In re Zen Tobacco Private Limited (GST AAR Gujarat)
The Authority for Advance Ruling (AAR) under GST in Gujarat has ruled that “sada tambaku pre-mixed with lime” is classifiable as manufactured tobacco, specifically under HSN 24039910 as chewing tobacco. This classification attracts a Goods and Services Tax (GST) rate of 28% (14% CGST + 14% SGST) and applicable compensation cess. The ruling was sought by Zen Tobacco Private Limited, a manufacturer and supplier of tobacco products.
Zen Tobacco Private Limited proposed to pack and supply unbranded unmanufactured tobacco pre-mixed with lime in pouches bearing mandatory details but no trademark. The company argued that their product remained essentially unmanufactured tobacco (HSN 2401) because the base material was tobacco leaves, and the process of mixing with lime did not constitute ‘manufacture’ as no new product emerged. They contended it was comparable to supplying unmanufactured tobacco with a separate lime tube, consumed after mixing by the user. The applicant cited the common parlance test and referred to Supreme Court judgments in Osnar Chemical P Ltd and Damodar J Malpani, along with AAR rulings in M/s. Gynkeer Products P Ltd and M/s. Pandey Traders, to support their view that the product should be treated as unmanufactured tobacco. They also argued that since the product would be unbranded, no compensation cess should be leviable.
