Wrong for GST to classify hand sanitizer as disinfectant
Sanitizer consumer will be worst hit with GST on chemical being risen from 12 to 18 percent
Chandigarh: In the entire world, for the common man, masks and sanitizers are proving to be the most effective weapon in the fight against corona. For Doctors, nurses and other medical staff treating corona positive patients, PPE kits, N 95 masks, etc are effective. When lockdown 1.0 was imposed, India did not have PPE kits or N 95 masks, etc. Even hand sanitizers and simple masks were available very few in numbers.
Due to lockdown and curfew, the industries have closed down and no labor was available. Despite such challenges, feeling it as their moral obligation and putting their health at risk, the industrialists started manufacturing PPE kits and N 95 masks in India on a large scale. Similarly, the production of sanitizers was scaled up.
Putting sanitizer into the list of essential commodities, the Government of India fixed the maximum price for it. But instead of declaring such sanitizer manufacturers as Corona warriors, the GST department has started terming them as tax evaders and is constantly slapping notices.
The CII Himachal's former chairman Harish Aggarwal, BBN Association chairman Sanjay Khurana, and Laghu Udyog Bharti pharma committee national president Rajesh Gupta stated in a press a statement issued here today.
Since the time hand sanitizers are being manufactured the concern companies have taken a license under the Drug and Cosmetics Act 1940. It was classified as medicinal preparation under Medicinal and Toilet preparations (Excise Duties) Act, 1955, and paid excise duty accordingly. After the imposition of GST in 2017 as per the Medicaments category under HSN 3004these companies are paying 12 percent GST. Now suddenly the GST department is telling them that they fall under HSN 3808 category as per which they are under the disinfectant category and hence have to pay 18 percent GST and have been sending notices to the company alleging them of evading tax, since the inception of GST.
Companies say that they charge 12 percent GST from customers and deposit the same amount to government and hence there is no issue of tax evasion. If the department feels that these industries are committing folly by not paying 18 percent GST instead of 12 percent then why didn't the department raise objections when the companies have been filing return since June 30, 2017. Now after three years, the department is saying that 18 percent tax had to be paid, which is not justified.
CII Himachal former chairman Harish Aggarwal said that decision of GST Department to fit in this commodity as “Disinfectant” under heading HSN heading 3808, in which other products are “Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products, and plant-growth regulators, and other similar products”, which all are related to the products used for agriculture and horticulture purpose, is highly ambiguous, irrational and unreasonable. The alcohol-based hand sanitizers are meant to be used on the human body unlike disinfectants used on the dead surfaces like soil or on the plants.
BBN association chairman Sanjay Khurana stated that if the GST department will pass strictures declaring hand sanitizers as a disinfectant and impose 18 percent GST then the companies would be forced to charge the same amount from consumers.
Laghu Udyog Bharti pharma committee national president Rajesh Gupta said that those companies that had stood by the government in these tough Corona times should not be humiliated by being served notices this way.