Home » News » Essential Commodity category doesn’t exempt Alcohol-based Hand Sanitizers from 18% GST

Hand Sanitizer is one of the most essential items in the time of a pandemic as per the WHO guidelines. In spite of this, the Indian Government has decided to raise the amount of GST to 18%. Earlier this year Springfield Distilleries had approached the GST Authority of Advance Ruling (AAR) in Goa after the Consumer Ministry classified Hand Sanitizer as an essential commodity.

They raised the argument that hand sanitizer is an essential commodity and there should be no GST on this product. However, the Goa bench ruled that alcohol-based sanitizer will attract 18% GST. It further held that merely classifying a good as an essential commodity cannot make it exempt from GST.

According to the Government raw materials used for the manufacturing of Hand Sanitizers already attracts a GST of 18%. If the rate of GST is not increased, it would be a great disadvantage for the manufacturers as well as the importers.

Government concluded that the Consumers will also not benefit by putting the domestic manufacturers at risk and this is also a policy for Atmanirbhar Bharat. The authority is currently investigating the tax evasion done by the manufacturers by wrongly classifying sanitizer under the head of ‘medicament’ by paying 12% tax.

In March, various FMCG’s like Hindustan Unilever, Godrej, and Dabur agreed to reduce the price of hand sanitizer by up to 70% after Sanitizer was categorized as an essential commodity. The government put a cap of Rs. 100 or Rs. 200 for hand sanitizer. The product can be repriced according to the size of the bottle. Most of the companies agreed to this even though they could incur a loss.

The spokesperson of Hindustan Unilever has said that they will increase the production for the national interest. However, his order stands expired on June 30th. Due to a large number of players in this industry, the high number of litigations can be expected in this matter. The government had also included petrol and diesel under the purview of the GST structure even though they are an essential commodity.

(This news has been written and submitted by Ms. Navya Sony during her course of internship at B&B Associates LLP. Ms. Navya is a final year student Symbiosis Law School, Pune)

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