“GST, IGST & CUSTOMS IMPLICATIONS – HSN CLASSIFICATION INTRICACIES OF ITEMS & SERVICES USED IN 2ND PHASE OF FIGHT AGAINST COVID-19”

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 “GST, IGST & CUSTOMS IMPLICATIONS – HSN CLASSIFICATION INTRICACIES OF ITEMS & SERVICES USED IN 2ND PHASE OF FIGHT AGAINST COVID-19”

Authors

Mukul Gupta

Senior Partner & Counsel

mukulgupta@sharnamlegal.com

 

Prateek Gupta

Partner & Counsel

prateekgupta@sharnamlegal.com

 

Ashish Mittal
Assistant Manager–IDT
office@sharnamlegal.com

 

Brief Background:

The outbreak of COVID-19 has resulted a surge in the demand for relevant medical supplies and prevention material/services, such as sanitizers, disinfectants, PPE kits, protective masks, protective spectacles, rubbing alcohol, gloves, infrared thermometers, ventilators, fumigation services etc. The second wave of the COVID-19 has grievously questioned the health facilities & infrastructure in India with extra-ordinary increase in demand and scarcity of life saving drugs, medicines, testing kits, ventilators, oxygen cylinder etc. Goods and Services Tax (hereinafter referred to as ‘GST’) on masks, sanitizers, gloves, PPE kits and some other key COVID-19 medical supplies may fall either under the 5% or 12% or18% GST slabs due to some valid controversies about their classification based on their contents and usage in accordance to the accepted principles of classification of goods and services. The present pandemic has also led to a trail of amendments, relief measures and other changes directed at regulating the foreign trade and associated matters. The analysis of such measures and changes in brief as well as some controversiesshall provide the reader an insight on the possible widespread effects needing reconsideration of earlier understanding.

1. TRADE FACILITATION

Customs law

The following are the major amendments which have been introduced in the light of outbreak of COVID-19 intending at regulating &providing relief to the business as well as provide ultimate reliefto the adversely affected citizens while keeping into consideration the requirement of the current situation.

1.1.Procedure for export of PPE Medical Coveralls notified

Trade Notice No. 17/2020-21 dated 29.06.2020 which was further revised vide Trade Notice No. 18/2020-21 dated 20.07.2020 issued by the Directorate General of Foreign Trade (hereinafter referred to as ‘DGFT’) restricts the export of PPE medical coveralls for COVID-19 (hereinafter referred to as ‘the Product’) and fixes the export quota of 50 lakh Product Units per month. It notifies the online application procedure through DGFT’s ECOM system for Export authorizations and criteria for export of the aforementioned commodity. This is as follows:

  • Export of only 50 lakh units of the Product shall be allowed monthly.
  • Exporters to apply online through DGFT’s ECOM system for Export authorizations.
  • Only applications for export of the Product filed from 1st to 3rd day of each month to be considered for monthly quota.
  • Approvals/allocations to be done by 10th of every month in accordance with Handbook of Procedures.
  • Validity of Export License will be for 3 months only.

Further, the requirements/eligibility criteria for issuance of Export license for exporting the productsalong with documents to be submitted along with online application have been laid as follows:

  • The applicant shall be a manufacturer of the Product.
  • Applicant is to submit copy of Testing/Accreditation of the Product issued to him from laboratories notified/recognized by the Ministry of Textiles.
  • Applicant to either submit copy of importing country’s PPEs medical coveralls Standards Certificate obtained by it or copy of Bureau of Indian Standards Certificate obtained by it, if importing country does not insist in a Standard Certificate.
  • Applicant to submit a Chartered Engineer’s certificate certifying that fabrics used in the Product were manufactured in India.
  • Copy of Applicant firm’s IEC.
  • Only one application per IEC will be considered during a month.
  • Copy of Purchase Order/Invoice.
  • All documents to be duly self-attested by authorized person of the firm.

1.2.Procedure & RESTRICTIONS for export of MEDICINE & Medical Component:

Since a close watch is regularly kept by the Government on Import & Export of all critical Goods, the Trade Notices are being regularly issued by the DGFT to restrict the export of various medicines & medical equipment and products increasing the supply for COVID-19 within the country. The various Trade Notices along with their short description of contents and nature is summarized in the table below:

SNo Trade Notice No. Date Year Short details of the Notification Download Link
1 02/2021-22 26/04/2021 2021-22 Operationalisation of DGFT ‘COVID-19 Helpdesk’ for International Trade related Issues’ Download
2 45/2020-21 02/03/2021 2020-21 Procedure and Criteria for submission and approval of applications for export of Diagnostic Kits and their components/laboratory reagents Download
3 39/2020-21 19/01/2021 2020-21 Procedure and Criteria for submission and approval of applications for export of Diagnostic Kits and their components/laboratory reagents. Download
4 21/2020-21 30/07/2020 2020-21 Procedure and Criteria for submission and approval of applications for export of Medical Goggles Download
5 22/2020-21 30/07/2020 2020-21 Procedure and Criteria for submission and approval of applications for export of 2/3 Ply Surgical Masks Download
6 19/2020-21 21/07/2020 2020-21 Procedure for EXPORT OF SAMPLES of PPE Medical Coveralls for COVID-19 Download
7 18/2020-21 20/07/2020 2020-21 Revised Procedure and Criteria for submission and approval of applications for export of PPE Medical Coveralls for COVID-19 Download
8 17/2020-21 29/06/2020 2020-21 Procedure and Criteria for submission and approval of applications for export of PPE Medical Coveralls for COVID-19 Download

1.3.Customs Duty Exemptions:

The Ministry of Finance has exempted the levy of Customs Duty and Health Cess on medical equipment, medicines, deviceswith an intent to effectively combat COVID-19 pandemicand increasing the supply of the criticalgoods within the country.

  1. In the beginning of the first phase of Covid-19 Pandemic the Notification No. 20/2020-Cus dated April 9, 2020 was issued, whereby CBIC granted exemption from customs duty on ventilators, personal protection equipment’s, COVID-19 testing kits and inputs for these goodsfrom import duty and health cess upto 30.09.2020.The following goods are covered by the exemption notification:(Note: No further extension was given to the said Notification)
S. No. HSN Description of Goods
1. 9018 or 9019 Artificial respiration or other therapeutic respiration apparatus (Ventilators)
2. 63 or any Chapter Face masks and surgical masks
3. 62 or any Chapter Personal protection equipment (PPE)
4. 30, 38 or any chapter COVID-19 testing kits 
5. Any chapter Inputs for the manufacture of above items

The importer however should follow the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017
  1. Now, during the second phase of COVID-19 which has much more adversely impacted the health infrastructure of the country and exposed the domestic manufacturing capacity of critical medicine & oxygen resulting in dire need to import the same from outside India to save the dying population, the Govt has further issued Notification No. 27/2020-Cus dated April 20, 2021 whereby it has exempted the following products from import duty & health cess.This exemption is applicable upto 31.10.2021only.
S. No. HSN Description of Goods
1. 29 Remdesivir Active Pharmaceutical Ingredients.
2. 29 Beta Cyclodextrin (SBEBCD) used in manufacture of Remdesivir, subject to the condition that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.
3. 30 Injection Remdesivir.

The Ministry of Finance under a very delayed action have removed the Custom Duty on the Remdesivir medicine and its main ingredients but the important factor that has still been ignored by them is that exemption from Custom Duty has not been given on similar generic medicine with same salt which maybe also be effectively used as an alternative of Remdesivir medicine. This delayed action as well as not including the generic medicine of similar category has resulted in making such other useful medicines costly as compared to Remdesivir, which need to be immediately examined and taken into consideration by the Government at the earliest to provide relief to the large number of patients suffering from this second wave of COVID-19.

  1. Further in continuation of the above notification another exemption Notification No. 28/2020-Cus dated April 24, 2021 CBIC has further exempted the following products from import duty & health cess.This exemption is applicable upto 31.07.2021 only.
S. No. HSN Description of Goods
1 9019 20, 9804 Oxygen concentrator including flow meter, regulator, connectors and tubings.
2 2804 40 Medical Oxygen
3 8421 39 Vacuum Pressure Swing Absorption (VPSA) and Pressure Swing Absorption (PSA) oxygen   plants, Cryogenic   oxygen   Air Separation Units (ASUs) producing liquid/gaseous oxygen.
4 7311 Oxygen canister.
5 9018 Oxygen filling systems.
6 7311 Oxygen storage tanks
7 9018 Oxygen generator
8 7311 ISO containers for Shipping Oxygen
9 7311, 8418 or 8419 Cryogenic road transport tanks for Oxygen
10 7311, 8418 or 8419 Oxygen cylinders including cryogenic cylinders and tanks
11 Any Chapter Parts of goods at S.No.1 and 3 to 10 above, used in the manufacture    of    equipment    related    to    the    production, transportation,  distribution or storage of Oxygen, subject to the condition that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.
12 9019 Any other device from which oxygen can be generated
13 9018 or 9019 Ventilators, including ventilator with compressors; all accessories and tubings; humidifiers; viral filters (should be able to function as high flow device and come with nasal canula).
14 9018 High flow nasal canula device with all attachments; nasal canula for use with the device.
15 6506 99 00 Helmets for use with non-invasive ventilation.
16 9019 Non-invasive ventilation oronasal masks for ICU ventilators.
17 9019 Non-invasive ventilation nasal masks for ICU ventilators.
18 3002 COVID-19 vaccine.
  1. The government have issued further Notification No. 30/2021-Customs dated 1st May, 2021 whereby the rate of IGST on ‘Oxygen Concentrator, imported for personal use’ under HSN Code 9804 has been reduced to 12% from the erstwhile rate of 28% IGST under the category of imported goods brought into India as ‘Gift’. Now, on Oxygen Concentrator whether brought by a business person or by an individual for his personal use shall be subjected to same rate of 12% IGST at the time of import thereof, this concession shall only be available till 30/6/2021.

Now, the fallacy which has arisen is that ‘Oxygen Concentrator’ are Customs Duty free, but they are not fully exempt from the impact of indirect taxes at the point of import, as the exemption/zero rate of IGST has not been provided as yet on such import, meaning thereby that IGST at the rate of 12% on B2B as well as on B2C as categorised under ‘Gift’ is still chargeable on the imported ‘Oxygen Concentrator’.

1.4.Exemption on oxygen concentrators for personal use:

DGFT has further provided relaxation vide Notification No. 04/2015-2020[1]dated 30.04.2021 in FTP Policy in Para 2.25 thereby allowing ‘import of oxygen concentrators for personal use’ through post, courier or e-commerce portals in the list of exempted categories, where Customs clearance is sought as ”gifts”. It is good that this exemption is given in customs dutybut waiver of 28% IGST on any ‘Gift’ item including oxygen concentrator at the point of import should also be granted keeping in view the shortage of Oxygen & its device in the country during the second wave of Covid-19, the availability of oxygen concentrators may save the apathy of large number of patients who are taking medical care in their own homes due to nonavailability of beds in the hospitals. This exemption shall be available only upto 31.07.2021.

The pertinent issue about the variation in rate of IGST chargeable at the point of import and it’s differential classification categorised as ‘Gift’ has been removed by issuing Notification No. 30/2021-Customs dated 1st May, 2021. It is worthwhile to mention here that if this Notification would not have been issued than the imported ‘Oxygen Concentrator’ by a business person in India then rate of 12% IGST is applicable whereas if the exactly same item is imported by an Individual as a ‘Gift’ received from outside India then the rate of 28% IGST would have been applicable, this was nothing but discrimination and would have created disadvantage to the individual citizen of this country.

An 85 year old Covid patient Shri Gurcharan Singh from New Delhi have to approach the Hon’ble Delhi High Court challenging the Notification No. 30/2021-Customs dated 1st May, 2021. The petitioner contended that the imposition of any sort of levy onOxygen/Oxygen Generators or Concentrators for personal use is not only violative of Article 14, but also abridged the valuable right to life as being a violative of Article 21 of the Indian Constitutionand as such imposition deserves to be struck down. Delhi High Court have quashed Notification dated 1st May, 21 and allowed all individuals to import Oxygen Concentrators for their personal use without having to pay IGST at the point of clearance from Customs. As per the court’s direction, such individual importers would now have to furnish a letter of undertaking to the concerned authority that the Oxygen Concentrator is for personal use and not for commercial usage. The Government is expected to issue an order to regularise this effect which may probably be done after the next GST Council meeting on 28th May, 2021.

For easy understanding of the various reliefs provided by the Government by the above referred Notifications has been given in the tabular form:

Availability of Exemption for INDIVIDUALS Custom Duty, Health Cess & IGST on some Major Requirements for Treatment of COVID Effected Patients
S.No. HSN Code Item Name By Individual for Personal Use
Custom Duty Health Cess IGST
1 29 Remdesivir Active Pharmaceutical Ingredients. Exempt vide NN-27/2021–Customs dated 20-04-2021[2] Not Leviable Taxable @ 18%
2 30 Injection Remdesivir. Exempt vide NN-27/2021–Customs dated 20-04-2021 Not Leviable Taxable @ 12%
3 9019 20, 9804* Oxygen concentrator including flow meter, regulator, connectors and tubings. Exempt vide NN-28/2021–Customs dated 24-04-2021[3] Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide

NN-30/2021–Customs

dated 1-5-2021 [4]
4 9018 or 9019 Ventilators, including ventilator with compressors; all accessories and tubings; humidifiers; viral filters (should be able to function as high flow device and come with nasal canula). Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide NN-28/2021–Customs dated 24-04-2021 Taxable @ 12%

*HSN 9804 Pertains to import of medical goods for Personal Use

Availability of Exemption for BUSINESS of Custom Duty, Health Cess & IGST on some Major Requirements for Treatment of COVID Effected Patients
S.No. HSN Code Item Name Imported by Business for Business Purpose
Custom Duty Health Cess IGST
1 29 Remdesivir Active Pharmaceutical Ingredients. Exempt vide NN-27/2021–Customs dated 20-04-2021 Not Leviable Taxable @ 18%
2 30 Injection Remdesivir. Exempt vide NN-27/2021–Customs dated 20-04-2021 Not Leviable Taxable @ 12%
3 9019 20 Oxygen concentrator including flow meter, regulator, connectors and tubings. Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide NN-28/2021–Customs dated 24-04-2021 Taxable @ 12%
4 9018 or 9019 Ventilators, including ventilator with compressors; all accessories and tubings; humidifiers; viral filters (should be able to function as high flow device and come with nasal canula). Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide NN-28/2021–Customs dated 24-04-2021 Taxable @ 12%

1.5 OBLIGATION OF URGENT RELEASE OF ‘Ad-Hoc Exemption Order’:

The Ministry of Finance ultimately understood on 3rd May, 2021 when large quantities of Covid Relief Material was reaching from all around the world and had reached various Ports, the need to exempt the relief material coming from outside India from the liability of IGST at the point of clearance of goods from customs.

The Government being sensitive to the current needs and the sufferings of the citizens issued the much desired Ad-hoc Exemption Order No. 4/2021 – Customs dated 3rd May, 2021. I believe that for the first time since implementation of GST the ‘Ad-Hoc Exemption Order’ has ever been issued by the Government.

This exemption is only be in force till 30th June, 2021 and applied to all those relief material which were pending for clearance on 3rd May, 2021. What an agony ? No officer of Indian Customs had earlier informed the senior officials of the Finance Ministry for granting exemption of IGST.

Even under this ‘Ad-Hoc Exemption Order’, only the specific relief material as already identified by the Government and covered under two existing Exemption Notifications of Customs bearing No. 27/2021 dated 20th April, 2021 and No. 28/2021 dated 24th April, 2021 have been included and covered for exemption of IGST as mentioned in the Appendix. Thus, only medicine – Remdesivir and its main ingredients as well as sixteen items relating to medical grade oxygen it’s generation plants including oxygen concentrator, ventilators and Covid-19 vaccines are covered for exemption of IGST, the detailed list with their HSN codes are given in this Article.

We are pained to mention that even though the exemption form custom duty and health cess was granted upto 30.09.2020 to personal protection equipment’s, COVID-19 testing kits and inputs for these goods in the first phase of Covid-19 Pandemic by Notification No. 20/2020-Cus dated April 9, 2020 (which has not been extended as yet beyond 30th September 2020). But these very essential/critical items has now not been included in the present exemption list in the questioned Ad-hoc Exemption Order No. 4/2021 – Customs dated 3rd May, 2021.

The Birds Eye view of the effect of the above discussed Notifications and Ad Hoc Order along with the four stringent conditions for availing the IGST exemption on a specified Covid relief material has been summarised in the following table:

Availability of Exemption for BUSINESS of Custom Duty, Health Cess & IGST on some Major Requirements for Treatment of COVID Effected Patients
S.No. HSN Code Item Name State Government or, any entity, relief agency or statutory body
Custom Duty Health Cess IGST
1 29 Remdesivir Active Pharmaceutical Ingredients. Exempt vide NN-27/2021–Customs dated 20-04-2021 Not Leviable Exempt vide Ad hoc Exemption Order No. 4/2021-Customs dated 03-05-2021 iv 
2 30 Injection Remdesivir. Exempt vide NN-27/2021–Customs dated 20-04-2021 Not Leviable Exempt vide Ad hoc Exemption Order No. 4/2021-Customs dated 03-05-2021 iv 
3 9019 20 Oxygen concentrator including flow meter, regulator, connectors and tubings. Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide Ad hoc Exemption Order No. 4/2021-Customs dated 03-05-2021 iv 
4 9018 or 9019 Ventilators, including ventilator with compressors; all accessories and tubings; humidifiers; viral filters (should be able to function as high flow device and come with nasal canula). Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide NN-28/2021–Customs dated 24-04-2021 Exempt vide Ad hoc Exemption Order No. 4/2021-Customs dated 03-05-2021 iv [5]

Conditions for Exemption from liability of Integrated Tax IGST at the point of clearance of Specified Goods as relief material by Indian Customs given vide Ad hoc Exemption Order No. 4/2021-Customs dated 03-05-2021 are:

Condition No. Condition
1 The said goods are imported free of cost for the purpose of Covid relief by a State Government or, any entity, relief agency or statutory body, authorised in this regard by any State Government.
2 The said goods are received from abroad for free distribution in India for the purpose of Covid relief.
3 Before clearance of the goods, the importer produces to the Deputy or Assistant Commissioner of Customs, as the case may be, a certificate from a nodal authority, appointed by a State Government, that the imported goods are meant for free distribution for Covid relief, by the State Government, or the entity, relief agency or statutory body, as specified in such certificate.
4 The importer produces before the Deputy or Assistant Commissioner of Customs, as the case may be, at the port of import within a period of six months from the date of importation, or within such extended period not exceeding nine months from the said date as that Deputy or Assistant Commissioner of Customs may allow, a statement containing details of goods distributed free of cost duly certified by the said nodal authority of the State Government.

The above mentioned four cumbersome conditions have been provided in the Annexure which are very difficult to fulfil in the circumstances of Covid pandemic more so by many organisations or agencies which are involved in the relief measures to combat the greatest ever pandemic of the modern time. The officers of the Government should be sensitive towards the humanity and must not ignore the sufferings of the Indian people. Imposition of these conditions may probably defeat the purpose of the exemption on the relief material and shall delay the deployment at the appropriate place. The stringent provisions of this notification reminds us the horrifying experience of Inspector Raj which the present government was claiming to have abolished.

1.6.Restriction on exports

In continuation of its measures to tackle the ongoing second wave of COVID-19 another step taken by Govt. is to restrict export of following medicines and medical components by introducing amendment in Export Policy with regard to ‘Injection Remdesivir and Remdesivir API’ vide Notification No. 01/2015-2020[6] dated 11.04.2021 in FTP Policy.

S.NO. ITC HS Codes Description Earlier Policy Revised Policy
207AA   Ex293499
Ex 300490		 Injection Remdesivir and Remdesivir Active Pharmaceutical In gredients(API) Free Prohibited

1.7.Other Exemptions

The DGFT in another relief measure by way of Trade Notice No. 62/2012-2020 dated 06.04.2020[7]directed that where imports taking place under a Free Trade Agreement, have claimed preferential treatment but original hard copy of Certificate of Origin on account of disruptions caused by COVID-19 pandemic cannot be produced or only a digitally signed copy or unsigned copy of the certificate may be accessed and cleared provisionally.

The final assessment may however be done subsequently on submission of the original certificate by the importer. Also, the revenue may be secured through undertaking and appropriate security.

1.8. Anti-Dumping Duties

The COVID Pandemic period also observed of a series of Anti-Dumping duties, majorly on the imports from China.The anti-dumping duties have been wrongly understood as ‘bans’ as a response to other countries like USA which have imposed such measures against China. While anti-dumping duties as an economic tool serve as restrictions to import, no such intent to ban the imports completely has been revealed by the Department to the effect.

 

  • CONCLUSION:

Exempt the levy of IGST at the point of Import to minimise the Cost to the Consumer of Critically Required Imported Material for Treatment and Management of COVID-19.

Thus, it is important to note that the Ministry of Finance had brought only 21 specific relief material in the sphere of exemption of IGST at the point of import to combat Covid-19 and does not cover all critically essential finished materials or raw materials/medical consumables/ components/medical spare parts presently needed in the country for this critical long war against Corona virus. The materials essentially required have been identified by various accredited organisations including State Governments as well as International Relief Agencies from various countries which may be ascertained and finalized in consultation with Ministry of Health and other experts. One such medicine which shall now be required in large quantities for treatment of ‘black fungus’ and it’s spread in eyes and effecting vision of the corona recovered patients, as very large number of patients are complaining depleted vision. Similarly, there may be many other diseases which may be cropping up and needs special treatment and effective medication which the country might face scarcity if urgent action is not taken.

Thus, all the Covid-19 related materials which may be categorised as “All Essential, Critical and Indispensable Goods and Services for Medical Support and Otherwise for Stopping the Spread, Safeguarding & Treatment of Patients of Corona Virus” for the immediate requirement of Patients, Doctors and other Para-Medical Staffs should be allowed to be sourced from outside the country without any payment at the point of import towards Customs duty or Health Cess or Integrated Tax IGST at least for another period of six months i.e. till 30th October,  2021 through a Notification which could be practically followed without any hassles and formalities.

2. CONTROVERSIAL ISSUES AS PER HSN Code vis-à-vis GST RATE ON SOME ITEMS OF EXTENSIVE USE AGAINST COVID-19

Goods and Services Tax law

Considering the unfortunately grave circumstances in the 2ndPhase of Covid Pandemic there is a great demand of the business community to make appropriate amendments in GST rate structure along with provisions for adjustment/claim of ITC in respect of the critically required goods which are being used by medical fraternity or by public or by government to provide much-needed relief. The domestic production of such goods can be induced by providing motivation through further regionalization of actual impact of the GST so that the consumer cost of such products would be minimised. The component of GST should not adversely impact/increase the price of such critical goods. A detailed representation along with the list of such particularly required goods which could be manufactured in the country have been submitted before the Government of India. The major hurdle seems to be absence of any meeting of GST Council in the last two quarters, which is a great issue of worry and impediment. It is a matter of great concern that even-inspite of the dire need of the country, the constitutional bodies do not function for one reason or the other leaving innocent citizens of this country at their own fate.

2.1.Issues related to Classification

Both the phases of pandemic has led to introduction of new products and services in the market as per the requirement in the war against Corona virus. Additional facilities for manufacture of such products have also been resorted to by several ventures as their new business lines. After detailed research and analysis of Harmonized System Nomenclature (hereinafter referred to as ‘HSN’) as updated till 2017 by World Customs Organization, we have prepared and enclosed the table providing various important products, their description, HSN Code, relevant rate notification and its item number as well as the GST tax rate in accordance to the prescribed Schedule under the GST law. The possible notifications and relevant entries have been incorporated with our brief comments for easier understanding and brief analysis of the most appropriate applicable classification and GST rate on the specifically described product. The difference of opinion regarding the categorization of some items has emerged due to very complicated structure of the classification entry which is really difficult to comprehend. The issues of classification have already started surfacing as being raised by the investigating agencies of the GST Departments.

There have been contrasting views regarding the classification of N95 Mask whether would be suitable under Heading 9018 or 9020 of the Harmonized System of Nomenclature.

2.1.1 Masks used for medical purposes and for other than medical purposes

In India, masks can be broadly divided into 4 types,on the basis of their physical features. These are:

  1. Masks with detachable filters or with a mechanical part;
  2. Masks without a detachable filter or a mechanical part;
  • Masks made of cellulose paper or felt or non-woven fabric; and
  1. Textile masks including designer masks which have now formed a part of the suit sets.

Further, the World Health Organisation in its 2016 Guidelines on Personal Protective Equipment (hereinafter referred as ‘PPE’) recommended technical specifications for surgical mask.[8]Guidance Flyer issued by WHO recommends Advanced masks (Surgical masks for single use only & N95 masks) for health workers or those in contact with COVID 19 patients or COVID patients themselves.[9]While, homemade masks of cloth have been recommended for people not suffering from medical conditions or having breathing difficulties.Guidelines prescribing the use of PPE in different settings have also been issued by the Ministry of Health and Family Welfare.[10]

There has however, emerged another category of face masks with replaceable filters. The following columns (I) and (II) state the competing entries for classification of the aforementioned Mask:

I II
HSN 9018 9020
Rate 12% 12%
Text Instruments and Appliances used in Medical, Surgical, Dental or Veterinary Sciences, Including Scientigraphic Apparatus, Other Electromedical Apparatus and Sight -Testing Instruments Other breathing appliances and gas masks, Excluding Protective Masks having neither Mechanical Parts nor Replaceable Filters

 

Our View:

Heading 9020 constitutes of two major categories of ‘Other Breathing Appliances’ and ‘Gas Masks’ but at the same time excludes the protective masks which do not have mechanical parts or replaceable filters. Hence a protective mask of the category having replaceable filters shall be classified within the Heading 9020 and shall attract a GST rate of 12%.

The second part of the heading containing exclusion of protective masks having neither mechanical parts nor replaceable filters creates acomplexity and needs a clearerconsideration of the facts of each case in order to classify a mask under the heading 9020 or 9018.

Further, the third category of ‘textile mask’ is classifiable under Heading 6307.90 depending upon the ‘sale value’ of the mask as a textile article. A textile mask with a sale value below Rs.1000/- piece shall attract a rate of 5%. On the other hand, a textile mask with a sale value exceeding Rs.1000/- piece shall attract a rate of 12%.

2.1.2. Face Shields majorly used for medical purposes

A constituent of the ‘Personal Protective Equipment’ is a plastic face shield with headgear providing good visibility to both the wearer and the patient with an adjustable band attached firmly around the head. It aims to protect the facial area from exposure to airborne particles containing virus that may be expelled by another person.

The following are the competing entries:

I II
HSN 9018 3926.90
Rate 12% 18%
Text Instruments and Appliances used in Medical, Surgical, Dental or Veterinary Sciences, Including Scientigraphic Apparatus, Other Electromedical Apparatus and Sight -Testing Instruments Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, plastic beads and feeding bottles]

 

Our View:

Face Shields as have been described above, are being majorly used for ‘medical’ purposes and the same shall qualify as an ‘instrument and appliance’ classifiable under Heading 9018, sub-heading ‘Other’ with HSN 9018 99 with applicable rate of 12%.

The possiblecontrary view has emerged based on the two rulings rendered by the United States CROSS Rulings[11] where under both the rulings, it has been held that such face shields brought into U.S. shall have a classification under Heading 3926.90 attracting a rate of 18% holding that they “would be considered articles of plastic, and as they are not more specifically provided for elsewhere.” The said view makes the impugned product susceptible to challenge and leviable to a higher rate.

The latter entry is however expansive and according to the general rules of interpretation, a specific entry over a general entry shall prevail. The entry for classification of a specially designed item based on its specific use is a better categorization being a nearer entry.

2.1.3.Mechanical Sprayer including battery/power operated used in fumigation

A battery/power operated mechanical sprayer usually works when user slides the locking button to the unlocked position, which enables the trigger button. When the user presses the trigger button, the motor is activated, which bring the water, water-basedsanitizers or disinfectants up the suction hose via the pump to the spray chamber.

I II III
HSN 8424 8424.89 84131910
Rate 12% 18% 5%
Text Sprinklers; drip irrigation system including laterals; mechanical sprayers Mechanical appliances (whether or not hand-operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines

[other than sprinklers; drip irrigation systems including laterals; mechanical sprayer; Nozzles for drip irrigation equipment or nozzles for sprinklers]

 Pumps for Liquids,whether or not fitted with a measuring device, Liquid Elevators

 

— Other

— Hand Pumps

Our View:

The article ‘battery/power operated mechanical sprayer’clearly falls within the Heading of ‘Mechanical Sprayers’under 8424 subjecting the same to a rate of 12%. A specific entry reading ‘mechanical sprayers’ has been listed thereunder.

However, a contrary view might be taken claiming a classification under the heading 8424.89 attracting a higher rate of 18% under the heading ‘Mechanical Appliances’. A careful consideration of the physical characteristics of the impugned product is required as to whether the product shall constitute a ‘sprayer’ or ‘gun’ or ‘appliance’.

A pump or a liquid elevator on the other hand shall be classifiable under Heading 8413.19.10 attracting a rate of 5%. Similarly, gun sprayer has been specifically stated under Heading 8424.89.

According to the Gujarat Advance Ruling Authority in Re:Nishith Vipin Chandra Shah [2020] 119 taxmann.com 385 (AAR-Gujarat) [03-07-2020], it has been held that Plastic Mechanical Liquid Dispenser used for pumping/dispensing liquid or lotion from a bottle and serves for the depletion of the contents, viz. liquid, gel, cream etc. shall be classified under the sub-heading 3926.90- Others as “articles, not elsewhere specified or included, of plastics (as defined in Note 1 to the Chapter) or other materials of heading 39.01 to 39.14”. The said item shall attract a rate of 28% according to the AAR Ruling.

However, the above view is susceptible to challenge in future and a lower rate of 12% under the below stated Heading may be attracted and can be classified as follows:

HSN Code Description Rate
8424.89

 

 Mechanical appliances (whether or not hand-operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines [other than sprinklers; drip irrigation systems including laterals; mechanical sprayer; Nozzles for drip irrigation equipment or nozzles for sprinklers]

 

 12%

 

2.1.4.Hand Sanitizers

Most controversial item concerning the classification issue is ‘sanitizer’. The specificationas per WHO note on Hand-rub Formulations mentions the ingredients: Ethanol, Isopropyl Alcohol, Hydrogen Peroxide and Glycerol. The majority of the formulation contains either Ethanol or Isopropyl Alcohol.[12]

The Director General of Goods and Services Tax vide its (internal) communication dated June 16, 2020 relating to evasion of GST in respect to Alcohol based – Hand Sanitizers (as used in ‘WCO Classification’) has stated that some manufacturers of the product are classifying product under wrong tariff heading 3004 attracting a rate of 12% while the product shall attract a rate of 18% under Heading 3808.

The most competitive entries under which a sanitizers or disinfectants could fall are as follows:

I II III IV V
HSN 3004 3401 3402 3808 3824
Rate 12% 18% 28% 18% 18%
Text Medicaments for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale, including Ayurvedic, Unani, homoeopathic siddha or Bio-chemic systems medicaments, put up for retail sale Soap, Organic surface-active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale, whether or not containing soap Organic surface-activeagents (other than soap);

surface-active preparations, washing preparations (including auxiliary washing preparations) and cleaning preparations, whether or not containing soap, other than those of heading 3401

 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar product Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included
Notes to HSN Code Chapter 34

Note 2 of Chapter Note while defining ‘soap’ for 3401 states that Products containing abrasive powders remain classified in heading 3401 only if in the form of bars, cakes or molded pieces or shapes. In other forms they are to be classified in heading 3405 as “scouring powders and similar preparations”.

Note 3 defining ‘organic surface-active agents” are products which when mixed with water at a concentration of 0.5% at 20oC and left to stand for one hour at the same temperature and give a transparent or translucent liquid or stable emulsion without separation of insoluble matter; and reduce the surface tension of water 4.5 X 10-2 N/m (45 dyne/Cm) or less.

Our View:

  1. Heading 3004

The Heading 3004 primarily deals with ‘Medicaments’ and states its properties thereafter.  The present commodity does not largely fulfill the basic criteria as has been set by the heading 3004, probably the classification adopted by some of the manufacturers needs serious reconsideration.

The HSN classification 3004 could only be attracted for sanitizer because of its characteristic being “prophylactic” which means measures designed to prevent the occurrence of an adverse event, a disease or its dissemination. For the purpose of the correct classification of the product, many other accepted principles of classification need to be examined in depth.

  1. Heading 3824

The classification HSN 3824 is a general category for chemical products which do not fall in any other classification.

A view has been taken by the US CROSS Rulings in NY N311037[13]where it has been held that the sanitizer made of Alcohol from Rum Distillated 70 % v/v, to be used in antimicrobial applications such as hand sanitizing and also containing distilled water, hydrogen peroxide, glycerin and isopropyl myristate shall be classified under Heading 3824 i.e. “Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Other: Other: Other: Other.”

A similar view has been taken by NY N304365[14]wherein the product constituted of a liquid sanitizer comprising of the active ingredient, ethyl alcohol (62% of the total product),the remainder of the hand sanitizer comprising of water, isopropyl alcohol, glycerin, fragrance, propylene glycol, and aloe barbadense is leaf juice.

If we go by the view as supported by US CROSS Rulings NY N311037 and NY N304365 wherein a similar issue relating to classification of hand sanitizer was raised before the authority then unfortunately the appropriate Heading for classification of hand Sanitizers is 3824 attracting a rate of 18%.

However, the analysis of the same is to be made taking into consideration the chemical constitution, intended use and by applying other relevant tests for determination of appropriate classification of the product.The products falling under same family is an important consideration for attracting the particular classification, by this criteria the questioned product must fall in 3808 covering “Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar product”.

  1. Heading 3402

Heading 3402 concerns “Organic surface-active agents (other than soap); surface-active preparations, washing preparations (including auxiliary washing preparations) and cleaning preparations, whether or not containing soap, other than those of heading 3401.”

Our View:

If the product sanitizer could be characterized as per its contents as an organic substance then such sanitizer may fall in 3402, but in accordance to the principle of use of the product, the nearest entry is 3808 which could appropriately be used for deciding the applicable rate of tax under GST being a consumption based tax collection system.

The appropriate Heading for classification of hand Sanitizers is 3808 attractingGST rate of 18%. Hand sanitizers fall under the category: ‘Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants’ and shall qualify as ‘similar product’ as per the same family of consumable productsas well as for the reason that they possess similar properties to the genus of products covered in the category.It is however likely that the rate of 18% may be reduced to 12%, specifically on Ayurvedic Hand Sanitizers. However, a tussle on examination of the contents of such hand sanitizers for classification whether would rest on the total nature as an ayurvedic product or the presence of the content of alcohol. The examination would have to be made on a fact-to-fact basis.

2.1.5.Disinfectant

Disinfectants with constitutions of alcohol, benzalkonium chloride solution or peroxyacids, or other disinfectants are common in use in present times.

Our View:

‘Disinfectant’ is specifically mentioned under Chapter Heading 3808 attracting a rate of 18%, so there is not much to debate on its classification for the present purposes.

The classification of the good is dependent upon the chemical properties of the product. The rules of classification have relied on chemical composition and reactions and hence, a reference to chemical composition is also a prerequisite to the classification of the product.

2.1.6. Protective Garments generally known as the Personal Protective Equipment (PPE)

WCO Classification provides for the following Headings which may be perused for classification of the said product:

  1. 3926.20: Protective unisex garments made of plastic sheeting, textile reinforced plastics or textile backed plastics
  2. 4015.90: Protective unisex garments made of rubber sheeting…
  • 4818.50: Paper or cellulose garments
  1. Other Sub-headings of Chapter 62, which can be discussed as follows:
I II III
HSN C 6210.10 6210.50 6210.50
Rate 5% or 12% 5% or 12% 5% or 12%
Text Protective garments for surgical/medical use made up of felt or nonwovens whether or not impregnated, coated, covered or laminated (fabrics of heading 56.02 or 56.03).This includes spun-bonded garments. Other protective garments of textiles and rubberised textile fabrics or woven fabrics that are impregnated, coated, covered or laminated (fabrics of headings 59.03, 59.06 or 59.07). Unisex protective garments made of rubberized textile fabrics

 

Our View:

While a distinction on the basis of the broad heads may be done depending on the properties of the protective garment, the most closely related heading under Chapter 62 is the Heading 6210.10 i.e. Protective garments for surgical/medical use made up of felt or nonwovens whether or not impregnated, coated, covered or laminated (fabrics of heading 56.02 or 56.03).This includes spun-bonded garments.

As per Wikipedia, Felt has been defined as “Felt is a non-woven textile. It is made by compressing and matting fibres together until they connect to form a sturdy fabric. Felt has a long history and is the oldest form of cloth known. Felt has been used in many cultures as a material for clothing, footwear, rugs and even tents.”

The reason for the above conclusion is that in major cases, the use of the commodity is ‘surgical’ or ‘medical’ and that the material used for making the protective garment is made of ‘felt or nonwovens whether or not impregnated, coated, covered or laminated’.

PPE made from plastic sheeting other than felts impregnated, coated, covered or laminated with plastics or embedded in plastics will be classifiable under the Heading 3926.20 with an applicable rate of 18%.

2.1.7.Gloves including surgical rubber gloves and others

Gloves, full fingered are being commonly used for prevention from the spread of the disease. They are made by using varied materials ranging from plastic, rubber, textile, etc. A differentiation on the basis of material used to manufacture the product and the purpose of manufacturing them has been made.

The following are the competing Headings for undertaking the process of classification of the product:

  I II III IV V
HSN 3926.20 4015.11 4015.19 6116.10 6216
Rate 18% 12% 18% 5% or 12% 5% or 12%
Text Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, plastic beads and feeding bottles] Surgical rubber gloves or medical examination rubber gloves Articles of apparel and clothing accessories (including gloves, mittens and mitts), for all purposes, of vulcanised rubber other than hard rubber [other than Surgical gloves] Knitted or crocheted gloves which have been impregnated or covered with plastics or rubber Textile Gloves that are not knitted or crocheted

Our View:

An intricate analysis of the properties of the material used to manufacture the product and those specified in the description of the product is required to ascertain the correct classification of the product. The intended use of the product in light of the destination based tax collection system read with the principles used in the classification process are needed to be relied upon.

The most commonly used type: Rubber gloves shall be classifiable as ‘Surgical rubber gloves’ attracting a lower rate of 12% or shall constitute an ‘article of apparel and clothing accessories’ attracting a rate of 18% shall depends upon the very facts of each case.

2.1.8.UV Disinfectant Boxes

UV Disinfectant boxes and similar appliances usually contain a component emitting ultraviolet (UV) rays/light to disinfect documents, medical instruments, articles, etc. and are in common use in work placesand hospitals to sanitize the inputs.

Our View:

The most closely related Heading to the impugned product is Heading 8543.70.99 i.e. “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this Chapter.” The present Entry is of a residuary and general nature attracting a rate of 18% under the rate notification.

It is hence iterated herein that UV disinfectant process is also commonly used in medical establishments for disinfecting of medical instruments, etc. but UV Disinfectant boxes does not find any specific mention in Chapter 90 which contains Medical or Surgical Instruments and Apparatus.

2.2.Availability of Input Tax Credit

2.2.1. Handwash, sanitizer, masks etc. provided to the employees by the employer

In the series of inadvertent event of spreading of corona virus turning into pandemic, the Prime Minister under Sections 6 and 10 of the Disaster Management Act, 2005 declared the pandemic as a ‘national disaster’, followed by the national lockdown as per Order dated 24.03.2020 under the Act. The Ministry of Home Affairs thereafter issued guidelines[15]which have been updated from time to timeto prescribe National Directives for COVID-19 Management. These include special directions for Work-Places, which are as follows:

  1. Provision for thermal scanning, handwash, sanitizer will be made available at all entry and exit points and common areas
  2. Frequent sanitization of entire office, common facilities and all points which come into human contact.
  • Wearing of face cover is compulsory in all work-places and adequate provision of the same should be made
  1. Employees showing any symptoms of COVID 19 should be immediately sent for checkup in nearby medical hospitals/clinics.
  2. Arrangement for transport facilities to be ensured with social distancing wherever public/private transport is not feasible
  3. Intensive communication and training on good hygiene practices shall be taken up

Standard Operating Procedures[16] for offices, factories, workplaces and establishments has been prescribed to be as follows:

  1. All workplaces to have adequate measures for temperature screening and provide sanitizers at convenient places
  2. All organisations to sanitise their workplaces between shifts.
  • All areas in the premises to be disinfected
  1. For workers coming- from outside, special transportation facility to be arranged without any dependency on public transport
  2. Medical insurance for workers to be made mandatory

Hence, in light of the above laws, the ‘work-places’ are required to fulfill the above mentioned conditions. A failure to comply with any of the above shall on the other hand attract penal measures as imposed by State laws. Hence, a compliance of the above provisions is necessary for carrying on the business i.e. such activities by virtue of the above laws is in course or furtherance of business.Moreover, to instil confidence in the employee’s to work together at workplace all these products are necessary otherwise the work cannot be possible adhering the social distancing norm to fight COVID-19

Section 16 of the Central Goods and Services Tax Act, 2017, prescribes the eligibility for taking credit. Section 17(5) however specifies a list of supplies in respect of which such credit shall not be available. The list blocks credit in respect of the following:

  1. Under clause (b), Food and beverages
  2. Under clause (b), life insurance and health insurance.
  • Under clause (h), goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.

In addition to the above, the following cases shall also be referred in order to determine the correct position in relation to the availability of credit on the supplies on which such credit on input has been blocked.

  • In Re: Caltech Polymers Pvt. Ltd. 2018 (10) TMI 1313 –AAR Kerala

The present application was filed with the issue of whether the food expenses for canteen services recovered from the employee without any profit margin would be liable to GST. The Appellate Authority held that the activity would constitute a ‘supply’ and would constitute a taxable service. It was observed before the Advance Ruling Authority that there is an involvement of ‘consideration’ as has been defined under Section 2(31) of the CGST Act, 2017 and that such provision of food shall fall within the meaning of ‘business’ as has been defined under Section 2(17)(b) of the CGST Act, 2017.

  • CCE v Brakes India Ltd. 2018 (11) TMI 1748

The issue before the Madras High Court was whether an activity carries out in compliance of statutory requirement under a particular Act alone would make the said activity/service as input service under Rule 2(l) of the CENVAT Credit Rules, 2004 especially when such service/activity has no nexus in or integral connection to the manufacture of final product. It was held that when the employer spends money to maintain factory premises in an eco-friendly manner based upon the directives issued by the Statutory Authorities, the tax paid on such services would form part of the costs of the final product, that the same would fall within the ambit of ‘input services’ and that the assessee is entitled to claim the benefit.

  • CCE v StanzenToyotetsu India (P.) Ltd. 2011 (4) TMI 201

It was held that credit on Outdoor catering services, transportation charges, rent-a-cab scheme and Group Health Insurance shall be available. It was held that it is clear from the definition any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products constitutes input service. If the credit is availed by the manufacturer, then the said service should have been utilized by the manufacturer directly or indirectly in or in relation to the manufacture of final products or used in relation to activities relating to business – merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessee is not entitled to the benefit of CENVAT credit.

 

Our View:

Considering the unique and challenging circumstances to protect human beings from the virus by introduction of the new law to fight the COVID pandemic, the business are entitled to undertake certain compulsory activities which were not prevalent before the COVID scenario. The circumstances however have found a mention in the previous excise regime wherein the credit was available in cases an activity which was compulsory to be undertaken by a law.The same has been asserted by the Appellate Authority for Advance Rulings under the New GST regime as well. So, the direct expenses for such fight to protect the business interests including all stakeholders are legitimate expenses in furtherance of business and thus the ITC would be eligible on all such inward supplies, as mandated by the law.

2.2.2.CSR Expenditure

  • The Mumbai Bench of CESTAT in the case of EsselPropack v Commissioner [2018-TIOL-3257-CESTAT-Mumbai] held that Corporate Social Responsibility (hereinafter referred to as CSR) is not in the nature of charity and is directly connected with the principal manufacturing activity of the company which is largely dependent on smooth supply of raw materials. The Bench held that contribution towards Social Responsibility is a mandatory requirement for public sector undertakings and has also been made obligatory for the private sector. CENVAT credit was allowed to the appellant for the reason that the production and sustainability of the company would be at stake if such activity is not treated as ‘business’ activity.
  • The Kerala Authority for Advance Rulings in an application filed by Polycab Wires Pvt. Ltd. 2019-VIL-100-AAR, the applicant had distributed electrical goods to people affected by the flood in Kerala in discharge of the applicant’s CSR obligations. It was hence adjudicated that the goods were distributed on free basis without collecting any money. Such distribution shall amount to ‘disposal by way of gift’ and no ITC shall be available as per Section 17(5)(h).

In a similar context to that of the mandatory CSR activities by law, while the erstwhile regime provides for credit, the AAR denies the same by invoking the specific provision of Section 17(5) concerning blocked credit.

The tussle on whether an obligation imposed by introduction of a law to the effect amounts to a supply in the course or furtherance of business is yet to reach the Courts. It points at the blatant denial of the right available to the taxpayer to avail ITC.

2.3.Complexity & Hardship Due to Non-Exemption or Non-Synchronisation of GST Liability:

Due to the drastic increase in COVID cases during the second wave of COVID-19, there has been an impulse demand for the life supporting equipment providing breathing aid to the patient. The government has started taking action to fulfil the same by providing exemption by Notification No. 28/2020-Cus dated April 24, 2021 from the Basic Customs Duty and Health Cess on import of medical grade oxygen and other related equipment’s for providing oxygen at a low cost to the patients as has been discussed in Para 1.3.3 of the first part of this Article.

Now, the fallacy which has arisen is that ‘Oxygen Concentrator’ are Customs Duty free,but they are still not fully exempt from the impact of indirect taxes at the point of import, as the exemption/zero rate of IGST has not been providedas yet on such import, meaning thereby that IGST at the rate of 12% on B2B as well as on B2C as categorised under ‘Gift’ is still chargeable on the imported ‘Oxygen Concentrator’.

The pertinent issue about the variation in rate of IGST chargeable at the point of import and it’s differential classification categorised as ‘Gift’ has been removed by issuing Notification No. 30/2021-Customs dated 1st May, 2021 as has been discussed above. It is worthwhile to mention here that if this Notification would not have been issued than the imported ‘Oxygen Concentrator’ by a business person in India then rate of12% IGST is applicable whereas if the exactly same item is imported by an Individual as a ‘Gift’ procured from outside India then the rate of 28% IGST would have been applicable, this was nothing but discrimination and would have created disadvantage to the individual citizen of this country.

This provision is still not good in the present grave circumstances of Covid pandemic and the sufferings of the general people for lack of facility of oxygen generation, large number of deaths are unfortunately happening due to non-availability of oxygen in hospitals as well as in home care. Large numbers of Oxygen Concentrators as well as Oxygen Generating Plants are being received in India as a relief from various countries like Germany, USA, France, Australia and UK et cetera, they are already in transit at the time of writing this Article. The question will arise that who and from which fund someone will pay the amount of 12% IGST for clearance of such goods from customs, these goods received as relief which is in the category of ‘Gift’ will then be probably dumped at the custom warehouses for need of money to deposit the 12% IGST, the Government must do something before this problem become a bombshell and the people continue to suffer from the lack of oxygen.

CONCLUDING REMARKS

The present grave circumstances of second phase of pandemic are once a lifetime challenge to very existence of humanity, so the situation needs to be tackled with unique thinking and innovative actions. The issues of classification or categorization of products and services needs to be re-invented considering the distinctive facts and circumstances. The GST law needs to be uniquely interpreted considering the crucial need to protect the human race both from the ill-effects of deteriorating health and economy.

 

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