Sanitiser makers cry foul over 18% GST

Vijay C Roy

Tribune News Service

Chandigarh, July 16

Manufacturers of hand sanitisers are planning to meet the Finance Ministry officials against the arbitrary imposition of 18% GST. The government on Wednesday said sanitisers are disinfectants like soaps, anti-bacterial liquids, dettol, among others, which attract 18% duty under the GST regime.

The industry says sanitisers are classified as “drugs” and not disinfectants as they are manufactured by companies who have got licence under the Drugs and Cosmetics Act, 1940.

In the northern region, there are nearly 200 manufacturers with almost 90% of them in Himachal. Out of this, nearly 100 manufacturers commenced operations after February this year when there was an acute shortage of sanitisers. Across the country, there are 905 units which are engaged in the manufacturing of hand sanitisers.

According to the manufacturers, hand sanitiser was earlier classified as medicinal preparation under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, and they paid excise duty accordingly. After the imposition of GST in 2017, as per the medicaments category under tariff heading 3004, the manufacturers were paying 12% GST.

Last month, the GST department started issuing notices to the manufacturers regarding evasion of taxes. The department said sanitisers fall under the disinfectant category like insecticides, rodenticides and fungicides and attract 18% GST. However, the manufacturers say there is no such notification.

“If the department feels the manufacturers are evading tax by not paying 18% GST, then why didn’t it raise objections earlier as the companies have been filing returns since June 30, 2017. Now, they are seeking retrospective tax since 2017. This is not justified,” said Harish Aggarwal, former chairman, CII Himachal.