Classification of Hand Sanitizer for GST: Ruling on Applicable Rate and Category

The case involved the appropriate classification and applicable GST rate for Hand Sanitizer. The authority ruled that Hand Sanitizers are classified under heading 3808 as disinfectants, taxable at a rate of 9% under the CGST Act and the KGST Act. Hand Sanitizers do not fall under medicaments for therapeutic or prophylactic use and are not specifically designed for COVID-19 prophylaxis. The ruling clarified that Hand Sanitizers do not meet the criteria for classification under Chapter Heading 3004 for therapeutic or prophylactic use.

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Issues: (i) Whether hand sanitizers are classifiable as medicaments under Heading 3003 or 3004, or as disinfectants under Heading 3808; (ii) whether hand sanitizers attract GST at 9% under the applicable rate notification.

Issue (i): Whether hand sanitizers are classifiable as medicaments under Heading 3003 or 3004, or as disinfectants under Heading 3808

Analysis: Heading 3004 applies only to medicaments meant for therapeutic or prophylactic use, while Heading 3003 covers mixed products for therapeutic or prophylactic use not put up in measured doses or retail packs. The product in question was found to be primarily used for sanitizing and disinfecting hands and surfaces by destroying microorganisms, rather than for treatment or prevention of a specific disease. The reasoning also turned on the common parlance understanding of sanitizers as disinfectants, the primary function of the product, and the distinction between care and cure. Since Heading 3808 specifically covers disinfectants, and Chapter 38 excludes medicaments, the product was held not to fall under Headings 3003 or 3004.

Conclusion: Hand sanitizers are classifiable under Heading 3808 and not under Headings 3003 or 3004.

Issue (ii): Whether hand sanitizers attract GST at 9% under the applicable rate notification

Analysis: Once the product was classified under Heading 3808, it fell within entry 87 of Schedule III of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017. On that basis, the applicable GST rate was determined under the Central and Karnataka GST regimes at 9% each.

Conclusion: Hand sanitizers attract tax at 9% under CGST and 9% under KGST.

Final Conclusion: The ruling rejects treatment of the product as a medicament and treats it as a disinfectant for GST classification and rate purposes.

Ratio Decidendi: A product used primarily to sanitize and disinfect hands is classifiable as a disinfectant under Heading 3808, and not as a medicament under Headings 3003 or 3004, unless it is shown to have therapeutic or prophylactic use in the relevant sense.

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