GST Classification of Ayurvedic Skin Care Products as Cosmetics
The Appellate Authority ruled that Ayurvedic skin care products are classified as cosmetics, not medicines, if their primary use is beautification.
- Ruling
- Appeal Case No. 02/WBAAAR/Appeal/2018 dated 08.05.2018
- Dated
- 08 Jan 2018
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked if their Ayurvedic products were medicines or cosmetics.
- The authority ruled all 31 products are cosmetics, not medicaments.
- Classification depends on primary use, not just an Ayurvedic label.
- Products for cleansing or beautifying fall under Chapter 33 or 34.
In short
The company asked the West Bengal Appellate Authority for Advance Ruling whether their Ayurvedic skin care products should be taxed as medicines or cosmetics. The authority examined whether these items were meant to treat diseases or simply to improve appearance. They concluded that because the products are used for cleansing and beauty rather than medical treatment, they cannot be classified as medicines.
What has changed
How it worked before
Many businesses assumed that any product labeled as 'Ayurvedic' or containing herbal ingredients would automatically qualify for the lower tax rates applied to medicines.
What has changed
The authority clarified that the primary use and the level of active ingredients determine the tax category. If a product is meant for skin care or beauty, it is a cosmetic, regardless of its herbal ingredients. This means businesses must pay the higher GST rate applicable to cosmetics rather than the lower rate for medicines.
Who this affects
Manufacturers of Ayurvedic or herbal skin care, hair care, and beauty products.
An example
A company makes an herbal face wash and markets it for 'glowing skin' and 'daily cleansing.' They want to classify it as a medicine to pay less tax. Based on this ruling, the tax department would likely classify it as a cosmetic because its primary use is beauty, not treating a specific skin disease.
What you should do
Review your product labels and marketing materials to see if you are selling them as beauty aids or medical treatments. Remember that an advance ruling only binds the company that asked for it and their specific tax office. You cannot automatically apply this decision to your own business, but it shows how authorities evaluate these products.
If you do nothing
If you classify your products as medicines when they are actually cosmetics, you risk paying the wrong amount of GST. If a tax officer disagrees with your classification during an audit, you may be forced to pay the difference in tax plus interest and penalties. It is safer to seek professional advice on your specific product composition.
The terms explained
- Medicaments
- Substances used for the diagnosis, treatment, mitigation, or prevention of a disease or ailment.
- Cosmetics
- Products intended to be rubbed, poured, or sprayed on the body for cleansing, beautifying, or altering appearance.
- Primary use
- The main purpose for which a product is intended and marketed, which determines how it is taxed.
The ruling in detail
Appellate Authority for Advance Ruling
M/s Akansha Hair & Skin Care Herbal Unit Private Limited
Appeal Case No. 02/WBAAAR/Appeal/2018 dated 08.05.2018 · West Bengal
Questions before the authority
- Whether the Ayurvedic skin care preparations manufactured by the Appellant are classifiable as medicaments under Chapter 30 of the Customs Tariff Act, 1975 or as cosmetics under Chapter 33.
Facts
The Appellant is a manufacturer of various skin care products and sought an advance ruling on their classification. They argued that their products are Ayurvedic medicaments meant for therapeutic or prophylactic uses and should be classified under Tariff Head 3004. The original Authority for Advance Ruling had classified some products as medicaments and others as cosmetics, leading to this appeal.
Ruling
| Question | What the authority ruled |
|---|---|
| Skin care preparations | Chapter 33 or 34 Not classifiable as medicaments under Chapter 30 |
The Appellate Authority held that none of the 31 products discussed qualify as medicaments or medicines as they are not used in the diagnosis, treatment, mitigation, or prevention of disease. Consequently, the products are to be classified under Chapter 33 (Cosmetics) or Chapter 34 (Soaps) rather than Chapter 30.
Reasoning
The Authority determined that the products are intended for cleansing, beautifying, or altering appearance rather than treating an injury or ailment. It relied on the definition of 'cosmetic' under the Drugs and Cosmetics Act, 1940, and noted that the products do not contain sufficiently high levels of active ingredients to be considered medicaments. The ruling emphasized that **specific description prevails over general description** in the Rules of Interpretation. Furthermore, the Authority clarified that the **primary use** of the products is for skin care and not for therapeutic purposes.
Provisions relied on
- Section 100(1) of the West Bengal Goods and Services Tax Act, 2017
- Section 95(a) of the GST Act
- Customs Tariff Act, 1975
- Drugs and Cosmetics Act, 1940
- Central Tax (Rate) Notification No. 01/2017 dated 28.06.2017
- Notification No. FT-1125 dated 28.06.2017
For the practitioner
This ruling is useful for practitioners dealing with the classification of Ayurvedic skin care products, establishing that **labeling and marketing as 'Ayurvedic'** does not automatically qualify a product as a medicament under Chapter 30. It reinforces that the **intended use and composition** are the decisive factors for classification. It does not decide on products not listed in the application.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2024-02/wb_aaar_02_2018_08.05.2018.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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