Protein powder with vitamins classified under HSN 2106 as food supplement attracting 18% GST rate

The AAR Uttarakhand ruled that dry powder containing protein powder with vitamins and minerals manufactured under the name Protowits should be classified under HSN 2106 as a food supplement with 18% GST rate, not under HSN 3004 50 as claimed by the applicant. The Authority found that despite the applicant holding a drug manufacturing license, the product did not qualify for classification as a medicinal preparation since protein substances are not covered under HSN 3004 50, which specifically covers haematinic preparations, mineral supplements, and vitamin preparations only.

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Issues Involved:
1. Classification and Rate of Applicable GST on the product "Dry Powders containing Protein Powder with Vitamins & Minerals."

Detailed Analysis:

Issue 1: Classification and Rate of Applicable GST on the Product

Applicant's Submissions:
1. The applicant is engaged in the manufacture and supply of pharmaceutical formulations/nutraceuticals and has obtained the necessary drug and FSSAI licenses.
2. The product in question, "Dry Powders containing Protein Powder with Vitamins & Minerals," is manufactured under a drug license and labeled for "Prophylactic Use Only."
3. The applicant contends that the product should be classified under HSN 3004, which pertains to medicaments for therapeutic or prophylactic uses, and should be taxed at 12% GST.
4. The applicant references a similar ruling by the Himachal Pradesh Authority for Advance Ruling, which classified a similar product under HSN 3004.

Jurisdictional Officer's Views:
1. The product does not meet the Fixed Dose Combination criteria as laid out in Entry Serial No. 138 of the FDC list.
2. Comparable products like Calcimax D and Threptine, which are used for prophylactic and therapeutic purposes, are taxed at 18% GST.
3. The product in question lacks specific details about its therapeutic or prophylactic uses and is considered a health supplement, subject to 18% GST.

Authority's Discussion and Findings:
1. The product is manufactured under a drug license, but protein is not mentioned in Schedule C and C(1) of the Drugs & Cosmetics Rules, 1943.
2. The product does not conform to Entry Serial No. 138 of the FDC list, which does not cover all the ingredients present in the applicant's product.
3. The product lacks specific details about its therapeutic or prophylactic uses, even though it is labeled for "Prophylactic Use Only."
4. The classification under HSN 3004 is not appropriate as it does not cover substances containing protein. Instead, protein concentrates and textured protein substances are classified under HSN 2106.

Ruling:
The product "Dry Powders containing Protein Powder with Vitamins & Minerals" manufactured by the applicant is classified as a food supplement under HSN 2106 and is subject to 18% GST.

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