In the midst of the rising number of coronavirus cases, the Goa bench of the GST Authority of Advance Ruling (AAR) has held that the alcohol-based sanitizers will have a GST of 18 per cent on the product. This comes amidst the ongoing debate over goods and services tax (GST) rate on hand sanitizers. The bench further added that its classification as an essential product cannot be a criterion for exemption from GST.
As the consumer affairs ministry has classified hand sanitizers as an essential commodity, Springfields (India) Distilleries had earlier moved the Goa AAR over-classification of the hand sanitizer and the applicable rate of GST. It also sought an opinion on whether it should be exempt from GST. However, the AAR bench ruled that merely classifying any goods as essential commodities will not exclude the criterion for exemption from GST.
The ruling comes at a time when the GST administration is exploring GST evasion by manufacturers of alcohol-based sanitizers. According to GST officials, several manufacturers and suppliers, including sugar mills and distilleries, are classifying alcohol-based hand sanitizers under the tariff heading 3004 with 12 per cent tax against 3808 of HSN, which attracts 18 per cent GST.
Abhishek Jain, EY Tax Partner, further said that the ruling is aligned to the view taken by GST authorities as well of a rate of 18 per cent being applicable on hand sanitizers. Jain added that the classification of hand sanitizers has been a matter of debate from the very beginning, especially given the multiple entries in which it could warrant classification because of its composition and uses.
With the advent of the pandemic, the usage of face masks and sanitizers have become crucial in an individual’s life. Therefore, the implementation of a GST on these sanitizers could prove to be unfair to a larger audience which would be unable to access the product because of financial limitations.
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