AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1794
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....ers Private Limited (hereinafter referred to as 'the appellant') against Order No, RAJ/AAR/2025-26/15 dated 17th December, 2025 passed by the AAR, Rajasthan. The appeal has been filed within the prescribed time of 30 days and is within time. BRIEF FACTS OF THE CASE The facts of the case are that the appellant holds GST registration No. 08AADCE5250C1Z1 and had filed an appeal stating that the appellant is engaged in manufacture and supply of compostable plastic bags, which are claimed to be eco-friendly substitutes for conventional plastic bags. 2. As submitted by them, the appellant holds valid CPCB/CIPET/TUV Rheinland certifications, confirming compostability and biodegradability as per ISO 17088 and EN 13432 standards. 3. The appellant submitted that vide Notification No. 09/2025-CTR dated 17th September, 2025 (effective from 22.09.2025), the Government inserted Serial No. 319 in Schedule-I, prescribing GST @ 5% for "Paper Sacks/Bags and Biodegradable Bags" under Chapters 39 & 48. 4. As the appellant was of the view that the term "boi-degradable bags" is not defined, they applied for an advance ruling before AAR, Rajasthan, and the AAR, vide Order No. RAJ/AAR/2025-....
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....ble. (4) The impugned ruling lacks clear findings and is therefore arbitrary and unsustainable. (5) The ruling defeats the policy objective of encouraging eco-friendly alternatives and plastic waste management. (6) Every compostable product is biodegradable. ISO 17088 requires biological decomposition into CO, water and biomass, establishing biodegradability beyond doubt. (7) GST law does not define "biodegradable bags"; hence technical meaning from expert statutory bodies must be adopted. (8) Having acknowledged that biodegradability determination lies with environmental authorities, the AAR ought to have accepted such certifications instead of denying concessional rate. (9) The appellant is duly certified by the Central Pollution Control Board, Ministry of Environment, Forest & Climate Change, Government of India, vide Certificate dated 01.03.2023, issued under the Plastic Waste Management Rules, 2018, authorising the appellant as a manufacturer for manufacturing and selling compostable plastic carry bags in India. The certificate mandates compliance with IS/ISO 17088 and conclusively recognises the Appellant's products as com....
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....r, the Appellant's product squarely qualifies as biodegradable bags taxable at GST @ 5%. PERSONAL HEARING 6. Personal hearing in the matter was held on 13.03.2026. Shri Ashok Bohra, Director of the appellant and Shri Rakesh Kumar Mehta, CA & Authorised Representative appeared for personal hearing and reiterated the submissions as put forth in appeal. Shri Ashok Bohra emphasized and raised objection that they have furnished test reports and certificates of the Pollution Control Board, still the Advance Ruling Authority did not give ruling conclusively about biodegradability/compostability of their-product and eligibility thereof for concessional rate of 5%. DISCUSSION AND FINDINGS 7. We have carefully considered the material and evidences available on record, the Order dated 17th December, 2025 of the Rajasthan Authority for Advance Ruling, the written submissions of the appellant and also oral submissions made at the time of personal hearing held on 13th March, 2026. 8. We observe that as claimed by them, the appellant is engaged in manufacture and supply of compostable plastic bags. The appellant claims that the products are eco-friendly substitutes for conventional....
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....degradable, then the concessional rate would not apply, and the applicable rate under the general classification for plastic bags under Chapter 39 would apply". 10. We further find that the AAR, Rajasthan have discussed the classification of the bags being manufactured by the appellant and found the same classifiable under chapter heading 3923, irrespective of the fact whether the same are bio-degradable or not. The AAR, Rajasthan have also discussed the issue of eligibility of a product for claiming exemption under S. No. 319 of the Notification No. 09/2025-CTR dated 17th September, 2025in the advance ruling dated 17th December, 2025 and the appellant has not challenged the findings of the AAR on both of the points. The appellant has only argued that the AAR has erred in law by not deciding conclusively, the eligibility of their products for concessional rate and failed to appreciate the certification establishing bio-degradability of their products. We find that the AAR, Rajasthan have mentioned that Advance Ruling Authority is not the competent authority to verify or affirm whether the product is bio-degradable or compostable, nor can the Authority conclude on the sufficiency....
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....e nodal agencies. 13. As regard the test reports produced by the appellant, we find that from both the test reports i.e. TÜV Rheinland Test Report dated 22.10.2025 and CIPET Test Certificate dated 09.12.2022, it is evident that the samples were drawn by the party. Also the procedure of drawing sample, sample size etc. is also not known. Thus, neutrality in the matter of drawing samples and get it tested by the appellant, is not beyond doubt. 14. We further find that supply is a continuous phenomenon and as the exemption is linked with the nature/characteristics of the product, in order to avail the exemption, the parameters are required to be strictly maintained on a regular basis. Therefore, one time certification of any such product would also not be appropriate. 15. We are agree with the findings of the AAR, Rajasthan that advance ruling authorities do not possess the jurisdiction to determine whether a product meets environmental, technical or scientific standards of bio-degradability or compostability and that determination of bio-degradability of any product is not in the scope of this advance ruling forum. We find that advance ruling authority is preordained fo....