Wipro case

 Facts of the case

1. The appellant is producer of sanitizers amongst other thigs such as toilet
soaps, LED bulbs and other toiletry fittings. The hike of sanitizer production
was due to the pandemic, they were making sanitizers with an alcohol base.
2. The appellant sought for an Advance Ruling on what is the right classification
of hand sanitizer for the purpose of GST and what is the applicable rate of
GST.
3. The AAR held that hand sanitizers were classifiable under Heading 3808
under the Customs tariff Act and are liable to tax of 9% under CGST and 9%
under KGST Act.
 Ratio

Following are the reasons claimed by appellant and AAAR authority:

1. The characteristics and operating procedure and the fact that they have been
granted a license to manufacture under the Drugs and Cosmetics Act. For
them to come under 3004 they should be medicament- a therapeutic or
prophylactic. Therapeutic- curing. Prophylactic- something that prevents
the onset or progression of that disease. Even if it was manufactured
under the Drugs and Cosmetics Act- it cannot be under 3004 unless it is a
medicament. Hand Sanitizer is merely a disinfectant for hygiene
purposes. Regulation under drugs and cosmetics act doesnt ipso facto
make it a medicament.
2. Applying the test of common parlance- alcohol sanitizer is normally used
by people for disinfecting so no properties of a medicament.
3. It should instead come under Chapter Heading 3808 of Customs tariff -
disinfectants- agents that destroy or inactivate the germs or bacteria.
4. AAR said that it is an alternative to soap- appellant contended this. AAAR
agreed that it is not an alternative but two very different products.
5. it is stated that a DGFT Notification is not an authority for determining
the classification of goods under GST law. Classification of goods is to be
determined based solely on the description of goods given in the First
Schedule to the Customs Tariff Act read together with the relevant
Section Notes and Chapter Notes.
6. 9% tax