Appellate authority grants concessional GST rate for "Micafungin Sodium" sale

The appellate authority concluded that the product "Micafungin Sodium" supplied by the appellant is eligible for the concessional GST rate of 5% under Entry No. 180 of Schedule I of Rate Notification No. 01/2017 IT (R) / CT (R). The ruling of the lower authority was set aside, determining that the sale of Micafungin Sodium by the appellant's DTA unit is covered under Serial No. 114 of Entry No. 180, subject to GST at the rate of 5%. The appellant's appeal was disposed of accordingly.

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Issues Involved:

1. Applicability of concessional GST rate on Micafungin Sodium.
2. Definition and classification of "bulk drug" and "drug".
3. Interpretation of the term "Micafungin Sodium for Injection".
4. Comparison with previous tax regimes and notifications.

Detailed Analysis:

1. Applicability of Concessional GST Rate on Micafungin Sodium:

The primary issue is whether the sale of Micafungin Sodium by the DTA unit of the appellant qualifies for a concessional GST rate of 5% under Entry No. 180 of Schedule I of Rate Notification No. 01/2017 IT (R) / CT (R). The appellant contends that Micafungin Sodium, used for injections, should be taxed at 5%, while the lower authority ruled it does not qualify for this rate.

2. Definition and Classification of "Bulk Drug" and "Drug":

The appellant argued that Micafungin Sodium is a bulk drug used for injections. The term "bulk drug" is not defined in the GST Act but is covered under the Drugs (Price Control) Order, 1995, which includes salts and esters. The appellant cited various legal precedents and regulatory definitions to support that bulk drugs are considered drugs and should be eligible for the concessional rate.

3. Interpretation of the Term "Micafungin Sodium for Injection":

The appellant emphasized that Micafungin Sodium is specifically used for injections, supported by approvals from CDSCO and US FDA. They argued that the term "Micafungin Sodium for Injection" includes the bulk drug form, which is mixed with a suitable vehicle (like Sodium Chloride) to be administered as an injection. The U.S. Pharmacopeia Nomenclature Guidelines were cited to explain that "for injection" signifies a dry solid form that becomes suitable for injection upon adding a vehicle.

4. Comparison with Previous Tax Regimes and Notifications:

The appellant referenced the previous Central Excise regime, where Micafungin Sodium was eligible for a concessional rate, arguing that similar provisions should apply under the GST regime. They highlighted that the Customs Notification No. 12/2012 also provided a 5% concessional rate for Micafungin Sodium for injection, indicating consistency in tax treatment across regimes.

Conclusion:

The appellate authority concluded that the product "Micafungin Sodium" supplied by the appellant is indeed eligible for the concessional GST rate of 5% under Entry No. 180 of Schedule I of Rate Notification No. 01/2017 IT (R) / CT (R). The ruling of the lower authority was set aside, and it was determined that the sale of Micafungin Sodium by the DTA unit of the appellant is covered under Serial No. 114 of Entry No. 180, thereby leviable to GST at the rate of 5%. The appeal filed by the appellant was disposed of on these terms.

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