The Telangana Authority of Advance Ruling (AAR) has ruled that 12% GST is payable on the ayurvedic product used for cures which are classifiable under AYUSH department licences.
The applicant, IncNut Lifestyle Retail Private Limited, is engaged in manufacturing hair oil, shampoos, etc., some of which are cosmetics and other Ayurvedic medicaments for which they have obtained AYUSH licences for each of their products.
It was contended by the appellant that the Ayurvedic products which are helpful in the treatment of specified disorders and that their products are primarily to prevent, control, cure or mitigate skin and hair related problems and that these medicaments have prophylactic properties.
The bench Consist of Sir B. Raghu Kiran IRS, Additional Commissioner (Central Tax) and S.V. Kasi Visweswara Rao Additional Commissioner (State Tax) observed that the products which are used for care are treated as “cosmetics” and therefore taxed at 18% GST. 12% GST is payable on the products used for cure and treated as ‘Medicaments’ falling under Serial No. 63 of Schedule II.
The authority held that ayurvedic products such as hair oil, conditioners, face serums, etc. cannot be classified as medicaments, but was classified as Cosmetics which attracts 18 per cent GST. It was observed that if a particular product is substantially for the care of skin and it contains subsidiary pharmaceutical or antiseptic constituents or is having subsidiary curative or prophylactic value would not become medicament.
The AAR noted that the products manufactured by the applicant are classified as medicaments or cosmetics based on the parameters, namely whether the product has a drug license; whether the product’s composition has medical ingredients; and the function or purpose indicated in the label and literature of the product.
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