In re Canpac Trends Private Limited (GST AAR Gujrat)
The applicant, engaged in the manufacture and supply of paper-based packaging products including paper bags, sought an advance ruling on the applicable GST rate for paper bags made from paper or paperboard and classifiable under Heading 4819, specifically Tariff Item 48194000. The issue was whether such goods attract GST at 18% under Entry No. 185 of Schedule II to Notification No. 01/2017-Central Tax (Rate), as amended, covering goods under Heading 4819 (except 481910 and 481920), or whether they fall under the newly inserted Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025, prescribing 5% GST for “Paper Sacks/Bags and bio-degradable bags” under Chapters 39 and 48.
The applicant submitted that the product is manufactured by cutting, printing, folding and pasting paper sheets into finished paper bags suitable for packaging or carrying goods, imparting the essential character of packing containers covered under Heading 4819. According to the Customs Tariff Act, 1975, Heading 4819 covers cartons, boxes, cases, bags and other packing containers of paper, while Tariff Item 48194000 specifically covers sacks and bags, including cones, of paper or paperboard.
The applicant argued that Entry No. 185 of Schedule II specifically includes all goods under Heading 4819, except goods under Tariff Items 481910 and 481920, and therefore paper bags under Tariff Item 48194000 should attract GST at 18%. It further contended that Entry No. 319 of Schedule I is a general or residual entry referring broadly to paper sacks/bags and biodegradable bags under Chapters 39 and 48 and cannot override the specific tariff-based classification under Heading 4819. Relying on the principle that a specific classification prevails over a general one, the applicant maintained that paper bags under Tariff Item 48194000 remain taxable at 18%.
