Classification & Tax Rate for Nonwoven Rice Bags: HSN 63053300, 2.5% CGST, 2.5% SGST

The authority ruled that the Non-woven fabric bags, known as Rice Bags, fall under HSN 63053300, and the applicable tax rate for bags valued not exceeding Rs. 1000 per piece is 2.5% CGST and 2.5% SGST. This decision clarified the classification and tax treatment for the applicant's products, providing a clear ruling on the Rate of Tax and HSN code for Nonwoven Rice Bags.

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Issues:
Clarification on Rate of tax and HSN code for Nonwoven Rice Bags.

Analysis:
The applicant, a registered person under the GST Act, sought an Advance Ruling regarding the rate of tax and HSN code for Nonwoven Rice Bags. The applicant purchases nonwoven fabric rolls, converts them into bags used for packing rice and food products. The GST council meeting had indicated that these bags fall under HSN Code 6305, to be taxed at 5% if the sale value is below Rs. 1000 and at 12% if above, although the GST Act schedule did not mention this. The GST department clarified that Nonwoven Bags fall under HSN Code "63059000" and are taxed at 5% if the sale value does not exceed Rs. 1000. The applicant provided detailed information about their manufacturing process, products, and sales, emphasizing that their bags are sold below Rs. 1000 each.

Upon examination, it was found that the applicant's bags are made from non-woven fabric rolls of polypropylene fiber, classified under HSN 5603, and sold as Packing Bags below Rs. 1000 each. The bags are created by cutting, printing, and stitching the fabric based on client requirements. The issue before the authority was to determine the appropriate Rate of Tax and HSN code for these Nonwoven Rice Bags. The bags were classified under HSN 63053300, as they are used for packing rice and food products, falling under the description of goods in Schedule 1 of Notification No. 1/2017-C.T. (Rate) dated 28.06.2017, taxable at 2.5% CGST and 2.5% SGST.

The authority ruled that the Non-woven fabric bags, known as Rice Bags, manufactured by the applicant, fall under HSN 63053300, and the applicable tax rate for bags valued not exceeding Rs. 1000 per piece is 2.5% CGST and 2.5% SGST, as per the relevant schedules and notifications. The ruling clarified the classification and tax treatment for the applicant's products, providing a clear decision on the Rate of Tax and HSN code for Nonwoven Rice Bags.

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