Classification of Hand Sanitizers under GST: 18% Tax despite Essential Commodity Status

The Advance Ruling Authority classified the Hand Sanitizers manufactured by the applicant under HSN 3808, subjecting them to a GST rate of 18% as per Notification No. 1 Central Tax (Rate) dated 28/06/2017. Despite being classified as an essential commodity by the Ministry of Consumer Affairs, Food and Public Distribution, Hand Sanitizers were not exempt from GST, as clarified by the Authority.

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Issues: Classification of Hand Sanitizer under HSN Code, Rate of GST Applicable, Exemption from GST as an Essential Commodity

Classification of Hand Sanitizer under HSN Code:
The applicant, a registered partnership firm manufacturing Hand Sanitizers, sought an Advance Ruling on the classification of Hand Sanitizer under the HSN Code. The applicant believed that Hand Sanitizers fall under HSN Code 30049087 and should be taxed at 12% under GST. However, the Authority determined that the Hand Sanitizers manufactured by the applicant, being alcohol-based, are classifiable under heading 3808 of the HSN. This classification attracts a GST rate of 18%.

Rate of GST Applicable:
The Authority analyzed the submissions made by the applicant and the provisions of the GST Act to ascertain the appropriate GST rate for Hand Sanitizers. It was concluded that alcohol-based Hand Sanitizers manufactured by the applicant fall under HSN 3808 and are taxable at the rate specified in Notification No. 1 Central Tax (Rate) dated 28/06/2017. Therefore, the applicable GST rate for the Hand Sanitizers in question is 18%.

Exemption from GST as an Essential Commodity:
The applicant also sought clarification on whether the Hand Sanitizers supplied by them could be classified as an essential commodity and thus be exempt from GST. While the Ministry of Consumer Affairs, Food and Public Distribution had classified Hand Sanitizers as an essential commodity, the Authority pointed out that mere classification as an essential commodity does not automatically exempt the goods from GST. Exempted goods are covered by Notification no.2 /2017/- Central Tax (Rate) dated 28/06/2017. Therefore, despite being classified as an essential commodity, Hand Sanitizers are not exempt from GST.

Conclusion:
In conclusion, the Advance Ruling Authority determined that the Hand Sanitizers manufactured by the applicant are to be classified under HSN 3808 and taxed at the rate specified in Notification No. 1 Central Tax (Rate) dated 28/06/2017, which is 18%. The classification as an essential commodity did not warrant exemption from GST, as per the relevant provisions.

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