Rajasthan AAR Denies GST Exemption on Fresh Psyllium Seeds, Applies 5% Tax

In re Mahavir Parsad Agarwal (GST AAR Rajasthan)

Statutory Provisions Governing the Advance Ruling

Under Section 102 of the CGST Act, 2017 and the RGST Act, 2017, the Advance Ruling may be amended by the Authority for Advance Ruling to rectify an error apparent on the face of the record. Such error may be noticed by the Authority on its own motion or brought to its notice by the applicant, concerned officer or jurisdictional officer within six months from the date of the order. No rectification having the effect of enhancing tax liability or reducing admissible input tax credit may be made unless the applicant or appellant has been given an opportunity of being heard. The supplied material specifically sets out the provisions relating to Section 102, Section 103 and Section 104 of the CGST Act.

Under Section 103(1), the Advance Ruling pronounced under Chapter XVII is binding only on the applicant who sought it in respect of a matter referred to in Section 97(2), and on the concerned officer or jurisdictional officer in respect of that applicant. Under Section 103(2), the Advance Ruling remains binding unless the law, facts or circumstances supporting the original ruling have changed.

Under Section 104(1), where the Authority finds that an Advance Ruling was obtained by fraud, suppression of material facts or misrepresentation of facts, it may declare the ruling void ab initio. Thereafter, the provisions of the Acts or Rules made thereunder apply to the applicant as if the Advance Ruling had never been made.

Any appeal against the Advance Ruling lies before the Appellate Authority for Advance Ruling, Rajasthan, under Section 100 of the CGST Act, 2017 and the RGST Act, 2017. The appeal is to be filed within thirty days from the date on which the ruling is communicated to the applicant, concerned officer or jurisdictional officer. Where the Appellate Authority is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within thirty days, it may allow the appeal to be presented within a further period not exceeding thirty days.

Applicant and Scope of the Application

The issue raised by M/s MAHAVIR PARSAD AGARWAL, A-6, KNISH! UPA1 MANDI, MERTA CITY, NAGAUR, Rajasthan-341510, described in the supplied material as the applicant, was considered fit for Advance Ruling because the prescribed fee had been deposited and the application fell within Section 97(2).

The questions were stated to concern:

• classification of goods and/or services or both; and
• determination of the liability to pay tax on any goods or services or both.

Facts and Proposed Business Activity

The applicant is described as a proprietorship firm engaged in trading Psyllium seeds, commonly known as Isabgol. The seeds were proposed to be purchased directly from farmers through official auctions conducted by Agricultural Produce Market Committees (APMCs) within Rajasthan.

The applicant proposed to supply the Psyllium seeds without undertaking any processing or subsequent value addition to Isabgol processing units. The proposed activities included procurement directly from farmers through standard APMC auctions, storage in designated godowns without mechanical or chemical processing, and subsequent supply without processing to specialised Isabgol processing units engaged in mechanical extraction of Psyllium husk.

The commodity was described as raw Psyllium seeds procured from farmers by APMC after threshing. Threshing was described in the supplied material as the operation of separating grains from plants, performed by farmers at their farms without subsequent alteration in form, character or chemical composition.

The applicant stated that at no stage, either before purchase from farmers or before subsequent sale, would the Psyllium seeds undergo processing or treatment. According to the submission, there was no industrial activity altering the form, character or essential nature of the seeds, and the seeds remained in the same condition from harvest through purchase by the trader and final supply to processing units, without intervention or value addition after harvesting.

Applicant’s Position on “Fresh” Psyllium Seeds

The applicant submitted that, in established trade and agricultural practice, Psyllium seeds are simply known as “Isabgol seeds” and there is no recognised commercial or agricultural distinction between fresh, dried or frozen Psyllium seeds. According to the applicant, the terms “fresh”, “dried” or “frozen” for Psyllium seeds arise only from GST circulars and FAQs and not from actual agricultural or market practice.

The applicant therefore submitted that, although a distinction between “Fresh or Chilled” and “Dried or Frozen” might be required for other agricultural seeds, Psyllium seeds are always “fresh” and are never traded in a “Dried or Frozen” condition.

Question 1: Entry 87 of Notification No. 10/2025-Central Tax (Rate)

The first question was whether Psyllium Seeds (Isabgol), supplied in natural, raw and unprocessed form after procurement through APMC auctions directly from farmers and without drying, freezing, crushing or other processing, qualify as “fresh” Isabgol seeds and are exempt under Entry 87, HSN 1211, of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025.

Entry 87 is described in the supplied material as covering “Plants and parts of plants (including seeds and fruits) of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose, fresh or chilled”.

The Authority answered “No”. It held, as stated in the supplied ruling, that the Psyllium Seeds (Isabgol) supplied by the applicant cannot be said to qualify as “fresh” Isabgol seeds and are not exempted under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025.

The ruling further states that the same are liable to tax at 5% under Notification No. 09/2025-CT dated 17.09.2025.

Question 2: Entry 77 for Goods of Seed Quality

The second question was posed alternatively: whether the Psyllium Seeds (Isabgol) qualify as “goods of seed quality” and are exempt from GST under Entry 77 (HSN 12) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025.

The Authority answered “No”, expressly stating that the answer was in view of its answer to Question 1.

Final Ruling

The supplied ruling therefore records a negative answer to both questions. The Psyllium Seeds (Isabgol) covered by the application were held not to qualify as “fresh” Isabgol seeds for exemption under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025. The ruling states that they are liable to tax at 5% under Notification No. 09/2025-CT dated 17.09.2025. The alternative claim of exemption as “goods of seed quality” under Entry 77 (HSN 12) of Notification No. 10/2025-Central Tax (Rate) was also answered in the negative.