Immunity booster products don't qualify as medicinal products under HSN Code 30039011, attract 18% GST under residuary entry

The AAR Telangana ruled that immunity booster products (Urban Roots, Bio kavach, and Avinja 7) do not qualify for classification under HSN Code 30039011 as they lack curative properties required for medicinal products. The products cannot be classified under Chapter 30 and do not fall under specified schedules in GST Notification 01/2017. Consequently, they are classified under residuary entry Serial No. 453 of Schedule III, attracting 18% GST (9% CGST + 9% SGST) rather than the lower tax rate sought by the applicant.

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Issues Involved:
1. HSN Code and Rate of Tax for Urban Roots.
2. HSN Code and Rate of Tax for Bio Kavach.
3. HSN Code and Rate of Tax for Immunity Booster - Avinja 7.

Summary:

Issue 1: HSN Code and Rate of Tax for Urban Roots

The applicant, M/s. Avinja Biotechnologies Private Limited, sought clarification on the classification of their product Urban Roots, a bio-fertilizer. They proposed two possible HSN codes: 30039011 (GST rate 12%) or 31010092 (GST rate 5%). The Authority for Advance Ruling (AAR) observed that bio-fertilizers are not specifically mentioned in Notification 1/2017. Referring to The Fertiliser (Control) Order 1985, the AAR concluded that Urban Roots does not qualify under HSN 31010092 as it is not an organic fertilizer. Consequently, it falls under the residuary entry at Serial No. 453 of Schedule III, attracting a tax rate of 9% CGST & 9% SGST.

Issue 2: HSN Code and Rate of Tax for Bio Kavach

Similarly, for Bio Kavach, another bio-fertilizer produced by the applicant, the AAR reviewed the proposed HSN codes: 30039011 (GST rate 12%) or 31010092 (GST rate 5%). Given the absence of a specific entry for bio-fertilizers in Notification 1/2017 and the definitions in The Fertiliser (Control) Order 1985, Bio Kavach was also classified under the residuary entry at Serial No. 453 of Schedule III, with a tax rate of 9% CGST & 9% SGST.

Issue 3: HSN Code and Rate of Tax for Immunity Booster - Avinja 7

For the Immunity Booster - Avinja 7, the applicant proposed classification under HSN codes 220299 (GST rate 18%) or 30039011 (GST rate 12%). The AAR referred to various judicial precedents to determine whether the product qualifies as a medicament or a cosmetic. The AAR concluded that the product did not indicate any curative properties and thus does not fall under Chapter 30. Consequently, it was classified under the residuary entry at Serial No. 453 of Schedule III, attracting a tax rate of 9% CGST & 9% SGST.

Rulings:

1. Urban Roots: Classified under Serial No 453 of Schedule III of Notification No. 1/2017. Rate of Tax: 9% CGST & 9% SGST.
2. Bio Kavach: Classified under Serial No 453 of Schedule III of Notification No. 1/2017. Rate of Tax: 9% CGST & 9% SGST.
3. Immunity Booster - Avinja 7: Classified under Serial No 453 of Schedule III of Notification No. 1/2017. Rate of Tax: 9% CGST & 9% SGST.

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