Biodegradable Carry Bags Eligible For 5% GST Subject To Notification Conditions: Rajasthan AAR

The Rajasthan Authority for Advance Ruling (AAR) in February, held that concessional GST at 5% applies to biodegradable carry bags only if the goods satisfy the condition of being biodegradable under the relevant notification. It also held that it cannot determine whether a product meets scientific standards of biodegradability or compostability.

The Authority Bench comprising Utkarsha and Dr. Akhedan Charan disposed of an application filed by Pradeep Verma concerning classification and GST applicability on carry bags made from materials such as PBAT and PLA. It held:

“while we cannot determine whether the applicant's product is biodegradable or compostable, we hold that if the bags supplied by the applicant are biodegradable, then the benefit of Entry No. 319 of Schedule I would be available and GST would be payable at the rate of 5%.”

The applicant sought classification under Chapter 39 and the benefit of the concessional rate under Notification No. 9/2025–Central Tax (Rate), which prescribes 5% GST for paper sacks/bags and bio-degradable bags.

The Authority observed that Section 97(2) of the CGST Act limits its jurisdiction to questions of classification and rate applicability, and does not empower it to decide scientific or technical issues such as biodegradability or compostability.

It held that the goods fall under Chapter 39, including heading 3923, as articles for conveyance or packing of goods, regardless of whether they qualify as biodegradable.

The Bench clarified that the concessional entry applies only if the goods meet the description of biodegradable bags under the notification. It added that if the goods do not satisfy this condition, the general GST rate applicable to plastic carry bags under Chapter 39 applies.

Accordingly, the AAR disposed of the application. It left the determination of biodegradability to competent authorities.