In re K R Innovation (GST AAR Maharashtra)
In a recent ruling by the Goods and Services Tax (GST) Authority for Advance Ruling (AAR), Maharashtra, M/s. K R Innovation, a partnership firm manufacturing ‘Fruit Protection Bags,’ sought clarity on the classification and applicable tax rate for their product. The AAR, after detailed examination, classified the bags under HSN 48194000 and determined a GST rate of 18%.
K R Innovation manufactures fruit protection bags from kraft paper, white or color MG poster paper, coated with chemicals for properties like anti-bacterial, anti-fungal, fly resistance, insect resistance, and sunburn protection. These bags are primarily used by farmers to safeguard fruits before harvest, contributing to better produce quality, uniform color, shape, and size. The bags are sealed on three sides with synthetic adhesive, with a galvanized MS wire attached to fasten the fourth side.
The firm initially utilized HSN Code 4805, applying an 18% GST rate. However, they observed competitors, particularly importers from China, using HSN 48195090 and levying a 12% GST. This discrepancy prompted K R Innovation to seek an advance ruling, citing a competitive disadvantage due to the higher tax burden on their farmer clientele, who are generally not eligible for Input Tax Credit (ITC) on agricultural produce.
