The Authority of Advance Ruling ( AAR ), Kerala has ruled that, Implants for Joint Replacements attract 5% Goods and Services Tax ( GST ).
The AAR Kerala was considered whether the rate of tax of implants for joint replacements attracted GST of 5% or 12%, in an application filed by Shri. Gopal Gireesh.
The applicant is a retail dealer of implants for joint replacements. He has preferred an application for advanced ruling on the rate of tax in respect of commodities listed in the application. The commodities are implants for handicapped patients in the nature of joint replacements falling under HSN Code 90213100 and are included under Schedule I. The applicant further stated that items mentioned are included under Schedule I; Serial No.257, List 3E(9) and the rate of GST is 5%.
The question to be decided was whether the products covered in Serial No. E 9 of List 3 of Entry 257 of Schedule I of Notification No.1/2017 attracted GST at the rate of 5% or Serial No. 221 of Schedule II of the Notification No.1/2017 attracting GST at the rate of 12%.
The AAR opined that List 3: E 9 dealt with instruments and implants for severely physically handicapped patients and joint replacement and spinal instruments and implants including bone cement. While, Serial Number 221 of Schedule II attracting 12% GST is a general and wider entry covering items like fracture appliances, artificial parts of body etc. It added that for the purpose of classification and determination of applicable rate for a supply of goods under GST Act, 2017 various chapter headings, sub-headings, interpretive rules and chapter notes under Customs Tariff Act, 1975 has been adopted under Notification Number 1/2017- Central Tax (Rate).
Appropriate classification determined under Customs Tariff Act including on an application of chapter notes and general explanatory notes would apply for purpose of levy of GST. The AAR applied Rule 3 of the general rules for interpretation of Import Tariff which provides that most specific description shall be preferred to headings providing a more general description.
AAR also observed that it was evident that joint replacements are specifically covered under the Entry at Serial No. E 9 of List 3 of Entry 257 of Schedule I and the Entry at Serial Number 221 of Schedule II is a General Entry that covers artificial parts of body.
By applying the principle under Rule 3 of the General Rules of interpretation of the First Schedule to the Customs Tariff Act, AAR held that joint replacements falling under HSN Code 90213100 are covered under Serial Number E (9) of List 3 of Entry 257 of Schedule I of Notification Number 01/2017 –Central Tax (Rate) and attracted GST at the rate of 5%.
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