The Kerala Authority of Advance Ruling (AAR) ruled that 12% GST applicable on laboratory reagents for rapid testing of food safety parameters.
The applicant is engaged in contract of chemical and microbiological testing services and trading (import and sale) of Neogen Group products in the Indian market. The range of trading items includes Neogen’s food safety products consisting of kits and laboratory reagents for dangerous or unintended substances’ testing for food safety parameters. Their products are used by food processing companies, regulatory bodies etc to manage the risk in food caused by pathogens and toxic substances. The exhaustive list of about 254 products dealt by them that are predominantly used for food testing in lab / field / mobile vans/ for testing of processed and unprocessed foods, juices, cereals, nuts, spices etc and raw materials like wheat, rice, corn, fruits, and also milk (aflatoxin), poultry (egg allergen) and fish products in some cases (histamine).
The applicant sought the advance ruling on issue whether Entry No. 80 in Schedule H to the Notification No. 01/2017 Integrated Tax (Rate) dated June 28, 2017 (as amended) is applicable for import as well as supply of “Laboratory reagents for rapid testing of food safety parameters”, attracting a levy of integrated tax at the rate of 12% or Entry No.453 to Schedule III, attracting a levy of integrated tax at the rate of 18%.
The coram of Joint Commissioner of Central Tax, Shiva Prasad and Additional Commissioner of State Tax, Senil A.K.Rajan observed that reagents referred to in Heading 3822 of the Customs Tariff includes both diagnostic and laboratory reagents. The Tariff Heading 3002 pertains to human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera, other blood fractions and immunological products, whether or not modified or obtained by means of biotechnological processes; vaccines, toxins, cultures of microorganisms (excluding yeasts) and similar products and the Tariff Heading 3006 pertains to pharmaceutical goods specified in note 4 of chapter 30. Admittedly, the products supplied by the applicant are laboratory reagents which are predominantly used in food testing labs or in the field for testing of processed and unprocessed food. Hence, they do not fall under any of the sub – headings / tariff items under Heading 3002 or 3006 and therefore, they are appropriately classifiable under Customs Tariff Heading 3822 00 90.
The AAR held that that the laboratory reagents for rapid testing of foods safety parameters supplied by the applicant is appropriately classifiable under Customs Tariff Heading 3822 00 90 and is liable to GST at the rate of 12% as per entry at Sl No. 80 of Schedule II of Notification No. 01/2017 Integrated Tax (Rate) dated June 28, 2017.
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