Lack of statutory authority invalidates GST classification circular on polypropylene bags, leaving the underlying classification issue open.

The Tax Research Unit lacked authority under Section 168 of the CGST Act to issue the impugned clarification on the classification of polypropylene woven and non-woven bags, because the power to issue orders, instructions or directions for uniform implementation of the Act rests with the Board. The circular was also found deficient because it relied only on Chapter 39 of the Customs Tariff Act and did not examine the statutory distinction between plastics and textiles, including the relevant chapter notes and competing tariff entries in Chapters 56 and 63. The circular was therefore without authority and liable to be quashed, while the broader classification question was left open.

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Issues: Whether the Tax Research Unit had authority under Section 168 of the Central Goods and Services Tax Act, 2017 to issue the impugned clarification and circular concerning classification of polypropylene woven and non-woven bags.

Analysis: The power to issue orders, instructions or directions for uniform implementation of the Act is vested in the Board. No provision of the CGST Act was shown to confer a corresponding power on the Tax Research Unit. The impugned circular also proceeded only on Chapter 39 of the Customs Tariff Act, 1975 and did not examine the statutory distinction drawn between plastics and textiles, including the relevant notes in Chapter 39 and the competing tariff entries in Chapters 56 and 63. In these circumstances, the circular could not be sustained. The wider question of classification was left open for decision in appropriate proceedings.

Conclusion: The impugned circular was without authority and was liable to be quashed.

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