GST rate on Hand sanitizer

[KARAN VERMA]

Sir

What is HSN code and GST rate on Hand Sanitizer.

[YAGAY and SUN]

The Goa Bench of the GST Authority for Advance Ruling on Application of Springfields (India) Distilleries = 2020 (7) TMI 304 - AUTHORITY FOR ADVANCE RULING, GOA has ruled out that Alcohol-based hand-sanitizers attract a GST rate of 18% and merely classifying any goods as an essential commodity will not be criteria for exempting such GST. Earlier, Springfield’s (India) distillery had sought Advance Rulings on the issue of classification of the Goods namely “Hand sanitizer” and the rate of GST to be applied. The company also sought opinion on whether Hand sanitizer supplied by it is classifiable as an essential commodity as per the notification of the Ministry of Consumer Affairs and to be exempt from GST.

Amidst debate on GST rate on alcohol-based hand sanitizer, an Authority for Advance Ruling has said that this hygiene product will attract GST at the rate of 18%.

The applicant, Springfield’s Distilleries moved to Goa AAR with two queries. First, the classification of hand sanitizer;

Secondly, whether a hand sanitizer as an essential commodity, will be exempted from GST?

However, in the opinion of the AAR when the GST administration is investigating into an allegation of some manufacturers, including alcohol-based hand sanitizer makers, including alcohol-based hand sanitizer makers, resorting to tax evasion /non-payment of GST by misclassifying the product. There has been the apprehension of tax evasion especially by manufacturers, suppliers including sugar mills and distillers are classifying alcohol-based hand sanitizer under the tariff heading 3004 while actually it should be under tariff heading 3808 of HSN (Harmonized System of Nomenclature).

Therefore, it was held that that in the opinion of the Authority that the hand sanitizers manufactured by the applicant are of the category of the Alcohol-based sanitizers and are classifiable are of the category of Alcohol-based sanitizers and are classifiable under heading 3808 of HSN to which the GST is applicable @18%.

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AI Summary

Product classification for hand sanitizers determines GST liability; alcohol based sanitizers are classifiable as disinfectants under customs tariff.
Alcohol based hand sanitizers are classified by reference to dominant ingredient, function and end use; where alcohol predominates and the product functions as a disinfectant it is classifiable under the tariff entry for disinfectants. Administrative findings and an AAR have treated such sanitizers as disinfectants, and DGGI enquiries have identified misclassification by some manufacturers and distilleries. Producers are advised to seek advance rulings or authoritative clarification and to document composition, as the burden to justify an alternate classification lies with the taxpayer when challenged.