2026-VIL-158-AAR
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SGST Advance Ruling Authority

GST – Kerala AAR - Tariff Classification and applicable GST rate on Herbal Extract Product – Nutraceutical Supplement versus Medicament – Applicant manufactured herbal extract product through steam distillation with water-based preparation method – Whether product qualifies as medicament under Chapter 30, nutraceutical under Heading 2106, or aromatic preparation under Chapter 33 of Customs Tariff – HELD – Product marketed as wellness supplement for general health support without specific disease treatment claims does not meet criteria for classification as medicament. The essential character test and common parlance test are decisive in classification matters, not the mere presence of ingredients with therapeutic properties - Medicaments are ordinarily supported by therapeutic claims, dosage discipline and regulatory recognition under Drugs and Cosmetics Act, 1940, which applicant did not possess. Product appropriately classifiable as nutraceutical or dietary supplement under Heading 2106 reflecting applicant's license from relevant food safety authority and intended use for nutritional supplementation - Classification under Chapter 33 rejected as product lacks aromatic character and is not marketed or used in perfumery, cosmetics or flavouring applications – The product is intended for direct human consumption as a dietary supplement for general wellness and nutritional support. The product is essentially a water based extract of turmeric, containing negligible quantities of turmeric derived constituents and consisting predominantly of water. In trade parlance, such products are understood and marketed as nutraceutical or dietary supplements rather than as pharmaceutical preparations or aromatic extracts. Therefore, considering the composition, manner of presentation, intended use and consumer perception, the essential character of the impugned product is that of a food preparation meant for nutritional or wellness supplementation, which appropriately falls within the scope of Heading 2106 - Price or MRP by itself does not determine classification unless specific value-linked condition in notification applies. Product initially taxable at rate of 18% as per Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, as amended, subsequently reduced to 5% by Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025, effective from 22.09.2025 – Ordered accordingly
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