GST Classification of Health Supplements vs Medicaments
The West Bengal Authority for Advance Ruling decided that health supplements are classified as food products, not medicines.
- Ruling
- 46/WBAAR/2018-19 dated 26/03/2019
- Authority
- 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
- EskagPharma asked to classify fifteen products under GST.
- The company claimed products were medicines under HSN 3004.
- The Authority ruled most products are health supplements under HSN 2106.
- Labels stating products do not treat diseases disqualify them as medicines.
In short
The West Bengal Authority for Advance Ruling (AAR) examined whether certain health supplements should be taxed as medicines or food products under the Goods and Services Tax (GST).
What has changed
How it worked before
Businesses often assumed that any product recommended by a doctor or sold in a pharmacy could be classified as a medicine, which typically carries a lower tax rate.
What has changed
The Authority ruled that if a product label explicitly states it is not intended to treat or cure diseases, it cannot be classified as a medicine. This means these items fall under HSN 2106 as food supplements, which may attract a different tax rate than pharmaceutical drugs.
Who this affects
Manufacturers and distributors of health supplements, dietary products, and nutraceuticals.
An example
Imagine a company selling a vitamin powder labeled 'not for medicinal use.' They might hope to classify it as a medicine to pay less tax. Based on this ruling, the tax department would likely classify it as a food supplement under HSN 2106 because the label itself denies its role as a medicine.
What you should do
Review your product labels and manufacturing licenses. Remember that an advance ruling only binds the company that asked and its specific tax office; it is not a universal law for your business.
If you do nothing
If you classify your products as medicines without proper justification, a tax officer may reclassify them during an audit. You could then be liable for the difference in tax, plus interest and potential penalties for incorrect filing.
The terms explained
- HSN
- Harmonized System of Nomenclature is a code used to classify goods for taxation purposes.
- Medicament
- A substance used for medical treatment that is primarily intended to cure or prevent a specific disease.
- Common parlance test
- A method used by authorities to determine how a product is understood and used by the general public rather than by technical experts.
- Therapeutic or prophylactic
- Therapeutic means healing a disease, while prophylactic means preventing a disease.
The ruling in detail
Authority for Advance Ruling
Eskag Pharma Pvt Ltd
46/WBAAR/2018-19 dated 26/03/2019 · West Bengal
Questions before the authority
- Classification of fifteen products under the GST Act
Facts
The applicant is a manufacturer of pharmaceuticals and medicaments seeking an advance ruling on the classification of fifteen specific products. They contend that these products have therapeutic or prophylactic uses and should be classified under HSN 3004. The Revenue department argued that the products are dietary or health supplements and should be classified under HSN 2106.
Ruling
| Question | What the authority ruled |
|---|---|
| Products at Sl Nos. 2 to 13 | HSN 2106 Classified as food preparations not elsewhere specified |
The Authority ruled that the products labeled as dietary or health supplements are not medicaments and are excluded from Chapter 30. Consequently, the products listed under serial numbers 2 to 13 are classified under HSN 2106. The ruling emphasizes that the user's perception and the manufacturer's labeling are critical for classification.
Reasoning
The Authority relied on the **common parlance test** and the information provided on product labels to determine the nature of the goods. It noted that several products explicitly state they are not intended to diagnose, treat, or cure diseases, which excludes them from Chapter 30 under Note 1(a). Furthermore, the applicant failed to provide evidence of a drug manufacturing license for these products, undermining their claim of therapeutic use. The decision turned on the interpretation of HSN 3004, which requires a product to be primarily meant for **therapeutic or prophylactic uses** to qualify as a medicament.
Provisions relied on
- Section 97(2)(a) of the GST Act
- Section 100 of the GST Act
- Section 3(b) of the Drugs and Cosmetics Act, 1940
- Note 1(a) of Chapter 30 of the Tariff Act
- Notification No. 1/2017-CT (Rate)
- Notification No. 41/2017-CT (Rate)
For the practitioner
This ruling clarifies that dietary and health supplements, even if prescribed by doctors, are generally classified under HSN 2106 rather than HSN 3004 if they lack substantial curative value or are labeled as food supplements. It serves as a warning that the absence of a drug manufacturing license can be used against an applicant claiming medicament status. It does not decide the classification of products not labeled as dietary or health supplements.
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/AAR/wb_46_2018-19_eppl.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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