WBAAR Rejects Tobacco Classification Plea as Issue Already Decided in Section 129 Proceedings

In re Rakesh Kumar (GST AAR West Bangal)

Summary: Rakesh Kumar Singh applied for an advance ruling concerning Dried and Cured Tobacco Leaves, described as unmanufactured tobacco obtained after natural drying of harvested tobacco leaves. The applicant stated that the leaves were purchased from farmers, agriculturists or traders, remained in their original agricultural form, and were not cut, chemically processed, flavoured, packed in retail pouches or converted into products such as bidi, cigarette, gutkha or zarda. The application raised questions on whether the goods qualified as “Agricultural Produce”, whether their supply was exempt under Notification No. 02/2017-Central Tax (Rate) or taxable at 2.5% under HSN 2401 in Schedule I to Notification No. 01/2017-Central Tax (Rate), and what classification and GST rate applied.

The Authority considered the application under Section 97 of the CGST Act. During the admission process, the Revenue raised an objection under Section 98(2), stating that the same classification and applicable-rate issue had already been dealt with in enforcement proceedings under Section 129. The Revenue reported that the applicant’s vehicle carrying the goods had been intercepted on 28.06.2025; physical verification found the goods to be unmanufactured tobacco taxable at 28%, contrary to documents charging 5%; a penalty order was passed on 01.07.2025; and the applicant admitted the infringement and paid IGST penalty of Rs1,40,896/- under Section 129(1)(a). The Authority referred to Section 129 in considering those prior proceedings.