2026-VIL-137-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Classification of Compostable Bags and Packing Materials made from Polymer Blend - Applicant engaged in manufacturing compostable bags and packing materials made from blend of Poly Lactic Acid (PLA) and Poly Butylene Adipate Terephthalate (PBAT) certified under IS/ISO 17088 standards by CIPET and certified by CPCB. Applicant classified products under Chapter heading 3923 as articles for conveyance or packing of goods attracting 18% GST - Whether compostable bags made from PLA-PBAT blend are classifiable under Chapter 39 for plastic articles or Chapter 48 for paper articles and appropriate HSN - HELD - The material composition of the compostable bag as revealed by test report is a blend of Poly Lactic Acid (PLA) and Poly Butylene Adipate Terephthalate (PBAT) which are plastic or polymer materials and not paper. Compostable bags made from polymer blends are therefore classifiable under Chapter 39 ‘Plastics and Articles Thereof’ and more specifically under Chapter heading 3923 2990 which covers articles for conveyance or packing of goods of other plastics including sacks and bags. The classification is determined by actual material composition of the goods and the test report clearly establishes the material to be plastic or polymer based and not paper based. Therefore, products should be classified under Chapter 39 HSN 3923 2990 and not under Chapter 48 - Compostable bags are classifiable under Chapter 39, specifically HSN 3923 2990 – Ordered accordingly - GST - Rate of Tax - Biodegradable Bags - Whether supplies of compostable bags made from PLA-PBAT blend and certified under IS/ISO 17088 are covered by entry for biodegradable bags in Notification 9/2025-CTR attracting concessional rate of 5% GST - HELD - Entry 319 of Notification 9/2025-CTR provides concessional rate of 5% for paper sacks and bags and biodegradable bags subject to condition that goods are biodegradable. To qualify as biodegradable bags within meaning of this notification the products must conform to IS/ISO 17899 T:2022 prescribed for biodegradable plastics under Rule 10(3) and Rule 10(4) of Plastic Waste Management Rules, 2016 as amended - The applicant's compostable bags cannot be classified as biodegradable bags for purposes of Notification 9/2025-CTR as they are specifically excluded from scope of biodegradable standards. Press release or legislative intent regarding rate reduction cannot override the statutory definitions and certification requirements prescribed under Plastic Waste Management Rules which specifically distinguish between compostable and biodegradable plastics. Compliance with statutory norms including CPCB certification under IS/ISO 17899 T:2022 is fundamental requirement and not merely procedural technicality – The supply of compostable bags are not covered by entry 319 for biodegradable bags in Notification 9/2025-CTR and 18% GST remains applicable.
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