the essay of 16 June 2021 · the untouched capture
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<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUNE 16, 2021</strong></font></p>
<p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is the GST rate on Hand sanitizers? </strong></font></p>
<p align="center"><u><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Vijay Kumar </font></strong></u></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NEARLY</STRONG> a year ago, I wrote - <a href="https://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=39034" target="_blank">While your hands were being sanitized </a></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While you were sanitising your hands frequently and positively hoping to keep corona at bay or away from you, the frontline tax soldiers of the government were working hard thinking of ways and means to fatten the coffers before the curve is flattened. Putting themselves to great risks, the GST Intelligence officers are reported to have arrested some directors of a company manufacturing sanitizer and have also seized several drums of the offending sanitizer. I only hope our sincere officers kept a safe distance and were fully sanitized before they undertook this hazardous job of seizing the sanitizer and arresting its manufacturer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It all started in June 2020 when the DG, GST Intelligence informed all the Chief Commissioners and other Commissioners that some manufacturers of hand sanitizers (alcohol-based) are wrongly classifying the said item under tariff heading 3004 (12% GST) whereas the said item is liable to be classified under tariff heading 3808 (18% GST). It has been informed that sugar mills and distilleries are also engaged in manufacturing/supplying alcohol-based hand sanitizers and are classifying the same under tariff heading 3004 (12% GST) whereas the same are correctly classifiable under heading 3808 (18% GST). Thus, the mis-classification of hand sanitizers appears to have resulted in substantial evasion of GST. A list of 62 manufacturers/suppliers of the item was prepared by DGGI headquarters by identifying the manufacturers with the help of online shopping platforms such as Amazon, Flipkart, etc., </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While this was in active progress, <em>Springfields (India) Distilleries </em> filed an application before the Authority for Advance Ruling in Goa that: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Hand Sanitizer is covered under HSN Code: 30049087 - Antihypertensive drugs: Antibacterial formulations not elsewhere specified or included - Rate of GST is 12%. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The learned Authority in its order dated 25.06.2020 - <a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTU5NjI0"><strong>2020-TIOL-173-AAR-GST </strong></a>held, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Alcohol Based Hand Sanitizers manufactured by the applicant are covered by HSN 3808 and are accordingly taxable at appropriate rate. </em>[18%] </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AAR and the DGGI are in agreement and so the tax payable is 18% and if somebody paid 12% by mistake or otherwise, he could be in jail. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Next time you use the sanitizer to clean your hands, remember you have contributed 18% GST and some manufacturer who sent this sanitizer to you is in jail. Covid has the last laugh. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One year back, I asked, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" span="span" style="background-color:#F3DBCF">Can't the Government make it a low tax rated item? Bureaucracy cannot move as fast as Corona and maybe we will have to wait for the next pandemic to have a low rate of tax for such essential items.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The second wave came and there was a huge demand for nil tax or a very low tax on covid relief materials. The good government reacted and even called for a GST Council meeting, which constituted a Group of Ministers and the Council met again and decided to lower the GST rates on these products.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The PIB Press Release immediately after the GST Council meeting on 12th June, stated that the tax on Hand Sanitizer would be reduced from 18% to 5%. In the Press Conference addressed by the Finance Minister, there was a question, <em>"when are the notifications going to be issued?"</em> The Finance Secretary assured that they would be issued very soon and they came up with the notifications late in the evening of 14th June, effective from 14th June.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the problem is - have they reduced the tax on Hand Sanitizer?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The NOTIFICATION NO. <strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjgyNDI=" target="_blank">05/2021-Central Tax (Rate)</a></strong>; Dated: June 14, 2021 , in Sl. No. 8 of the table has allowed a rate of 2.5% CGST for hand sanitizer.</font></p>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3804 94 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hand Sanitizer </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.5% </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You search all of the tariff and you will not find this heading 3804 94. Then what is exempted? DGGI and AAR assert that Hand Sanitizer should be classified under 3808, but now the Government says it attracts a concessional rate in 3804. If you were classifying the product under 3808, will you get the exemption now?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Well, probably what they meant was 3808 94 and not 3804 94. This is a small mistake and would eventually be corrected. These things do happen when you have to deal with too many things within too little time.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I decided not to get my next supply of Hand Sanitizer till the rate is confirmed. But as good fortune would have it, around 10 pm on 15th June 2021, I find that the government has issued a <font color="#003399"><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjgyNDI=">corrigendum</a></font> asking us to read <em>"3804 94"</em> as <em>"3808 94"</em>. Problem solved!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Couldn't they have mentioned <em>"any chapter"</em> instead of specifying the heading to the sixth digit and causing so much confusion?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is amazing that the government could realise the mistake, understand it and correct it within a record time - sometimes the government works - fast.</font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Until Next Week. </strong></font></p>
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