Rajasthan AAR Treats Stored Psyllium Seeds as Dried, Applies 5% GST

In re Jai Mata Di (GST AAR Rajasthan)

The Rajasthan Authority for Advance Ruling (AAR) has ruled that Psyllium Seeds (Isabgol) purchased from farmers through Agricultural Produce Market Committee (APMC) auctions and subsequently stored by a trader in dry and ventilated godowns cannot qualify as “fresh” Isabgol seeds for GST exemption. According to the AAR, such seeds acquire the character of “dried” goods by the time they are supplied by the applicant and consequently attract GST at 5% under Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025. The ruling assumes significance because the Gujarat AAR had recently reached the opposite conclusion on substantially similar Psyllium seed supplies.

Issue Before Rajasthan AAR

The applicant, M/s Jai Mata Di, proposed to purchase Psyllium Seeds directly from farmers through APMC auctions in Rajasthan and supply them to Isabgol processing units. According to the applicant, no drying, freezing, crushing, grading, polishing, chemical treatment or other processing would be undertaken. The seeds would merely be stored in dry and ventilated godowns before onward supply. The underlying tariff classification was not seriously disputed: Psyllium seed is specifically covered by tariff item 1211 90 13. :contentReference[oaicite:0]{index=0}

The principal question was whether these seeds qualified as “fresh or chilled” goods exempt under Entry 87 of Notification No. 10/2025-Central Tax (Rate). Alternatively, the applicant sought exemption under Entry 77 covering “all goods of seed quality”. The distinction was commercially important because Entry 71 of Notification No. 09/2025-Central Tax (Rate) covers specified products under HSN 1211 that are frozen or dried and attracts GST at 5%.

Applicant Relied on Natural and Unprocessed Character of Isabgol

The applicant’s case centred on the absence of any deliberate processing. Psyllium was harvested and threshed by farmers, packed and brought to APMC mandis. The trader proposed to purchase the seeds in that condition and supply them without altering their form, character or composition. The applicant argued that ordinary storage and natural loss of moisture could not convert an agricultural commodity into a deliberately “dried” product.

The applicant also relied upon CBIC’s clarification distinguishing fresh and dried agricultural products. Circular No. 163/19/2021-GST explains, in the context of fruits and nuts, that fresh goods are those intended to be supplied in the state as plucked, while intentionally dried or dehydrated goods are treated differently. The applicant sought application of that principle to Isabgol.

AAR Focuses on Condition of Goods at Time of Trader’s Supply

The Rajasthan AAR adopted a materially different approach. It held that the relevant inquiry was not merely whether the applicant itself mechanically processed the seeds. What mattered was the condition of the goods when supplied by the applicant. The Authority considered the processes preceding the applicant’s purchase less relevant for determining whether the applicant’s eventual supply was of “fresh or chilled” or “frozen or dried” goods. :contentReference[oaicite:1]{index=1}

The decisive factor was storage. The applicant had stated that Psyllium seeds would be kept in dry and ventilated godowns. The AAR observed that no evidence was furnished regarding the period of storage. It then reasoned that storage in a dry and ventilated godown would have the purpose or effect of drying the seeds and concluded that, by the time of subsequent supply, they would be “dried”. :contentReference[oaicite:2]{index=2}

The Authority applied by analogy the principles contained in Circular No. 163/19/2021-GST, even though that clarification concerned fresh and dried fruits and nuts under headings 0801 and 0802. It emphasised the circular’s proposition that exemption for fresh produce does not extend to goods dried “in any manner”.

5% GST Applied Under Notification No. 09/2025

Once the seeds were characterised as dried, the tax consequence followed. Entry 71 of Notification No. 09/2025-Central Tax (Rate) covers plants and parts of plants, including seeds and fruits, of a kind used primarily in perfumery, pharmacy or similar specified purposes, when frozen or dried. The AAR held that the Psyllium seeds fell within this taxable entry and attracted 5% GST (2.5% CGST plus 2.5% SGST). :contentReference[oaicite:3]{index=3}

Consequently, exemption under Entry 87 of Notification No. 10/2025 was denied. The alternative claim under Entry 77 for “all goods of seed quality” was also answered negatively in view of the answer to the principal question. The final ruling expressly states that the applicant’s Psyllium Seeds are not “fresh” Isabgol seeds and are taxable at 5%. :contentReference[oaicite:4]{index=4}

Contrary Gujarat AAR Ruling Creates Important Classification Conflict

An important feature is the applicant’s reliance on In re Jigneshkumar Narayandas Patel (Akshar Traders), where the Gujarat AAR had reached the opposite result. In that case, Psyllium Seeds procured through APMC auctions directly from farmers and supplied in natural, raw and unprocessed form without drying, freezing or crushing were held to qualify as “fresh” Isabgol seeds exempt under Entry 87. The Rajasthan AAR declined to follow that ruling, observing that it did not have access to the complete facts of that case and that, under Section 103 of the CGST Act, another State AAR’s ruling was not binding upon it. :contentReference[oaicite:5]{index=5}

The contrary Gujarat decision is available at Fresh Isabgol Seeds Exempt from GST as They Remain Unprocessed After Harvest: AAR Gujarat. The conflicting rulings demonstrate the practical significance of evidence regarding storage duration, moisture reduction and whether ordinary warehousing can itself properly be characterised as “drying”.

Key Takeaway

The Rajasthan ruling effectively makes the condition of Psyllium seeds at the point of the trader’s outward supply, rather than merely the absence of mechanical processing, central to exemption eligibility. Its conclusion that storage in a dry and ventilated godown renders the seeds “dried” is particularly significant for agricultural commodity traders because ordinary storage could potentially affect GST treatment even without an intentional dehydration process.

At the same time, the conflicting Gujarat AAR demonstrates that the issue is not uniform across advance ruling authorities. Since an advance ruling is binding only upon the applicant and the concerned or jurisdictional officer in respect of that applicant under Section 103 of the CGST Act, businesses dealing in Psyllium seeds should carefully document the condition of the commodity, storage period and whether any intentional drying or dehydration actually takes place before adopting an exemption position.