2026-VIL-28-AAAR
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SGST AAAR

GST – West Bengal AAAR - Classification of tobacco leaves – Vide the impugned order the WBAAR held that supply of tobacco leaves are covered by Entry No. 162 of Schedule I to Notification No. 1/2017-Central Tax (Rate), as amended, and are liable to 5% GST - Dept-Appellant sought to classify sun-cured tobacco leaves as "unmanufactured tobacco" attracting higher GST rate, whereas Respondent contended that cured tobacco leaves continue to remain classifiable as "tobacco leaves" attracting concessional GST rate – Whether sun-cured tobacco leaves procured from farmers and subsequently supplied as such or after operations such as grading, bundling and butting continue to retain their character as "tobacco leaves" or become classifiable as "Unmanufactured Tobacco (other than tobacco leaves)" under Heading 2401 – HELD - The activities undertaken by the Respondent namely, storage, stocking, grading, bundling and butting, are stated to be undertaken only for preservation, segregation, handling, packing and transportation of the leaves. The process of curing, particularly sun-curing, is necessary process undertaken to reduce the moisture content of freshly harvested tobacco leaves and to make them fit for storage, transportation and sale - The relevant GST rate notification uses the expression "tobacco leaves" without qualifying it to restrict only to green, fresh or uncured tobacco leaves. Had the legislature intended such restriction, it could have used appropriate restrictive words – The Heading 2401 of the Customs Tariff and HSN Explanatory Notes recognise tobacco leaves in cured or fermented form, thereby establishing that curing is not alien to the tariff structure - The clarification in Circular No. 332/2/2017-TRU should not be read restrictively to exclude cured leaves as the expression "leaves of tobacco as such" refers to leaves retaining their character as leaves and not to leaves in freshly plucked green condition – The ruling passed Authority for Advance Ruling is upheld and held that sun-cured tobacco leaves supplied without further processing except storage or stocking, as well as tobacco leaves subjected only to grading, bundling or butting, continue to retain their character as "tobacco leaves" covered under Entry No. 162 of Schedule I to Notification No. 1/2017-Central Tax (Rate), as amended, attracting 5% GST – The Department’s appeal is rejected
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