5% GST leviable on Carry Bags made of Polypropylene Non-Woven Fabrics: AAR

The Advance Ruling Authority ( AAR ), Kerala recently ruled that carry bags made of polypropylene non-woven fabrics is classified under Entry 224 of Schedule 1 of Notification 01/2017 Central Tax (Rate) and State Notification dated 360/2017 and taxable at 5% (SGST 2.5% and CGST 2.5%).

In the instant case, the applicant JJ Fabrics is a manufacturer of carry bags made of polypropylene non-woven fabrics and has preferred for advanced ruling on the rate of tax of the same. Applicant asserted that said bags are used by big industrial units, big retail outlets and textile shops for packing their commodities and has been granted registration by the office of textile commissioner for manufacturing of textile based products.

It added that various authorities under textile ministry had examined the products and have certified that they are technical textile fabrics. The applicant had further submitted a test report from Centre for Biopolymer Science and Technology, wherein it was certified that non woven carry bags made by the applicant is a polypropylene product with a filler content of 42.29%. Applicant also asserted that as per clarification issued by Commissioner of GST and Central Excise, Madurai the said non-woven bags comes under HSN 6305 90 00 with 2.5% CGST and 2.5% SGST is sale value does not exceed Rs. 1000/- per piece.

Members Senthil Nathan S(Joint Commissioner) and N Thulaseedharan Pillai(Joint Commissioner, General) on the facts disclosed and submission made at the time of hearing admitted the application. They accepted the test report submitted by the applicant and added that in Custom Tariff Act, snacks and bags made of polypropylene strip or the like is classified under Section 63 and the Schedule I and II of the Notification number 01/2017 Central Tax(Rate) and State Notification 360/2017 was relied upon.  The AAR ruled that carry bags made of polypropylene non-woven fabrics is taxable at 5%.