The AAAR Rajasthan has upheld the AAR’s ruling that compostable plastic bags are classifiable under Chapter 39 heading 3923 29 90 irrespective of their biodegradability, and that the concessional 5% GST rate under S. No. 319 of Notification 09/2025-Central Tax (Rate) is available only if the bags are biodegradable — a determination the advance ruling forum lacks jurisdiction to make.
The AAAR held that determination of biodegradability is a “scientific and technical matter falling within the jurisdiction of the environmental authorities” and not within the scope of Section 97(2) of the CGST Act. The AAAR noted that while the appellant held CPCB, CIPET, and TÜV Rheinland certifications, the samples were drawn by the party and neutrality was in doubt, and one-time certification is insufficient as supply is continuous.
The AAAR directed the jurisdictional GST field formation to draw samples and get them tested for determining applicability of the concessional rate.
In Re: M/s Easy Flux Polymers Private Limited | Order No. AAAR/01/2026-27 | 2 April 2026 | AAAR Rajasthan