GST: Is Hajmola a candy or an Ayurvedic medicine? A debate has started

In a case of GST (GST News) classification, Dabur India's popular Hajmola candy has come under the scrutiny of the Directorate General of GST Intelligence (DGGI). According to CNBC TV18, according to sources, Dabur India and DGGI are at loggerheads over GST classification. This investigation is being conducted by the Coimbatore zone of DGGI. Currently, an investigation is underway on whether Hajmola candy should be put in the category of Ayurvedic medicine, which is subject to 12% GST or whether it should be considered just a candy and 18% GST should be levied on it. During the investigation, a source said that Dabur has claimed that Hajmola candy is an Ayurvedic medicine and not a normal sugar-boiled candy.

Let us tell you that Dabur had faced a similar classification challenge in the pre-GST regime, where the Supreme Court ruled in favor of the company and said that Hajmola candy is an Ayurvedic medicine and not a confectionery item.

What next? It remains to be seen whether the government will change the classification of Hajmola candy and bring it under the 18% rate or follow the Supreme Court order. Experts say that the GST Council will clarify the picture regarding the classification and this may lead to reorganization of the entire category. Abhishek A Rastogi, founder of Rastogi Chambers, who is arguing GST classification disputes in different courts, said that Hajmola should be classified on the basis of its formulation, purpose and recognition under the Ayurvedic system of medicine, and not just on the basis of its form or taste. Hajmola is not a traditional sugar-based candy but an Ayurvedic formulation recognized as a digestive aid and marketed as such, containing classical Ayurvedic ingredients like cumin, asafoetida, Pippali and Amchur. These are time-tested herbs traditionally used for their digestive properties. Rastogi further said that the Central Drugs Standard Control Organization (CDSCO) recognizes Ayurvedic formulations under the ambit of the Drugs and Cosmetics Act and Hajmola is sold under an Ayurvedic license. It is consumed to promote digestion and reduce gastric troubles. He said, "The mere fact that it is tasty or offered in chewable form does not detract from its essential quality as an Ayurvedic medicinal product." Dispute with Income Tax Department Apart from this, Dabur is already facing tax demand. On April 1, the company disclosed an income tax reassessment order demanding Rs 110.33 crore for the year 2017-18. The Income Tax Department has accused the company of non-deduction of tax related to in-house research and development (R&D) and incorrect claims under section 14A of the Income Tax Act, 1961. Dabur plans to challenge this demand.

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