Top Stories Hand Sanitisers are not Disinfectants: Bombay HC quashes 2020 GST Press Release by Centre [Read Order] The Ministry cited the Atmanirbhar Bharat policy, claiming that reducing GST on sanitizers would lead to increased imports, thereby harming local production By Manu Sharma – On November 12, 2024 4:38 pm – 2 mins read In a landmark ruling, the Bombay High Court has quashed a 2020 Press Release issued by the Ministry of Finance, which classified alcohol-based hand sanitisers as “disinfectants” and imposed an 18% Goods and Services Tax (GST) rate. The Court held that this classification, intended to align hand sanitisers with cleaning agents like soaps and antibacterial liquids, was not within the executive’s authority to decide without judicial oversight. The decision protects the classification of sanitizers as “medicaments,” which would attract a lower GST rate of 8% to 12%. Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

The case was brought forward by Schulke India Pvt. Ltd., a company that markets hand sanitizers and antiseptics in the medical sector. Schulke argued that the classification in the Press Release contradicted their products’ categorization under both the erstwhile VAT regime and the current GST system. They contended that hand sanitizers should be treated as pharmaceutical goods or “medicaments,” given their usage in healthcare. Furthermore, Schulke pointed to guidelines under the Drugs and Cosmetics Act, which classify sanitizers as “drugs” rather than disinfectants.

The Union of India defended the Press Release by claiming it was a legitimate exercise of executive power under Articles 73 and 77 of the Constitution. The Ministry argued that a lower GST rate would create an inverted duty structure, disadvantageous to domestic manufacturers against foreign imports. In the judgement, the Bombay High Court Bench of division bench of Justice M S Sonak and Justice Jitendra Jain noted that the press release virtually expresses a firm view on classification of alcohol-based hand sanitisers as “disinfectants” and not “medicaments”, laying special mention to the limitations of executive power in classifying products under tax laws. Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here The Court noted that while the executive can issue guidance, it cannot impose interpretations that preempt judicial or quasi-judicial determinations by tax authorities. By attempting to classify hand sanitisers without legislative backing, the Press Release had intruded upon the domain reserved for judicial interpretation, which was a clear violation of the separation of powers.

The ruling is a major win for pharmaceutical companies and the medical sector safeguarding their products from arbitrary classifications that could lead to higher taxation. To Read the full text of the Order CLICK HER