TaxTMI 
TaxTMI 
2020 (1) TMI 795
X X X X Extracts X X X X
X X X X Extracts X X X X
....rred to as CGST Act. 2017 and SGT Act, 2017) by M/s. Chromachemie Laboratory Private Limited, (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 71/2019 Dated: 23 Sept 2019 = 2019 (10) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The Appellant, is a leading organization engaged in new product development for the pharmaceutical, biopharmaceutical and food industries. The Appellant inter alia imports Pharmaceutical Reference Standards (hereinafter also referred to as 'PRS') of various official pharmacopoeias like US Pharmacopoeia (USP), European Pharmacopeia (EDAM], British Pharmacopoeia (BP) and supplies them to all major pharmaceutical companies in India. 4. PRS is a reference analytical sample provided by the official global pharmacopoeias required to be used by the pharmaceutical manufacturers to confirm that their product quality standards are in conformity with the respective monographs prescribed. The drug manufacturing companies use these PRS in their laboratory tests on all drug substances for determining the purity of medicine and identification and quantification of pharmaceutical impurities. 5. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of HSN Code 3822 00 11, 3822 00 12 and 3822 00 19 which are for medical diagnosis are covered under the Entry under SI. No. 80 to Schedule II to the Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017 and not all laboratory reagents; that the word "and" is a word of conjunction and it joins two goods "kits" and "reagents" and that they are with the common adjective of being "diagnostic" and hence joins two classes of goods "diagnostic kits" and "diagnostic reagents"; that the goods of Chapter Heading 3822 other than "diagnostic kits" or "diagnostic reagents" are not covered under any specific entry of Schedule I or Schedule II or Schedule IV or Schedule V or Schedule VI of the Notification No. 01/2017-Integrated Tax (Rate) dated 28,06.2017 and hence the Pharmaceutical Reference Standards gets covered under the entry under SI. No. 453 of the Schedule III which is taxable at 18% GST. 9. Aggrieved by the ruling of the Authority, the Appellant has filed this appeal before us on the following grounds: 9.1. At the outset, the Appellant submitted that in terms of Section 98(6) of the CGST Act, the Advance Ruling Authority should have pronounced the Ruling in writing w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aboratory reagents may be used in medical, veterinary, scientific or industrial laboratories, in hospitals, in industry in the field or, in some cases, in the home. 9.4. In the instant case, the imported goods viz. Pharmaceutical Reference Standards ('PRS') is a 'prepared laboratory reagent without a backing' with a label and proper instructions for its use. 9.5. The Appellant reiterates that it is not in dispute that the product viz. Pharmaceutical Reference Standards is a Prepared Laboratory Reagent intended to be used exclusively for a specified analytical calibrating and referencing purposes and classifiable under Tariff Item 3822 00 90 of the Customs Tariff. The Appellant submits that the Government of India, on the recommendations of the GST Council vide the Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2018 (hereinafter referred also to as 'Rate Notification') has notified the applicable rate of the Integrated Tax that shall be levied on inter-State supply of goods. The Appellant submits that essentially the issue under consideration in the present appeal is the applicability of rate of tax on supply of the Prepared Laboratory Reagent classifiable under Tar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y reagents on a backing, other than those of heading 3002 or 3006; and (f) Prepared laboratory reagents without a backing, other than those of heading 3002 or 3006. 9.9. The Pharmaceutical Reference Standards imported by the Appellant is a 'Prepared laboratory reagents without a backing, other than those of heading 3002 or 3006' with a proper labelling and appropriate instructions for its use and is covered under (f) supra and thus consequentially covered under the term 'reagent' in Entry No. 80 of Schedule II of the Rate Notification which read as 'Ali diagnostic kits and reagents". Accordingly, the import and supply of 'Pharmaceutical Reference Standard' would attract a levy of integrated Tax at the rate of 12 per cent. 9.10. The Appellant submits that the expression "AND" used in the term All diagnostic kits and reagents' is separating the words and therefore the term 'Reagent' is a separately identified term, The Appellant submits that the said Entry under Sl. No. 80 to the Notification has been incorrectly interpreted by the Authority in the impugned Ruling; that the word 'reagent' is not preceded by the word 'diagnostic'. Thus, by restricting the, entry to only....
X X X X Extracts X X X X
X X X X Extracts X X X X
....GST regime in comparison to erstwhile combined indirect tax rates. As per the said Circular, for the majority of supplies of goods, the tax incidence approved by the GST Council would be much lower than the erstwhile combined indirect tax rates levied Ion account of Central Excise duty rates embedded Central Excise duty rates / Service Tax post-clearance embedding, VAT rates or weighted average VAT rates, cascading of VAT over excise duty and tax incidence on account of CST, Octroi, Entry, Tax, etc.] by the 'Centre and States. The Appellant submits that the list of such supplies, where the GST incidence would be lower than the erstwhile combined indirect tax rates also included an Entry under SI. No. 48 as 'diagnostic kits and reagents'. In view of the said Circular dated 15.06.2017. the intention of the legislature was very clear to reduce the rate of tax on the supply of reagents. 9.13. The Appellant submits that entry under SI. No. 453 to Schedule-III is a residuary entry which provides for an applicable rate of Integrated Tax at the rate of 18 per cent on all goods that are not specified in Schedule I, II, III, IV, V or VI of the Rate Notification. The Appellant further subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the class of diagnostic reagents are only covered under the Entry under SI. No. 80 to Schedule II to the Rate Notification which is incorrect. 9.16. The Appellant submits that all the Notifications must be interpreted strictly. It is further submitted that no one is at liberty to add or modify the words of the entry while interpreting the scope of the notification. This has also been laid down by the Hon'ble Supreme Court in the following cases: Saraswati Sugar Mills v. Commissioner of C.Ex., Delhi-Ill, 2011 (270) E.L.T. 465 (S.C.) = 2011 (8) TMI 4 - SUPREME COURT, Hotel Leela Venture Ltd. v. Commissioner of Cus. (Gen.), Mumbai, 2009 (234) E.L.T. 389 (S.C) = 2009 (1) TMI 9 - SUPREME COURT: Commissioner of C. Ex., Jaipur v. Mewar Bartan Nirman Udyog, 2008 (221) ELT. 27 (S.C.) = 2008 (9) TMI 33 - SUPREME COURT. The Appellant further submits that term 'and' as used in the Entry under Sl. No. 80 has been used to separate the words, 'All diagnostic kits' and 'Reagents'. Therefore. the term 'reagents' has to be treated as a separate word whose identity shall be separate from the words preceding it. 9.17. The Appellant further submits that since no specific exclusion or qualifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....based organization catering to the analytical and regulatory requirements of the manufacturing industries. They are the Authorized distributors of the US Pharmacopoeia Reference Standards and Publications and are also distributors of Reference Standards from other Pharmacopoeias. They import Pharmaceutical Reference Standards and supply them to major pharmaceutical companies in India. 13. Pharmaceutical Reference Standards are required to be used by drug manufacturers to ensure that the quality of the medicines produced by them are in conformity with the respective monographs prescribed by these official pharmacopoeias. Reference standards are one of the key factors for consistently good quality of pharmaceutical products. Reference Standards are substances of known purity which are intended to be used exclusively for a specified analytical, calibrating or referencing purpose and not to be used as Drugs, which should be clearly stated on the label and / or accompanying certificate or literature. The drug manufacturing companies use these Reference Standards in their laboratory tests on all drug substances for determining the purity of medicine and identification and quantificati....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... (v) 3 per cent. in respect of goods specified in Schedule V, and (vi) 025 per cent. in respect of goods specified in Schedule VI. Explanation (iii) to the Rate Notification provides that "tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975. 16. We are concerned with the entry SI.No. 80 of Schedule II of the said rate Notification which reads as under: Schedule-II - 12% S. No. Chapter/ Heading/Sub- heading/Tariff item Description of Goods 80. 3812 All diagnostic kits and reagents The dispute in this case is whether the description of the goods given against the entry SL.No. 80 of Schedule II applies to all reagents both diagnostic as well as laboratory reagents. When we read the description of the goods under Chapter Heading 3822 of the Customs Tariff together with the HSN Explanatory Notes for Heading 3822, we find that the said Heading covers prepared diagnostic or laboratory reagents and prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stic kits and diagnostic reagents is not correct. The principle of ejusdem generic applied by the Authority in interpreting the entry SI-No 80 is misconstrued. The rule of ejusdem generis applies when (1) the statute contains an enumeration of specific words; (2) the subjects of enumeration constitute a class or category; (3) that class or category is not exhausted by the enumeration; (4) the general terms follow the enumeration; and (5) there is no indication of a different legislative intent. in the instant case, the words used in the entry SI.No. 80 of Schedule II "diagnostic kits and reagents" are of one class of goods falling under Chapter Heading 3822 of the Customs Tariff. However, the general word "Air is preceding the enumeration and does not follow the enumeration. The rule of ejusdem generis has no inverse application, General words preceding the enumeration are not governed by this rule. Further, the phrase "All diagnostic kits and reagents" brings within its fold the entire range of diagnostic and laboratory reagents, which have been listed in (a) to (f) of Para 16 above. There is no scope for bringing within its ambit other goods since the phrase is exhaustive in its ....