Page 48 - GSTL_23rd July 2020_Vol 38_Part 4

Applicability of rate of GST on Hand Sanitizer, when it is
treated as Ayurvedic Medicament and manufactured
with ingredients prescribed under Licence granted by
Aayush Department

Question : Sir, we are manufacturing the Hand Sanitizer Gel and Rub with
the ingredients mentioned in our Licence issued by the Aayush Department and we sale
the same product under the HSN Code 3004 and discharging our GST liability @ 12%.
We would also like to inform you that we sale our products in Retail market with the
name of “XYZ” in following sizes :
(1) Hand Sanitizer Rub and Gel, 50ML/100 ML/200 ML/250 ML/500 ML/5
Ltr. and 20 Ltr.,
(2) Sanitizing Wet Wipes, Single Wet wipes and Multy wipes (Pk of
10/20/25/50 upto 70) Now we are facing problem with regard to payment of
GST @ 12%, because department is insisting that the applicable rate of GST
on the above product is 18%.
In the light of above, we request you to kindly clarify with suitable case law and
notification or circular, if any, available in this matter. Your kind attention in this regard
is also invited to Press Note of Ministry of Finance dated 15-7-2020, wherein has been
mentioned that alcohol based hand sanitizers like detergents shall attract 18 per cent du-
ty.
Answer : With reference to your above query, kindly note :
That first of all if product is alcohol based (if alcohol is about 60 to 70 per
cent of the ingredient, the states may like to subject it to State Excise as even at
present States Levy and collect Excise Duty under the Medicinal and Toilet Prep-
aration (Excise Duties) Act, (in short, MTP Act), on any product for the manufac-
ture of which Alcohol is predominantly used and which is medicinal and toilet
preparation covered under MTP Act. But this observation is not specific to your
query, even though part of the larger controversy.
It is trite law that burden of proving classification is on the Department.
The initial onus therefore, while disputing classification lies on the Department.
GST LAW TIMES  23rd July 2020  48