Biodegradable bag classification and concessional GST rate depend on material used and satisfaction of the biodegradability condition.

Biodegradable bag classification turns on the material used: bags made from polymer or compostable plastic fall under Chapter 39, while paper bags fall under Chapter 48. The Authority could not decide whether the product is scientifically biodegradable or compostable, as that factual determination lies outside its jurisdiction. Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) grants 5% GST only where the supplied bags are in fact biodegradable; otherwise, the general rate applicable to plastic bags under Chapter 39 applies.

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Issues: (i) whether the applicant's biodegradable bags are classifiable under Chapter 39 or Chapter 48, and (ii) whether supplies of such bags are covered by Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) attracting 5% GST.

Issue (i): whether the applicant's biodegradable bags are classifiable under Chapter 39 or Chapter 48, and the appropriate HSN therein.

Analysis: The classification of the bags depends on the material from which they are made. Bags made from polymer or compostable plastic fall under Chapter 39 as articles for the conveyance or packing of goods, while bags made from paper fall under Chapter 48. The question whether the product is actually biodegradable or compostable is a scientific and technical determination, which lies outside the Authority's jurisdiction under Section 97(2) of the CGST Act, 2017.

Conclusion: The bags are classifiable under Chapter 39 if made of polymer or compostable plastic and under Chapter 48 if made of paper, but no ruling is given on whether the applicant's product satisfies the scientific test of biodegradability or compostability.

Issue (ii): whether supplies of such bags are covered by Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) attracting 5% GST.

Analysis: Entry No. 319 grants a concessional 5% rate for paper sacks or bags and biodegradable bags under Chapters 39 and 48. The benefit is available only if the supplied goods are in fact biodegradable as contemplated by the entry. If the goods are not biodegradable, the general rate applicable to plastic bags under Chapter 39 applies. The Authority therefore could not give an unconditional affirmative answer and confined the ruling to the statutory condition in the notification.

Conclusion: The concessional 5% GST rate is available only if the bags supplied are biodegradable; otherwise, the general rate applies.

Final Conclusion: The ruling determines the tariff chapter by the material of the bags and recognises the concessional notification only on satisfaction of the biodegradability condition, leaving the factual scientific determination outside the Authority's jurisdiction.

Ratio Decidendi: An advance ruling authority may decide classification and notification applicability, but it cannot itself determine whether a product is scientifically biodegradable or compostable; a concessional notification tied to biodegradability applies only upon satisfaction of that condition.

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