Laboratory Reagents' and that the relevant entry in the GST rate notification (Entry No. 80 of Schedule II) covers 'All diagnostic kits and reagents' under Chapter Heading 3822. The Authority noted that the CBIC had issued a circular clarifying that the intention of Entry No. 80 was to prescribe a 12% GST rate for all goods falling under Heading 3822, including laboratory reagents.The Authority concluded that the concessional GST rate of 12% is applicable to all goods falling under Heading 3822, including the laboratory reagents imported and supplied by the appellant.Ruling:In view of the above discussions and findings, and based on the CBIC's Circular No. 163/19/2021-GST dated 6th October 2021, the Appellate Authority held that the concessional GST rate of 12% is applicable to all goods falling under Heading 3822, including laboratory reagents imported and supplied by the appellant.