Plastic Nursery Pots and Seedling Trays Attract 18% GST: Tamil Nadu AAR

In re Solar Compact Private Limited (GST AAR Tamil Nadu)

Summary: The Tamil Nadu Authority for Advance Ruling (AAR), in the case of In re Solar Compact Private Limited, examined the classification and applicable GST rate on plastic nursery pots, pots for flowering plants and seedling trays manufactured from polypropylene and high-density polyethylene (HDPE). The applicant manufactured these products through injection moulding and thermoforming processes and supplied them to farmers, horticulturists, nurseries, plantations, agricultural universities and Government horticulture departments. The products were used for raising seedlings of crops, vegetables and other plants before transplantation. The applicant sought clarification on whether the products should be classified as plastic articles under HSN 3926 or as agricultural implements and horticultural equipment under HSN 8201 or 8436, potentially qualifying for exemption or a concessional GST rate. The application also raised questions concerning Notification No. 1/2017-Central Tax (Rate) and Notification No. 9/2025-Central Tax (Rate) dated 17 September 2025.

The applicant contended that the products were designed exclusively for agricultural and horticultural purposes and constituted an essential part of seed propagation, root development and transplantation. It submitted that their classification should be determined by their function and end-use rather than merely by the material used in manufacture. The applicant also relied on the treatment of comparable products under the erstwhile Tamil Nadu Value Added Tax Act, 2006, claiming that agricultural implements had previously enjoyed exemption from tax. According to the applicant, continuing this treatment under GST would avoid imposing an additional financial burden on farmers. During the personal hearing on 21 July 2026, its authorised representatives produced samples of nursery pots and plastic trays used for rice transplantation and demonstrated their use through photographs and videos.

The AAR examined the General Rules for the Interpretation of the Customs Tariff, particularly Rule 1, which requires classification according to the terms of tariff headings and the relevant Section and Chapter Notes. It observed that HSN 8201 falls under Chapter 82, covering articles of base metals, whereas the applicant’s products were manufactured entirely from polypropylene and HDPE. Consequently, they could not be classified as hand tools under HSN 8201. The Authority further held that the nursery pots and seedling trays were simple moulded plastic articles and neither machinery nor parts or accessories of agricultural machinery. Although the trays were used to produce seedling mats suitable for rice transplantation, the transplanting machinery used the seedling mats and not the trays themselves. The Authority therefore rejected classification under HSN 8436. It concluded that polypropylene products fall under HSN 39269080, while HDPE products fall under HSN 39269099.

Regarding the applicable rate, the AAR held that Serial No. 127 of Schedule II to Notification No. 9/2025-Central Tax (Rate) covers the relevant plastic articles under HSN 3926 and prescribes CGST at 9%, resulting in a total GST rate of 18%, comprising 9% CGST and 9% SGST. It rejected the applicant’s contention that the products were agricultural implements eligible for exemption or a lower tax rate. The Authority also examined the earlier TNVAT exemption and concluded that the applicant’s products were not covered as agricultural implements or their parts even under the exemption provisions relied upon. Accordingly, Schedule I of Notification No. 9/2025-Central Tax (Rate) was held inapplicable. On the fifth question, concerning whether the classification would automatically apply to distinct persons of the applicant registered in other States, the Authority declined to give a ruling, holding that an advance ruling must relate to supplies being undertaken or proposed to be undertaken by the applicant itself. The decision was issued by Shri R.V. Pradhamesh Bhanu, Member (CGST), and Shri B. Suseel Kumar, Member (SGST), through Advance Ruling No. 59/ARA/2026 dated 8 September 2026.

FULL TEXT OF THE ORDER OF THE AUTHORITY FOR ADVANCE RULING, TAMIL NADU

1. Any appeal against this Advance Ruling order shall lie before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-Section (1) of Section 100 of CGST Act 2017/TNGST Act 2017, within 30 days from the date on which the ruling sought to be appealed is communicated.

2. In terms of Section 103(1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only-

(a) On the applicant who had sought it in respect of any matter referred to in sub-section (2) Section 97 for advance ruling.

(b) On the concerned officer or the Jurisdictional Officer in respect of the applicant.

3. In terms of Section 103(2) of the Act, this Advance Ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.

4. Advance Ruling obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act.

5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as the Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act.

M/s Solar Compact Private Limited, having place of business at C-3, Phase III, SIDCO Industrial Estate, Ekkattuthangal, Chennai, Tamilnadu – 600 032 (hereinafter called as the “Applicant”) has registered with GSTIN 33AAJCS5394K1ZU under the Goods and Services Tax Act. They have filed this application for advance ruling under Section 97 of the CGST Act, 2017, and corresponding provisions under the Section 97 of TNGST Act, 2017. The Applicant has made a payment of application fees of Rs.10,000/- under sub rule (1) of Rule 104 of CGST Rules, 2017 and TNGST Rules, 2017.

2. Statement of relevant facts having a bearing on the questions raised.

2.1. The applicant is engaged in the manufacture of plastic nursery pots, pots for flowering plants and seedling trays, made from polypropylene and HDPE materials. These are used for raising seedling of crops, vegetables, and other plants in nurseries prior to transplantation. The applicant either manufactures the trays and pots, or sends raw materials to third parties for job work to get them manufactured. The manufacturing process involves moulding of plastic granules using injection moulding and thermoforming machines. The finished products are reusable, lightweight, durable, and recyclable. The nursery pots, pots for flowering plants and trays are supplied to farmers and horticulturists, Government horticulture departments and agricultural universities under subsidy schemes, nurseries and plantations.

2.2. The products are used solely for agricultural and horticultural purposes. They form part of the process of propagation and cultivation of plants.

2.3. Under the erstwhile TNVAT regime, similar products were treated as agricultural implements and were exempted from tax based on departmental clarification as per Entry 1(ii) of Part-B of Fourth Schedule to the TNVAT Act, 2006 read with Item (13) of the List of Agricultural Implements notified vide Notification No. II(1)/CTR/12(a-3)/2012 in G.O. Ms.No.47/CT & R (B1) Department dated 27.03.2012.

2.4. After the introduction of GST, there is ambiguity regarding the classification – whether these products fall under:

i. HSN Code 3926 90 99 as “Other articles of plastics,” taxable at 18% or

ii. HSN Code 8201 as “Hand tools used in agriculture, horticulture or forestry,” taxable at Nil or 5%, or

iii. HSN Code 8436 as “Agricultural, horticultural or forestry machinery for soil preparation or cultivation,” attracting a lower rate.

2.5. Since the classification directly affects the applicable rate of GST, and in turn the affordability for farmers, the applicant seeks a ruling for clarity and uniform tax treatment.

3. Questions raised by the applicant:

The applicant has filed the present application for advance ruling seeking clarification on the following questions:

i. What is the appropriate classification (HSN Code) of the products “Plastic Nursery Pots, pots for flowering plants and Seedling Trays”?

ii. What is the rate of GST applicable on the said products under Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 as amended?

iii. Whether these Products can be considered as agricultural implements or horticultural tools used for cultivation, thereby exempt or taxable at a lower rate under GST?

iv. Whether Schedule I of the Notification No.9/2025-Central Tax (Rate) dated 17th September 2025 is applicable to the products?

v. Whether the HSN code prescribed under this ruling would be applicable to all other states of the distinct persons of the applicant?

4. Applicant’s interpretation of law:

The applicant has presented the following interpretations in support of their contention:

Classification Based on Function and Use:

As per the Rules for Interpretation of the Customs Tariff, classification depends not only on the material but also on the primary function and end-use of the product. The nursery trays and pots are used exclusively in raising seedlings, a critical stage in agricultural production, and thus merit classification as agricultural implements.

Exclusivity of Agricultural Use:

The products are specifically designed for agriculture/horticulture and not for general household use. Hence, they qualify as tools used directly in cultivation, similar to seed planters, seedling trays, and nursery raising equipment covered under Heading 8201 or 8436.

Beneficial Interpretation for Agricultural Implements:

In line with the policy objective to support agricultural mechanisation, exemption or concessional GST rates are provided for implements used directly in farming. The applicant’s products aid in propagation, root development, and transplantation – essential steps in the cultivation process.

Principle of Continuity:

When a product retains the same characteristics and end-use before and after GST, the earlier classification should continue unless the tariff entry or rate notification explicitly alters its treatment.

Avoidance of double tax burden on farmers:

Imposing 18% GST under generic plastic classification increases cost to farmers, contrary to the intent of keeping agricultural inputs and implements either exempt or at a minimal rate.

5. The applicant is under the administrative control of State. The concerned authorities of the Centre and State were addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. As remarks have not been received from both the Centre and State authorities, it is assumed that there are no pending proceedings against the applicant on the issues raised by the applicant in the ARA application.

6. Personal Hearing

6.1. The applicant was given an opportunity to be heard in person on 21.07.2026. Shri. G. Shravan Kumar, Shri M.G. Shankar and Shri M. Udayachandran appeared for the personal hearing as the authorized representative (AR) of M/s. Solar Compact Private Limited. The AR reiterated the submissions made in their application for advance ruling. The AR brought samples of nursery pots and ‘plastic trays used for rice transplantation’, and showed photos/videos of the manner of use of the trays in growing seedlings for transplantation. The AR further requested that the appropriate classification and GST rate for the said products may be clarified.

7. Discussions and Findings:

7.1. We have carefully examined the submissions made by the applicant in their advance ruling application and the submissions made during the personal hearing. We have also considered the issue involved, the relevant facts and the applicant’s submission/interpretation of law in respect of question on which the advance ruling is sought.

7.2. We find that the first four queries raised by the applicant, as mentioned in Para 3 above are liable for admission as it gets covered under Section 97 (2) (a), (b) & (e) of CGST/TNGST Act, 2017 under “Classification of any goods or service or both”, “Applicability of a notification issued under the provisions of this Act” and “Determination of the liability to pay tax on any goods or services or both”. As per Section 95(a) of the CGST Act/TNGST Act, 2017, “advance ruling” means a decision provided in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. We therefore find that the fifth query raised by the applicant, as mentioned in Para 3 above is not liable for admission, as an advance ruling cannot be given in respect of supply not being undertaken or proposed to be undertaken by the applicant.

7.3. We find that the Applicant is engaged in the manufacture of plastic nursery pots, pots for flowering plants and seedling trays, made from polypropylene and HDPE materials, and that these are used for raising seedling of crops and other plants in nurseries prior to transplantation. The moot question to be answered is whether the above products, with the specifications and features submitted by the applicant would be classifiable under HSN 39269099 as “Other articles of plastics,” or HSN 8201 as “Hand tools used in agriculture, horticulture or forestry,” or HSN 8436 as “Agricultural, horticultural or forestry machinery for soil preparation or cultivation”. Once the classification is decided, the rate of tax can be ascertained.

7.4. We note that Classification under GST is governed by the HSN as notified, applied in terms of the General Rules for the Interpretation (GRI) of the Customs Tariff, read with the Section Notes and Chapter Notes. Rule 1 of the GRI provides that classification is to be determined according to the terms of the headings, and any relative Section or Chapter Notes, and only where the headings and notes do not otherwise require, resort gets made to the subsequent provisions. We now take up the HSNs one by one.

7.4.1. HSN 3926:

a) We note that the HSN 3926 covers “Other articles Of plastics and articles of other materials of headings 3901 To 3914”. We also note that the plastic nursery pots, pots for flowering plants and seedling trays, manufactured by the applicant are made from polypropylene (HSN-39021000) and HDPE (HSN-39012000), and therefore, the goods manufactured by the applicant seem to fit under HSN 3926.

b) The description of goods falling under the HSN 3926 is reproduced below:

c) It is seen that the plastic nursery pots, pots for flowering plants and seedling trays do not fall within any of the specifically enumerated entries from HSN 392610 to 392640. We therefore proceed to analyse the HSN 392690, and note down the subheadings falling under the same:

d) It is seen that the plastic nursery pots, pots for flowering plants and seedling trays do not fall under any of the specifically enumerated entries from HSN 39269010 to 39269070. Further, analysing the HSNs 39269080 and 39269090, we note the following description:

e) The applicant has stated that the products manufactured by them are made from polypropylene and HDPE materials. We therefore note that the products made from polypropylene and HDPE materials fit under HSN 39269080 and 39269099 respectively.

7.4.2. HSN 8201:

a) Chapter 82 falls under Section XV of Customs Tariff which covers “Base Metals and articles of Base Metals”. We note that Note 3 of Section XV states the following:

“3. Throughout this Schedule, the expression ‘base metals’ means: iron and steel, copper, nickel, aluminium, lead, zinc, tin, tungsten (wolfram), molybdenum, tantalum, magnesium, cobalt, bismuth, cadmium, titanium, zirconium, antimony, manganese, beryllium, chromium, germanium, vanadium, gallium, hafnium, indium, niobium (columbium), rhenium and thallium.”

b) As per Section Note 3 of Section XV, the goods covered under Section XV have to be base metals or should be articles of base metals. The products in question, being plastic nursery pots, pots for flowering plants and seedling trays, which are made of polypropylene and HDPE, and not of any base metal, cannot be classified under Section XV, and in particular under Chapter 82. Consequently, we conclude that the goods in question cannot be classified under the HSN 8201.

7.4.3. HSN 8436:

a) Chapter 84 falls under Section XVI of the Customs Tariff which covers “Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders And Reproducers, Television Image And Sound Recorders And Reproducers, And Parts And Accessories Of Such Articles”.

b) Section Note 5 defines “machine” as any ‘machine, machinery, plant, equipment, apparatus, or appliance’ cited within the headings of Chapter 84 and Chapter 85. Chapter 84 covers ‘Nuclear reactors, boilers, machinery and mechanical appliances, and parts thereof’, and are goods which generally perform a mechanical function, or used as parts of the said machine.

c) The applicant brought samples of their products. On examination, it is noted that the plastic nursery pots/pots for flowering plants are simple moulded articles of plastic, with holes for drainage of water, and used for holding soil to grow plants. The seedling trays made of polypropylene and HDPE are trays with holes for drainage of water. Seedlings are grown in the trays topped with suitable soil. The roots of the seedlings intertwine as they grow and become a single mat. These mats are removed from the trays and planted as such by hand or placed in transplanting machinery for transplanting the seedlings to the field. The trays help in growing and transporting the seedlings in an even and organised manner, so that the seedling mats are suitable for feeding into the transplanting machines. The rice planting machinery uses the seedling mats grown on the trays for transplantation, and not the trays as such. In view of the above, it is noted that the plastic nursery pots/pots for flowering plants, and seedling trays manufactured by the applicant, are not part of any machine/agricultural machinery, or used with any machine/agricultural machinery.

d) It is therefore concluded that the above products are not fit for classification under Chapters 84 and specifically under HSN 8436.

7.5. Applicability of GST rate:

Now we take up the issue of the applicable rate of GST for the above products.

7.5.1. Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 stands amended vide Notification No.9/2025-Central Tax (Rate) dated 17th September 2025.

7.5.2. As per S. No. 127 of Schedule II of the amended Notification, the applicable CGST rate for the products falling under HSN 3926, and described below is 9%:

“Other articles of plastics and articles of other materials of headings 3901 to 3914 [other than bangles of plastic, plastic beads and feeding bottles]”

7.5.3. It there follows that the total GST rate for plastic nursery pots, pots for flowering plants and seedling trays falling under HSN 3926 is 18%.

7.6. Arguments on the applicant’s interpretation

7.6.1. We note that the applicant has interpreted the classification of the above products in the following manner:

a. As per the Rules for Interpretation of the Customs Tariff, classification depends not only on the material but also on the primary function and end-use of the product. The nursery trays and pots are used exclusively in raising seedlings, a critical stage in agricultural production, and thus merit classification as agricultural implements.

b. The products are specifically designed for agriculture/horticulture and not for general household use, and thereby qualify as tools used directly in cultivation under Heading 8201 or 8436.

c. Concessional GST rates are provided for implements used directly in farming.

d. Under the erstwhile TNVAT regime, similar products were treated as agricultural implements and were exempted from tax based on departmental clarification as per Entry 1 (ii) of Part-B of Fourth Schedule to the TNVAT Act, 2006 read with Item (13) of the List of Agricultural Implements notified vide Notification No. II(1)/CTR/12(a-3)/2012 in G.O. Ms.No.47/CT & R (B1) Department dated 27.03.2012. When a product retains the same characteristics and end-use before and after GST, the earlier classification should continue unless the tariff entry or rate notification explicitly alters its treatment.

e. Imposing 18% GST under generic plastic classification increases cost to farmers, contrary to the intent of keeping agricultural inputs and implements either exempt or at a minimal rate.

7.6.2. In this regard, we note that as per Rule 1 of the GRI, classification is to be determined according to the terms of the headings, and any relative Section or Chapter Notes, and only where the headings and notes do not otherwise require, resort gets made to the subsequent provisions. In the present case of the applicant, we have as per Rule 1 of the GRI, based on the Section and Chapter Notes, ruled out the HSN 8201 and 8436. Further, based on the make of the products and the tariff description, we have arrived at the HSN 3926 for the said products.

7.6.3. We have also discussed that as per S. No. 127 of Schedule II of Notification No.9/2025-Central Tax (Rate) dated 17th September 2025, the applicable CGST rate for the above products falling under HSN 3926 is 9%, and therefore the total GST rate is 18%.

7.6.4. The applicant further relies on the exemption granted to agricultural implements before the implementation of GST, and claims that the same treatment should be provided post GST also. In this regard, we take up the Entry 1(ii) of Part-B of Fourth Schedule to the TNVAT Act, 2006 that is relied upon by the applicant and examine the applicant’s claim. The Entry 1(ii) of Part-B of Fourth Schedule to the TNVAT Act, 2006 states as below:

PART – B

(Goods exempted from tax by Section 15)

7.6.5. We note that under Entry 1(ii) of Part-B of Fourth Schedule to the TNVAT Act, the following were exempted:

(i) Agricultural implements manually operated or animal driven as notified by the Government.

(ii) Agricultural implements not operated manually or not driven by animal, including their parts and accessories (including those powered or operated by tractors or by power tillers) as notified by the Government.

(iii) Sprayers, sprinklers and drip irrigation equipment including their parts and accessories.

7.6.6. We have already discussed that the plastic pots and trays are simple moulded articles of plastic used for holding soil and seedlings, are not classifiable as any implement/equipment, or parts thereof. We therefore note that the said products do not fall under the exemption category as claimed by the applicant even before GST. Therefore, we hold that the applicant’s argument that the above products were exempted prior to the implementation of GST under the TNVAT Act holds no ground.

8. In view of the above, we rule as under:

Ruling

(1) What is the appropriate classification (HSN Code) of the products “Plastic nursery pots, pots for flowering plants and seedling trays”?

Answer:

a. The plastic nursery pots and seedling trays made from polypropylene fit under HSN 39269080.

b. The plastic nursery pots and seedling trays made from HDPE materials fit under HSN 39269099.

(2) What is the rate of GST applicable on the said products under Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 as amended?

Answer: As per Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 amended vide Notification No.9/2025-Central Tax (Rate) dated 17th September 2025, the GST rate for the above products is 18%.

(3) Whether these Products can be considered as agricultural implements or horticultural tools used for cultivation, thereby exempt or taxable at a lower rate under GST?

Answer: No

(4) Whether Schedule I of the Notification No.9/2025-Central Tax (Rate) dated 17th September 2025 applicable to the products?

Answer: No

(5) Whether the HSN code prescribed under this ruling would be applicable to all other states of the distinct persons of the applicant?

Answer: No Ruling given