2026-VIL-21-AAAR
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SGST AAAR

GST – Rajasthan AAAR - Classification of Biodegradable Bags – Appellant is engaged in supply of compostable plastic bags having certifications from Pollution Control Board, and international testing agencies confirming biodegradability and compostability - Entitlement to concessional GST rate of 5 percent under Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025 inserted vide Serial No. 319 in Schedule-I for "Paper Sacks/Bags and Biodegradable Bags" under Chapters 39 and 48 - The AAR declined to conclusively determine biodegradability, holding that determination of biodegradability and compostability is a scientific and technical matter falling within the jurisdiction of environmental authorities and not within the scope of Advance Ruling under Section 97(2) of Central GST Act, 2017 – HELD - The Advance Ruling Authorities do not possess jurisdiction to determine whether a product meets environmental, technical or scientific standards of biodegradability or compostability as such determination falls within the domain of Pollution Control Boards under Plastic Waste Management Rules - Further, the test reports produced by the appellant itself lack neutrality as samples are drawn by the party. The supply being a continuous phenomenon requires strict maintenance of parameters on a regular basis and not merely one-time certification, therefore, Advance Ruling Authority can only conclude that if products are biodegradable then concessional rate would be available otherwise applicable rate for plastic bags under Chapter 39 would apply - The jurisdictional GST field formation may draw samples and get the same tested to determine biodegradability. The order of Advance Ruling Authority is upheld and the appeal is dismissed
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