In re Easy Flux Polymers Private Limited (GST AAAR Rajasthan)
The appeal was filed by Easy Flux Polymers Private Limited against an Advance Ruling Authority (AAR), Rajasthan order dated 17 December 2025 concerning the GST classification and tax rate applicable to compostable plastic bags. The appellant manufactures and supplies compostable plastic bags and claimed that its products are eco-friendly substitutes for conventional plastic bags. The company relied on CPCB, CIPET, and TUV Rheinland certifications, which, according to it, confirmed compostability and biodegradability under ISO 17088 and EN 13432 standards.
The dispute arose after Notification No. 09/2025-CTR dated 17th September 2025 inserted Entry No. 319 in Schedule I, prescribing GST at 5% for “Paper Sacks/Bags and Bio-degradable Bags” under Chapters 39 and 48. Since the notification did not define the term “bio-degradable bags,” the appellant sought an advance ruling regarding classification and applicability of the concessional GST rate.
The AAR held that the appellant’s compostable bags, being made from polymer materials, are classifiable under Chapter 39, Heading 3923, Sub-heading 3923 29 90 as “other sacks and bags, of plastics.” The AAR further held that classification remained the same irrespective of whether the bags were biodegradable.
On the question of the concessional GST rate, the AAR stated that it was not the competent authority to verify or determine whether a product is biodegradable or compostable. According to the AAR, such determination is a scientific and technical matter falling within the jurisdiction of environmental authorities and outside the scope of advance ruling proceedings under Section 97(2) of the CGST Act. It therefore ruled that if the bags are biodegradable, Entry No. 319 would apply and GST would be payable at 5%; otherwise, the normal GST rate applicable to plastic bags under Chapter 39 would apply.
