Shopping bags classification under heading 4202 determines GST treatment for cotton and non-woven carry bags by material and date

Fabric cut, printed and stitched carry bags with handles were classified under heading 4202 as shopping bags, because they were used to hand over purchased goods to customers rather than as sacks or bags ordinarily used for packing goods under heading 6305. On that classification, cotton shopping bags attracted the amended GST rate from 15.11.2017, while non-woven carry bags continued under the applicable higher rate entry. For the period up to 14.11.2017, both categories were taxable at the same rate under the then applicable entries. The ruling therefore confirmed heading 4202 classification and linked GST liability to the material used and relevant date of supply.

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Issues: (i) Whether non-woven carry bags and cotton carry bags manufactured from fabric cut, printed and stitched by the applicant are classifiable under heading 6305 as bags used for packing of goods or under heading 4202 as shopping bags; (ii) what is the applicable GST rate on such bags for the relevant periods.

Issue (i): Whether non-woven carry bags and cotton carry bags manufactured from fabric cut, printed and stitched by the applicant are classifiable under heading 6305 as bags used for packing of goods or under heading 4202 as shopping bags.

Analysis: Heading 6305 covers textile sacks and bags of a kind normally used for packing goods for transport, storage or sale. The bags in question were found to be carry bags with handles, used by textile and jewellery shops for handing over purchased goods to customers. They were not used for packing goods in the sense contemplated by heading 6305. Heading 4202 specifically covers shopping bags, including those of cotton and of textile materials, and the competing tariff entries supported classification of such carry bags under that heading.

Conclusion: The bags are classifiable under heading 4202 and not under heading 6305. This issue is decided against the applicant.

Issue (ii): What is the applicable GST rate on such bags for the relevant periods.

Analysis: On the adopted classification under heading 4202, cotton shopping bags fell under the amended entry from 15.11.2017 attracting 6% CGST and 6% SGST, while non-woven carry bags continued under the relevant Schedule III entry attracting 9% CGST and 9% SGST. For the period up to 14.11.2017, both kinds of bags were taxable at 9% CGST and 9% SGST under the then applicable entries.

Conclusion: The applicable rate was 9% CGST and 9% SGST up to 14.11.2017 for both categories, and from 15.11.2017 onwards cotton carry bags attracted 6% CGST and 6% SGST, while non-woven carry bags continued at 9% CGST and 9% SGST. This issue is decided against the applicant.

Final Conclusion: The ruling confirms classification of the applicant's products as shopping bags under heading 4202 and applies the corresponding GST rates based on the material used and the relevant date of supply.

Ratio Decidendi: Bags made from fabric that are cut, stitched and fitted with handles for sale to customers as shopping or carry bags are classifiable under heading 4202 rather than heading 6305, which is confined to bags ordinarily used for packing goods.

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