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September 20, 2022

GST on Ayurvedic products supplied under AYUSH Department licences

by CA Shivam Jaiswal in GST, Legal Court Judgement

GST on Ayurvedic products supplied under AYUSH Department licences

Facts and Issue of the Case

At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.

 It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted.

The applicant M/s. IncNut Lifestyle Retail Private Limited is in the business of manufacturing hair oil, shampoos etc., some of which are cosmetics and others Ayurvedic medicaments. They have obtained AYUSH license for each of their product. They are desirous of ascertaining whether the products manufactured by them (52 in number) are cosmetics or medicaments. Hence this application.

Observation by the Court

The applicant claims to be manufacturing Ayurvedic products under licenses issued by AYUSH Department of Government of Telangana. The applicant therefore is of the opinion that all the products manufactured by the applicant can be classified as Ayurvedic medicaments under chapter sub-heading @12% under GST.

It is the contention of the applicant that they manufacture Ayurvedic products using Ayurvedic ingredients which are helpful in the treatment of specified disorders and that their products are primarily to prevent, control, cure or mitigate skin and hair related problems and that these medicaments have prophylactic properties also.

They contended that these products are to be used for a specific period prescribed and that there is no requirement to continue the same once the physiological disorder is addressed. They contended that these products are purchased online by the customer after verifying the information, ingredients and usage of the products. The applicant contends that all the goods manufactured by them are sold as medicaments and therefore are eligible to be taxed as Ayurvedic medicaments i.e., under HSN ‘30049011’.

Conclusion

QuestionsRuling
Whether the products manufactured by him under the licences issued by AYUSH department of Government of Telangana and sold as Ayurvedic products fall under HSN No. 30.04 or under HSN 3304 of the GST Tariff?The products referred by the applicant are classified as medicament or cosmetic based on the following parameters: a) Whether the product has a drug license; and b) Whether the Composition of the product has medical ingredients; and c) The function or purpose indicated in the label and literature of the product.
 By applying the above parameters, the products which are used for care are treated as ‘Cosmetics’ and therefore taxed @9% CGST & SGST each; the products which are used for cure are treated as ‘Medicaments’ falling under Serial No. 63 of Schedule II taxable @6% CGST & SGST each. The product wise details are in the above discussion.
In-re-Incnut-Lifestyle-Retail-Private-Limited-GST-AAR-Telangana

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