Calcutta High Court Treats Polypropylene Sacks As Plastic, Not Textile Products In GST Dispute

The Calcutta High Court has held that polypropylene leno bags manufactured by Mega Flex Plastics Limited should be treated as plastic sacks, not textile products, for GST purposes.

A Division Bench comprising Justice Debangsu Basak and Justice Md. Shabbar Rashidi observed that the company's bags were commonly known in the market as “plastic sacks” and not textile sacks.

The court held, “The sacks manufactured by the appellant are commonly known in the market as plastic sacks. They are not known as synthetic textile sacks or textile sacks.”

The bench held that merely weaving polypropylene strips into bags does not automatically make them textile products. It said the bags would have to meet specific technical requirements to qualify as synthetic textile material.

Mega Flex Plastics, which manufactures polypropylene leno bags used for packaging, argued that its products should be treated as textile sacks rather than plastic products.

The company had earlier approached the West Bengal Authority for Advance Ruling, which in 2018 ruled in its favour, holding that the bags could be treated as textile products if they met certain technical conditions.

However, that ruling was later overturned by the appellate authority. A Single Judge also dismissed the company's challenge, leading to the present appeal.

Before the Division Bench, the company argued that such bags are internationally treated as textile products and relied on technical reports issued by the Central Institute of Plastics Engineering and Technology, the Indian Institute of Technology, and Indian Oil Corporation stating that the bags were made from synthetic woven fabric. It also relied on industry standards and subsidy benefits it had received under a textile sector scheme.

The GST authorities relied on an earlier Madhya Pradesh High Court ruling that had held similar woven plastic sacks to be plastic products and not textile goods.

Accepting the authorities' stand, the High Court observed, "Given the raw materials used in the manufacture of the sacks, by the appellant, - raw materials being plastic granules – per se, the manufactured sacks cannot be termed as textile product.”

The Court clarified that a product could qualify as synthetic textile material if it met the required technical standards, but found there was no material before it to differ from the concurrent findings that Mega Flex's bags did not satisfy those requirements.

Accordingly, the Court dismissed the company's appeal.

For Appellants: Advocate Vinay Kumar Shraff, Advocate Rahul Dhanuka, Advocate Dev Agarwal, Advocate Niraj Baheti.

For Respondents: Advocate Tirtha Pati Acharya, Advocate Anindya Sundar Das, Advocate Tanoy Chakraborty, Advocate Saptak Sanyal, Advocate Uday Sankar Bhattacharya, Advocate Tapan Bhanja.