Authority classifies M/s. Altis Finechem products under HSN 2919, subject to 18% GST rate

The Authority ruled that products manufactured by M/s. Altis Finechem Pvt. Ltd. are classified under HSN 2919 and are liable to GST at 18% rate, not eligible for the concessional 5% rate, as they are considered bulk drugs and not finished medicinal products. This decision was based on the interpretation that the products, being raw materials or Active Pharmaceutical Ingredients (API), cannot be directly administered to humans, thus not meeting the criteria for the lower GST rate applicable to drugs or medicines ready for administration.

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Issues Involved
1. Classification of goods.
2. Determination of tax liability under HSN 2919.

Detailed Analysis

Classification of Goods
The applicant, M/s. Altis Finechem Pvt. Ltd., engaged in the manufacture and supply of bulk drugs and intermediates, sought an Advance Ruling to classify their products under HSN 2919. These products include Alpha-Ketoanalogue Isoleucine Calcium Salt, Alpha-Ketoanalogue Valine Calcium Salt, Alpha-Ketoanalogue Leucine Calcium Salt, Alpha-Ketoanalogue Methionine Calcium Salt, and Alpha-Ketoanalogue phenylalanine Calcium Salt.

The applicant contended that their products should be classified under CTH No. 30 and liable to a 5% GST rate as per Sr. No. 180 of Notification No. 01/2017-CT (Rate) dated 28.06.2017. They argued that their products are "Ketoanalogue preparation of essential amino acids" and should be considered as drugs or medicines.

Determination of Tax Liability
The core issue was to determine whether the applicant's products qualify for a lower GST rate of 5% under Sr. No. 180 of Schedule-I of Notification No. 01/2017-CT (Rate) dated 28.06.2017. The relevant entry specifies that "Drugs or medicines including their salts and esters and diagnostic test kit" are eligible for the 5% GST rate.

The term "drug" as defined by the Drugs and Cosmetics Act, 1940, includes all substances intended for diagnosis, treatment, mitigation, or prevention of diseases in humans or animals. However, the term "bulk drugs" is not defined in the CGST Act, 2017. According to the Drugs (Prices Control) Order, 1979, "bulk drug" refers to any pharmaceutical, chemical, biological, or plant product used as an ingredient in formulations.

The Authority concluded that the applicant's products, being bulk drugs, are raw materials or Active Pharmaceutical Ingredients (API) and cannot be directly administered to humans. Therefore, they do not qualify for the concessional 5% GST rate, which applies only to ready-to-administer drugs or medicines.

Ruling
The Authority ruled that the products in question are classifiable under HSN 2919 and are liable to GST at the rate of 18% (9% CGST + 9% SGST) as per Notification No. 01/2017-CT (Rate) dated 28.06.2017. The ruling emphasized that the concessional rate of 5% GST is not applicable to bulk drugs, which are considered raw materials and not finished medicinal products.

Additional Considerations
The Authority also referenced a previous ruling in the case of M/s. LAURUS LABS LTD, where certain bulk drugs were classified under List 1 and taxed at 5% GST. However, it was clarified that this ruling is not applicable to the applicant's case as the products are different, and Advance Rulings are binding only on the applicant who sought it and the concerned officer.

In summary, the products manufactured by the applicant are classified under HSN 2919 and attract an 18% GST rate, as they are bulk drugs and not finished medicinal products eligible for the concessional rate.

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