2026-VIL-62-AAR
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SGST Advance Ruling Authority

GST – Rajasthan AAR - Classification and applicable rate of tax on biodegradable/compostable carry bags – HELD - The determination of biodegradability or compostability is a scientific and technical matter falling within the jurisdiction of the environmental authorities and not within the scope of this Authority under Section 97(2) of the CGST Act - The bags in question are made from polymer materials (including PBAT and PLA) and are classifiable under Chapter 39 – Plastics and articles thereof, specifically under heading 3923, being articles for the conveyance or packing of goods. This classification is independent of whether the material is biodegradable or not – Ordered accordingly - Applicable GST rate on biodegradable/compostable carry bags - The applicant submitted that the supply of its biodegradable/compostable carry bags is covered under Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025, which provides a concessional GST rate of 5% for "Paper Sacks/Bags and bio-degradable bags" under Chapters 39 and 48 – HELD - The concessional rate is conditional and applies only if the goods supplied are biodegradable as understood in the context of the said entry. The Authority held that if the bags supplied by the applicant are biodegradable, then the benefit of Entry No. 319 would be available, and GST would be payable at the rate of 5%. If the product is not biodegradable, then the concessional rate would not apply, and the applicable rate under the general classification for plastic bags under Chapter 39 would apply.
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