TaxTMI 
TaxTMI 
2026 (9) TMI 527
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....l Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like manner except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the above, henceforth, for the purposes of these proceedings, the expression "GST Act" would mean both the CGST Act and the WBGST Act. 1.2 The applicant, M/s Mangalam Kallani HUF, is a Hindu Undivided Family engaged in the business of manufacturing ruled/lined paper sheets under the trade name "Marvel Products". The applicant carries on the activity of converting uncoated paper and paperboard into ruled/lined paper sheets by undertaking a manufacturing process involving cutting and ruling of paper at its manufacturing unit. The ruled/lined paper sheets so manufactured are supplied primarily to notebook and exercise book manufacturers for ....
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....tion No. 10/2025-Central Tax (Rate), what documentary evidence, declaration or undertaking must the applicant obtain from its buyers (notebook manufacturers) to establish that the ruled sheets will be used exclusively for manufacture of exercise books/notebooks; what documentary evidence, declaration or undertaking must the applicant furnish to its paper mill suppliers to enable the mills to apply NIL rate on their supply of paper reels (HSN 48025590) to the applicant; and whether a written undertaking on the buyer's or supplier's letterhead is legally sufficient or any specific CBIC-prescribed format is required? 4. In respect of the applicant's inward supply of uncoated paper reels (HSN 48025590) from paper mills, presently received at NIL rate of GST under Sl. No. 128 of the Exemption Notification, whether the application of NIL rate by the paper mills on their supply of paper reels to the applicant is legally correct, specifically whether Sl. No. 128 covers the paper mill's supply to an intermediate processor, namely the applicant, who converts the reels into ruled sheets for exclusive supply to exercise book manufacturers, or whether the exemption is confined only to ....
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....h are not specifically uttered in the statute itself. Interpretation of a notification and import of certain concepts or mechanisms into the notification are not the same thing. So, questions placed under serial no. 3 are not admitted. The applicant's representative is duly informed. Questions placed before us under serial nos. 1, 2 and 4 are admitted for discussion and ruling. 1.6 The applicant states that the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act. 1.7 The officer concerned from the Revenue has raised no objection to the admission of the application. 1.8 The application is, therefore, admitted subject to the observations recorded in Paragraph 1.5. 2. Submission of the Applicant 2.1 The Applicant submits that it is exclusively engaged in the manufacture and supply of ruled/lined paper sheets at its manufacturing unit situated in Siliguri, West Bengal. To carry out its manufacturing activities, the Applicant procures uncoated paper and paperboard of a kind used for writing, printing, or other graphic purposes, in rolls or rectangular sheets, excluding paper falling under HS....
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....g activity using its own machinery and workforce and thereafter sells the ruled/lined sheets in the open market. 2.4 The Applicant further submits that the ruled/lined sheets manufactured by it are supplied exclusively to notebook and exercise book manufacturers, who utilise such sheets for assembling and binding finished products such as exercise books, graph books and laboratory notebooks. According to the Applicant, the ruled/lined sheets have no alternate commercial use amongst its customer base and are procured exclusively for manufacture of educational stationery products. The Applicant presently classifies such outward supplies under HSN 48025790 and clears the same at NIL rate of GST under Sl. No. 128 of Notification No. 10/2025-Central Tax (Rate), considering the ruled sheets to be paper used exclusively for exercise books, graph books, laboratory notebooks and notebooks. The Applicant seeks confirmation regarding the correctness of such classification and tax treatment. 2.5 The Applicant submits that significant compliance uncertainties have arisen after the revision of the GST rate structure with effect from 22.09.2025 through Notification Nos. 09/2025-Central Tax ....
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....sifiable under HSN 48025790. 2.7 On the applicability of exemption under Sl. No. 128 of Notification No. 10/2025-Central Tax (Rate), the Applicant submits that the ruled/lined sheets supplied by it qualify for NIL rate of GST. According to the Applicant, the ruled sheets are purchased exclusively by notebook manufacturers and are used solely in the manufacture of exercise books, graph books and laboratory notebooks, thereby fully satisfying the prescribed end-use condition. The Applicant further submits that the legislative intent behind Sl. No. 128 is to exempt paper inputs used in the manufacture of educational stationery. According to the Applicant, any restrictive interpretation confining the exemption only to the final notebook manufacturer while denying the benefit to intermediate processors would frustrate the object of the exemption and unnecessarily burden the supply chain. The Applicant contends that the expression "used for exercise books, graph books, laboratory notebooks and notebooks only" relates to the actual end-use of the goods and not to the identity of the supplier claiming the exemption. Since the ruled/lined sheets remain classifiable under Heading 4802 and....
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....n is product-specific and end-use based rather than recipient-specific. The notification nowhere restricts the exemption only to supplies made directly to the final manufacturer of exercise books. Since the Applicant merely acts as an intermediate processor by converting paper reels into ruled/lined sheets, which are thereafter supplied exclusively for manufacture of exercise books and similar educational products, the Applicant contends that the prescribed end-use condition continues to remain fully satisfied throughout the supply chain. According to the Applicant, any restrictive interpretation limiting the exemption only to direct supplies made by paper mills to notebook manufacturers would defeat the legislative object of making educational stationery affordable. Without prejudice to the above submissions, the Applicant further submits that even if the exemption is ultimately held to be unavailable and the correct GST rate on inward paper reels is determined to be 18 per cent, the statutory liability to discharge such GST would primarily rest upon the supplying paper mills under section 9 of the CGST Act, 2017. The Applicant, being merely the recipient of the goods, cannot o....
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....ires the character of a commercially distinct stationery article intended exclusively for manufacture of notebooks. The Revenue therefore submits that classification under Heading 4820 merits consideration. Without prejudice, it is further submitted that even if the goods are held classifiable under Heading 4802, such classification by itself would not automatically entitle the Applicant to exemption. 3.3 In respect of the second question, the Revenue submits that the exemption under Serial No. 128 of Notification No. 10/2025-Central Tax (Rate) is both product-specific and end-use specific. According to the Revenue, the Applicant manufactures intermediate ruled paper sheets and not exercise books or notebooks. The exemption entry does not extend to intermediate processors, converters, job workers or suppliers of semi-finished ruled sheets. It is therefore submitted that the Applicant cannot claim exemption merely because the buyers subsequently utilise the goods for manufacture of exercise books. According to the Revenue, each supply under the GST law constitutes an independent taxable event and the eligibility for exemption is required to be determined separately for each taxab....
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....ning questions be answered in accordance with the submissions made by the Revenue. 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorized representatives of the applicant during personal hearing. We have also considered the submission made by the concerned revenue officer. 4.2 As per the facts submitted before us, the applicant is exclusively engaged in the manufacture and supply of ruled/lined paper sheets. The applicant owns and operates a factory at Siliguri, equipped with the necessary plant and machinery to carry out the said manufacturing activities. For the purpose of production, the applicant procures uncoated paper and paperboard of the kind used for writing, printing, or other graphic purposes, in rolls or rectangular (including square) sheets of any size from paper mills weighing between 40 g/m2 and 150 g/m2. Such inputs fall under the relevant tariff headings, excluding paper covered under HSN 4801 (newsprint) and HSN 4803. The applicant's manufacturing process involves converting the aforesaid uncoated paper into ruled/lined sheets. The finished products, i.e., ruled sheets, a....
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....pplicant to notebook and exercise-book manufacturers qualifies for NIL rate of Central Tax under serial no. 128 of Notification No. 10/2025-CT(Rate) dated 17.09.2025 - which grants NIL rate to 'uncoated paper [Heading 4802] used for exercise book, graph book, laboratory note book and notebooks only' - specifically: * Whether the end-use condition prescribed under Serial No. 128 - "used for exercise book, graph book, laboratory note book and notebooks only" - is satisfied throughout the supply chain, including at the stage of the Applicant's supply of ruled/lined sheets to notebook manufacturers who utilise such sheets exclusively for assembling finished exercise books; and whether such end-use condition operates as a description of the character and intended destination of the goods or as a condition requiring actual manufacture of exercise books by each person in the supply chain claiming the benefit of the entry? * Whether, in the alternative, if Serial No. 128 does not apply, the correct rate is 18% GST under Schedule II of Notification No. 09/2025-CT(Rate)? Question 3: In the event that the supply of ruled/lined paper sheets qualifies for NIL rate und....
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....tted that exemption notifications are required to be construed strictly. The settled principle laid down by the Hon'ble Supreme Court in Commissioner of Customs v. Dilip Kumar & Company (2018) 9 SCC 1 is that an assessee claiming exemption must establish clearly that the goods fall within every requirement of the exemption notification. Any ambiguity is to be interpreted in favour of the Revenue. The Revenue believes that the applicant manufactures ruled/lined paper sheets by subjecting uncoated paper reels to printing/ruling, cutting into notebook sizes, and packing for supply to notebook manufacturers. The Revenue submits that, although the applicant contends that the product remains paper classifiable under Heading 4802, after ruling and cutting into standard notebook dimensions, the product acquires the characteristics of a stationery article intended exclusively for manufacture of notebooks. The HSN Explanatory Notes indicate that Chapter 48 distinguishes between paper as such and converted articles of paper. The applicant admittedly converts plain paper into a commercially distinct product having a specific identity in trade, namely "ruled notebook sheets." The process und....
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....isdiction of the Authority and deserve to be rejected as not maintainable. Regarding the fourth question placed by the applicant, the Revenue is of the opinion that GST is a supplier's liability under Section 9 of the CGST Act. The primary liability to discharge tax rests upon the supplier, namely the paper mill. The applicant cannot be directed under the present proceedings to discharge tax liability of another registered person. If subsequently tax is correctly charged by the supplier and the applicant receives a valid tax invoice satisfying Sections 16 and 17 of the CGST Act, input tax credit shall be governed by the statutory provisions. The Authority cannot render an advance ruling on hypothetical future availment of ITC contingent upon future tax payments by another taxable person. So the Revenue believes that the question is either premature or beyond the scope of the present proceedings. 4.6 According to the submissions made by the applicant, they procure uncoated paper reels from paper mills, classifiable under HSN 48025590, i.e., other uncoated paper and paperboard, of a kind used for writing, printing or other graphic purposes, in rolls, weighing between 40 g/m&sup....
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....g a brightness less than 60%, and a burst index equal to or less than 2.5kPa. m2/g; or (e) containing 3% ash or less, having a brightness of 60% or more and a burst index equal to or less than 2.5 kPa.m2/g. The applicant has also referred to another tariff heading, 4820, for probable classification of the goods procured by him from the paper mills. The entries under the said chapter heading are as under: 4820 REGISTERS, ACCOUNT BOOKS, NOTEBOOKS, ORDER BOOKS, RECEIPT BOOKS, LETTER PADS MEMORANDUM PADS, DIARIES AND SIMILAR ARTICLES, EXERCISE BOOKS, BLOTTING-PADS, BINDERS (LOOSE-LEAF OR OTHER), FOLDERS, FILE COVERS, MANIFOLD BUSINESS FORMS, INTERLEAVED CARBON SETS AND OTHER ARTICLES OF STATIONERY, OF PAPER OR PAPERBOARD; ALBUM S F OR SAM P LES OR F OR COLLECTIONS AND BOOK COVERS, OF PAPER OR PAPERBOARD 4.8 As per our understanding, the core issue here is to determine whether uncoated paper reels which undergo the process of ruling and lining and cutting to standard notebook size still remain uncoated paper for inclusion under tariff heading 4802 or it becomes a different product to be classified elsewhere in the Customs Tariff Act, 1975. Before this determination,....
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....paper kg. 10% - 4802 55 90 - - - Other kg. 10% - 4802 56 - - Weighing 40 g/m2 or more but not more than 150 g/m2, in sheets with one side not exceeding 435 mm and the other side not exceeding 297 mm in the unfolded state : 4802 56 10 - - - Litho and offset paper kg. 10% - 4802 56 20 - - - Drawing paper kg. 10% - 4802 56 30 - - - Duplicating paper kg. 10% - 4802 56 40 - - - Account book paper kg. 10% - 4802 56 50 - - - Bank, bond and cheque paper kg. 10% - 4802 56 60 - - - Currency note paper kg. 10% - 4802 56 70 - - - Paper for security printing, currency paper, stamp paper kg. 10% - 4802 56 90 - - - Other kg. 10% - 4802 57 - - Other, weighing 40 g/m2 or more but not more than 150 g/m2 : 4802 57 10 - - - Litho and offset paper kg. 10% - 4802 57 20 - - - Drawing paper kg. 10% - 4802 57 30 - - - Duplicating paper kg. 10% - 4802 57 40 - - - Account book paper kg. ....
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....- - Poster paper kg. 10% - 4802 69 30 - - - Printing paper dyed or marbled in mass kg . 10% - 4802 69 40 - - - Account book paper kg. 10% - 4802 69 50 - - - Automatic data processing machine paper kg. 10% - 4802 69 60 - - - Paper for security printing, currency paper, stamp paper kg. 10% - 4802 69 90 - - - Other kg. 10% - As per the submission of the Applicant, they procure reels of 'uncoated paper and paperboard of a kind used for writing, printing or other graphic purposes weighing between 40 g/m2 and 150 g/m2'. If we refer to the above table and read it in consonance with Chapter note 5 of Chapter 48 supra, we will find that the goods under reference will be covered by tariff heading no. 480261 under the description 'other paper and paperboard, of which more than 10% by weight of the total fibre content consists of fibres obtained by a mechanical process'. The specific tariff item no. of the goods is 48026190, being the residual entry. This classification is applicable when uncoated paper and paperboard are supplied in rolls. The applicant also supplies the goods after cuttin....
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....ched pulp or from pulp obtained by a mechanical or chemi-mechanical process and satisfying certain criteria mentioned in the stated chapter note. c) Ruled or lined sheets of uncoated paper have not been specifically excluded from the scope of tariff heading 4802. d) Chapter Note 10 provides that heading 4820 does not cover loose sheets or cards, cut to size, whether or not printed, embossed or perforated. So, loose sheets of paper and loose sheets cut to size are not covered by tariff heading 4820, whether or not they are printed. e) Tariff heading 4820 covers registers, account books, note books, order books, receipt books, letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders, folders, file covers, manifold business forms, interleaved carbon sets and other articles of stationery, of paper or paperboard, albums for samples for collections and book covers, of paper or paperboard. As the description suggests, all of these are finished products. So, in our view, the paper that is ruled or lined and cut into sheets in the applicant's factory continues to be covered under tariff heading 4802. It cannot be moved ....
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.... under tariff heading 4802 for the purpose of the GST Acts is solely based on actual use. This is clearly a case of usage-based taxation. There is no other criterion whatsoever. The basis of classification is very unambiguous. In our understanding, the phrase 'used for' is of utmost importance. Phrases such as 'for use in manufacturing' or 'to be used for manufacturing' etc have not been used in serial no. 128 supra. This clearly indicates that there is no scope for intention of use. It is to be used actually. There is no denying the fact that it is only at the point of manufacture that the actual use of paper and paperboard can be understood properly, i.e. whether it has been used for exercise books, graph books, laboratory notebooks, and notebooks or for any other purpose. If uncoated paper and paperboard under tariff heading 4802 is used for exercise books, graph books, laboratory notebooks, and notebooks, it will be covered by entry no. 128 of the Schedule in Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 and will be exempt from GST. The fact that the recipient of such goods is a manufacturer of exercise books, graph books, laboratory notebooks, and notebooks has ....
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....mstances, and it is to be discharged by the supplier of the goods or services, or both. Section 9(1) of the CGST Act, 2017 provides: Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption and un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption] on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. Sub-sections (3), (4) and (5) of Section 9 define the circumstances where tax is payable by a person other than the supplier of goods or services or both, including the recipient of the same. The sub-sections are reproduced as under: (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge ba....
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....ed/lined paper sheets manufactured and supplied by the applicant - being uncoated paper reels (HSN 48025590) subjected to the process of ruling/lining and cut to standard notebook sizes - are correctly classifiable under: * HSN 48025790 - uncoated paper in rectangular sheets, Heading 4802; or * HSN 48201090 - other articles of stationery, Heading 4820; or * any other heading or sub-heading of the First Schedule to the Customs Tariff Act, 1975? Answer: Uncoated paper and paperboard as referred to in the application is covered by tariff heading 480261 and the specific tariff item number is 48026190 when it is supplied in rolls. When it is supplied in sheets it is covered by tariff heading 480262 and the specific tariff item number is 48026290. Question 2: Whether the supply of ruled/lined paper sheets by the applicant to notebook and exercise-book manufacturers qualifies for NIL rate of Central Tax under serial no. 128 of Notification No. 10/2025-CT(Rate) dated 17.09.2025 - which grants NIL rate to 'uncoated paper [Heading 4802] used for exercise book, graph book, laboratory note book and notebooks only' - specifically: * Whether the end-use ....