Material composition governs bag classification, while concessional GST treatment applies only when bags are truly biodegradable.

Classification of biodegradable bags depends on material composition: bags made from polymer or compostable plastics fall under Chapter 39, while bags made from paper fall under Chapter 48. The Authority noted that its classification jurisdiction does not extend to a scientific or technical determination of biodegradability or compostability. Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) grants a 5% concessional rate for paper sacks/bags and biodegradable bags under Chapters 39 and 48, but that benefit applies only where the supplied bags strictly answer the description of biodegradable bags; otherwise, the general rate for plastic bags applies.

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Issues: (i) classification of biodegradable bags under Chapter 39 or Chapter 48; (ii) applicability of Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) for the rate of GST.

Issue (i): classification of biodegradable bags under Chapter 39 or Chapter 48.

Analysis: The jurisdiction under Section 97(2) of the Central Goods and Services Tax Act, 2017 covers classification of goods, but not a scientific or technical determination of whether a product is biodegradable or compostable. Bags made from polymer or compostable plastics fall under Chapter 39, specifically heading 3923, while bags made from paper fall under Chapter 48. The classification depends on the material composition of the goods and is independent of biodegradability.

Conclusion: The bags are classifiable under Chapter 39 if made of polymer or compostable plastics, and under Chapter 48 if made of paper.

Issue (ii): applicability of Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) for the rate of GST.

Analysis: Entry No. 319 of Schedule I grants a concessional rate of 5% for "Paper Sacks/Bags and bio-degradable bags" under Chapters 39 and 48. The benefit of the entry depends on the goods answering the description of biodegradable bags. Where the bags supplied are biodegradable, the concessional entry applies. Where they are not biodegradable, the general rate applicable to plastic bags under Chapter 39 applies.

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

Final Conclusion: The ruling accepts the material-based classification of the bags and extends the concessional notification benefit only on satisfaction of the biodegradable description, leaving non-biodegradable goods to the general tariff treatment.

Ratio Decidendi: A classification ruling can determine tariff heading by material composition, but eligibility for a concessional notification entry depends on the goods strictly answering the description in the notification, while scientific verification of biodegradability lies outside the Authority's jurisdiction.

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