In re Swadeshi Soap Industries (GST AAR West Bangal)
The West Bengal Authority for Advance Ruling examined whether laundry soap bars weighing less than 500 grams and classified under HSN 34011942 would qualify for the concessional GST rate of 5% introduced through Notification No. 09/2025–Central Tax (Rate) dated 17.09.2025, effective from 22.09.2025.
The applicant was engaged in the manufacture and supply of laundry soap bars weighing less than 500 grams and priced below Rs. 20 per piece. The applicant sought clarification on whether such products could be classified as “toilet soap” under Serial No. 251 of Schedule I attracting GST at 5%, or whether they would fall under Serial No. 66 of Schedule II attracting GST at 18%.
The applicant argued that soap is produced through the process of saponification and that the products manufactured by it contained Total Fatty Matter (TFM) exceeding 60%. According to the applicant, BIS standards classify soaps with TFM above 60% as toilet soaps. The applicant also relied on a test report showing TFM of 62% in its products and argued that laundry soaps with such TFM should qualify as toilet soaps even if marketed as laundry soap.
The applicant further submitted that toilet soap and laundry soap are manufactured using similar raw materials such as vegetable oils, palm oils, and caustic soda, through similar manufacturing processes and machinery. It was argued that the differences between the two products relate mainly to fragrance and moisture content rather than chemical composition. The applicant also contended that consumers, particularly in rural and low-income areas, often use the same soap for bathing and washing clothes, and therefore the products should be treated similarly for taxation purposes.
