TaxTMI 
TaxTMI 
2021 (4) TMI 931
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....espect of the following question: Whether Entry No. 80 in Schedule II to the Notification No. 1/2017-Integrated Tax (Rate) dated 28-06-2017 (as amended) is applicable for import as well as supply of "Prepared Laboratory Reagents / Pharmaceutical Reference Standards (PRS)" attracting a levy of Integrated Tax at the rate of 12% or Entry No.453 to Schedule III attracting a levy of Integrated Tax at the rate of 18%? 3. Admissibility of the application: The question is about "applicability of a notification issued under the provisions of this Act" and hence is admissible under Section 97(2)(b) of the CGST Act 2017. 4. BRIEF FACTS OF THE CASE: The applicant furnishes some facts relevant to the issue: 4.1 The Applicant states that they are science-based organization conceptualized to cater to the growing analytical and regulatory requirement of the Pharmaceutical Industries and to provide solutions to the new challenges in separations and purifications faced in the Pharmaceutical and Research Institutions worldwide. 4.2 The applicant intends to import Pharmaceutical Reference Standards (hereinafter also referred to as 'PRS') from Pharmacopeias like European Pharma....
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....plicability of rate of tax on import and supply of the Prepared Laboratory Reagent classifiable under Tariff Item 3822 00 90, in terms of in terms of the Rate Notification. 4.9 It is submitted that the only entry in the Rate Notification which covers the goods falling under Chapter Heading 3822 being 'Diagnostic Kits and Reagents' is Entry No. 80 of Schedule-II, which provides for the rate of GST at 12%. The relevant entry reads as follows: Schedule-II -12% Sl.No. Chapter/ Heading/Sub-heading/ Tariff item Description of Goods 80 3822 All diagnostic kits and reagents 4.10 In the alternative, Entry No. 453 to Schedule-III, a residuary entry, provides applicable rate of GST @ 18% on all goods that are not specified in Schedule I, II, IV, V or VI. The relevant entry reads as follows: Schedule-III -18% SI.No. Chapter/ Heading/ Sub-heading/ Tariff item Description of Goods 453 Any Chapter Goods which are not specified in Schedule I, II, IV, V or VI 4.11 In the above factual matrix, the Applicant seeks clarity on whether the PRS classifiable under Tariff Item 3822 00 90 shall be covered under Entry No. 80 of Schedule II to Notific....
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....stic reagents of heading 30.02 or diagnostic reagents designed to be administered to the patient and blood grouping reagents of heading 30.06. It also covers certified reference materials. Diagnostic reagents are used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans; their functions based upon a measurable or observable change in the biological or chemical substances constituting the reagent. Prepared diagnostic reagents of this heading may be similar in function to those designed to be administered to patients (subheading 3006.30), with the exception that they are used for in vitro, rather than for in vivo, applications. Prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or diagnosis. Prepared diagnostic and laboratory 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 The reagents of this heading should be clearly identifiable as being for use only as diagnostic or laboratory reagents. This must be clear from their composition, l....
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.... the standard as laid down by these pharmacopeias would qualify to be used safely. On this background the goods imported by the main appellant are to be considered whether they are Pharmaceutical Reference Standards or otherwise. The phrase "Reference Standards" is not defined or described in Customs Act, 1962 or Customs Tariff Act that appeared to establish appropriate product description as early as in the year 2004, a particular reference seeking clarification on the description of "Pharmaceutical Reference Standards" was made to appropriate and competent authority in this matter, i.e., Drugs Controller General (India) under Directorate General of Health Services (Drug Division) who vide his letter reference No. X19014/ 10/ 04-D, dated 17-11-2004 stated as under :- ........... 7.8 Plain reading of the above letter from the Drugs Controller General (India) would clearly indicate that the Reference Standards are substances required for analytical calibrating or referencing purpose which would be required to estimate the standard of the product manufactured or consumed by the clients of the main appellants. It is to be noted that based upon the above clarification....
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.... analytical calibrating and referencing purposes and classifiable under HSN 3822 00 90. g. The applicant states that 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 (hereinafter referred to as the 'CTA'). Further, as per Explanation (iv) to the Rate Notification, the rules for the interpretation of the First Schedule to the CTA, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. In view of the above Explanations, it is evident that the classification adopted under the CTA can be borrowed for identifying the appropriate schedule under the IGST Act / CGST Act / State GST Acts in which a particular goods are listed and also for determination of rate of tax applicable under GST law. h. The Applicant submits that essentially the issue under consideration in the present application is the applicability of rate of tax on supply of the Prepared Laborato....
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.... diagnostic reagents as well as prepared laboratory reagent. As per the HSN Explanatory Notes to Chapter Heading 38.22, the term 'reagent' under Chapter Heading 3822 should be clearly identifiable as being for use only as diagnostic or laboratory reagents. It further provides that prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or diagnosis. Further, the HSN Explanatory Notes provides that reagents of this heading should be clearly identifiable as being for use only as diagnostic reagents or laboratory reagents which must be clear from their composition, labelling, instructions for in vitro or laboratory use, indication of the specific diagnostic test to be performed or physical form (e.g., presented on a backing or support). 6.3 The applicant further states that on reading of the HSN Explanatory Notes with the terms or words used in Entry 80 of the Schedule II of the Rate Notification, the description -"all diagnostic kits and reagents" includes amongst others "prepared laboratory reagents without a backing, other than those of heading 3002 or 3006." 6.4 The applicant states ....
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....t in the matter of Commissioner of Commercial Tax, U.P. v. A.R. Thermosets (Pvt.) Ltd. reported in 2016 (339) E.L.T. 500 (S.C.). The applicant submits that the term "reagent" used in the description under Entry No.80 to Schedule II of the Rate Notification has been used as generic expression and it would cover all reagents, which share and have common composition and commercial entity, and meet the popular parlance test. The applicant also places reliance on the following judgments in support of his contention: (a) Himalaya Stone Industries V. State of Uttarakhan and others [2013] 62 VST 233 (b) Nandi Printers Ltd. V. State of Karnataka reported at 122 STC 164 (Kar) 7. The applicant relies on the Circular F.No.296 /07 /2017-CX.9 dated 15.06.2017 issued by the Central Board of Indirect Taxes and Customs which provides for a list of goods with reduced tax liabilities under the GST regime in comparison to erstwhile combined indirect tax rates and the applicant submits that in the erstwhile indirect tax regime, the combined rate of indirect taxes levied on the manufacture and sale of "Pharmaceutical Reference Standards" classified under Tariff Item 3822 00 90 was a....
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....uthority in interpreting the entry Sl. 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 Sl. 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 "All" 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 of Para 16 above. There is no scope for bringing within its ambit other goods since the phrase is exhaustive in its enumeration. We also find that the Fitment Committee which was mandated to recommend suitable GST ra....