The Telangana Authority for Advance Rulings (AAR) has ruled that a GST rate of 12% must be charged on all Ayurvedic products supplied by the Ayush department of the Centre.
S V Kasi Vishweswara Rao and B Raghu Kiran on the bench heard the ruling for IncNut Lifestyle Retail Private Limited, who had applied for the advance ruling. The taxpayer dealt with cosmetic products and ayurvedic medicaments such as shampoo and hair oil with an approved Ayush license. They also deal with the treatment of mouth, oral and facial disorders.
The applicant wanted to check if the products would fall under Heading 30 or 33. They opined that since their products were certified by the Ayush, these would be ayurvedic medicaments. The bench asserted that these were falling under Heading 30 of HSN Chapter 63 since the products are ayurvedic medicaments enabling cure. Hence, a 12% GST must be levied. Whereas, Heading 33 covers preparations for use on hair charged at 18% GST.
If an item’s primary function is “care” and not “cure”, it is not considered a medicament. Further, a product used predominantly in curing or treating diseases or ailments but contains less quantity or portion of curative ingredients must be branded as a medicament. All products sold over the counter cannot be classified as cosmetics since some can be medicaments.
The bench further explained that there is a set criterion to judge if certain cosmetic products are ayurvedic medicaments. The product must bear a drug license, contain medical ingredients, and perform functions given on the label and literature of the product.
Hence, if a specific product is mainly for skincare and just because it comprises subsidiary pharmaceutical or antiseptic attributes or has subsidiary curative or prophylactic value, it is not medicament and would get classified under skincare products.
For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in
Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.
