Pharmaceutical Pellets and Granules Qualify as Medicaments Under GST, Taxable at 12% Instead of 18%

The AAR ruled that pharmaceutical pellets and granules manufactured by the applicant qualify as medicaments under the GST notification and are taxable at 12% instead of 18%, except for one weight loss-related product. The Authority determined these products meet the criteria of having therapeutic or prophylactic uses while not being in measured doses for retail sale. The ruling was based on examination of the products' constituents and application of Supreme Court precedent interpreting "therapeutic or prophylactic" uses in pharmaceutical classification cases.

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Issues: Classification of pharmaceutical Pellets and Granules as Medicaments under GST Act at a specific tax rate.

Analysis:

Issue 1: Application and Admissibility
The applicant filed an application under Section 97(1) of the TGST Act, 2017 seeking an advance ruling on the classification of pharmaceutical Pellets and Granules for GST purposes. The application fee was paid, and no objections were raised by the jurisdictional officer, leading to the admission of the application.

Issue 2: Interpretation of GST Acts
The provisions of both the CGST Act and the TGST Act were considered to be the same unless specified otherwise. The term 'GST Act' was used as a common reference for both acts throughout the ruling.

Issue 3: Facts of the Case
M/s. Spansules Formulations claimed that they were paying 18% tax on pharmaceutical Pellets and Granules under CGST & SGST, but believed they should be taxed at 12%. The products were described as not in measured doses suitable for retail sale.

Issue 4: Questions Raised
The main question raised was whether the pharmaceutical Pellets and Granules could be classified as Medicaments under a specific entry in the GST notification and be subject to GST at a reduced rate of 12%.

Issue 5: Personal Hearing
During the personal hearing, the applicant's representatives argued that the products fell under a lower tax rate category as per their interpretation of the GST notification.

Issue 6: Discussion & Findings
The ruling authority examined the products and their constituents, finding that they met the criteria to be classified as Medicaments under a specific entry in the GST notification. The products were not in measured doses for retail sale and had therapeutic or prophylactic uses, except for one product related to weight loss.

Issue 7: Legal Interpretation
The ruling referred to the Hon'ble Supreme Court's interpretation of 'therapeutic or prophylactic' uses and concluded that the products, except for the weight loss-related one, qualified as medicaments used for therapeutic or prophylactic purposes.

Issue 8: Ruling
The ruling clarified that the pharmaceutical Pellets and Granules, except for the weight loss-related product, could be classified as medicaments under the specified entry in the GST notification and were subject to GST at the rate of 12%.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the authority's decision regarding the classification of pharmaceutical Pellets and Granules under the GST Act.

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