Concessional GST on drugs and medicines does not extend to bulk drugs used only as pharmaceutical ingredients.

Concessional GST at 5% under Sr. No. 180 of Schedule I was confined to drugs or medicines understood in their ordinary and common-parlance sense, with reference to the Drugs and Cosmetics Act, 1940, as products used for diagnosis, treatment, mitigation or prevention of disease. Bulk drugs such as Danuorubicin, Epirubicin, Idarubicin and Zoledronic Acid were held to be active pharmaceutical ingredients or raw materials used in formulations, not medicines directly administered as such. They therefore did not qualify for the concessional rate merely because they were named in the relevant list. The ruling was against the applicant.

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Issues: Whether the applicant's bulk drugs, namely Danuorubicin, Epirubicin, Idarubicin and Zoledronic Acid, were classifiable as "drugs or medicines" eligible for concessional GST at 5% under Sr. No. 180 of Schedule I of Notification No. 01/2017-Central Tax (Rate), dated 28.06.2017.

Analysis: The applicable entry grants 5% GST only to drugs or medicines specified in List I. Since the CGST Act does not define "drugs" or "medicine", the term was understood in its plain, ordinary and popular sense, with reference to Section 3(b) of the Drugs and Cosmetics Act, 1940 and the common-parlance understanding of medicine as something used for diagnosis, treatment, mitigation or prevention of disease. The materials supplied by the applicant were found to be bulk drugs or active pharmaceutical ingredients, i.e. raw material or ingredients used in formulations, and not products directly administered as medicines. The presence of specific names in List I did not extend the concessional rate to bulk drugs as such where the goods supplied were not medicines in the relevant sense.

Conclusion: The bulk drugs in question were not eligible for the 5% rate under Sr. No. 180 of Schedule I, and the ruling was against the applicant.

Final Conclusion: Concessional GST under the notified entry was confined to medicines or drugs meant for diagnosis, treatment, mitigation or prevention of disease, and not to bulk drugs supplied as raw material or active pharmaceutical ingredients.

Ratio Decidendi: For the concessional GST entry covering drugs or medicines, the goods must answer the common-parlance meaning of medicine or drug and be capable of use as such; bulk drugs supplied as ingredients or raw material do not qualify merely because they are connected with pharmaceutical manufacture.

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