Page 126 - GSTL_26th March 2020_Vol 34_Part 4

636 GST LAW TIMES [ Vol. 34
2.1 They are manufacturers of sacks and bags of Non-woven Rice Bag.
They purchase non-woven fabric rolls made of 100% polypropylene fibre which
are classified under HSN Code 5603 and convert the same into sheets by cutting,
printing and then man-made stitched into bag. Such Non-woven Rice Bags are
mainly used for packing rice and food products of 5Kg, 10Kg, 20Kg and 25Kg.
They have stated that this product falls under head HSN Code 6305 33 00 and
liable to be taxed @ 5% if the sale value falls below Rs. 1,000/- and if the value is
more than Rs. 1,000/- it is liable to be taxed at 12% under GST Act.
3.1 The applicant was heard in person on 28-8-2019. They submitted
photographs of the manufacturing process and produced samples of the raw ma-
terial used. The raw material is PP Non-woven fabric which is bought in rolls in
white colour (HSN 5603 of 100-150 GSM) and then printing the designs given by
their customers who are rice millers are done. It is stitched into bags with top
open of 5/10/15/20Kg Size with fixed dimension. The customer will fill the bag
with rice and close the top with stitching. The applicant undertook to submit a
sale invoice for each size. They further stated that all the bags are below
Rs. 1,000/- per piece and should be taxed at CGST 2.5% and SGST 2.5% as per S.
No. 224 of Schedule-I of Notification 1/2017. They also submitted a report of a
textile research association stating that the raw material is non-woven fabric and
not plastics.
3.2 The applicant furnished sample Tax Invoice for purchase of ‘Non-
woven Fabric Roll’ and sample sale invoice for sale of ‘Non-woven Rice Bag’ of
5 Kg, 10 Kg, 25 Kg.
4.1 The jurisdictional Central Tax Officer submitted the written com-
ments. In the written comments, the following are stated :
The applicant are purchasing their raw material Viz., Non-Woven Fabric
Rolls [HSN : 5603] made of 100% Polypropylene Fibre usually in white
colour, at the GST rate of CGST @ 6% and SGST @ 6% for manufacture of
Non-woven Fabric Bags. They are cutting the fabric rolls into pieces of
desired sizes, printing on it based on various designs. Logos required by
their customers and stitching into Bags. They are selling the non-woven
Fabric Bags [HSN : 6305] mainly to the rice suppliers. The bags of 5Kg,
10Kg, 20Kg and 25Kg capacity are sold at the sale value not exceeding
Rs. 1,000/- per piece and GST is paid at the rate of CGST : 2.5% and
SGST : 2.5%. In a similar case, Tamilnadu Advance Ruling Authority has
passed AR Order No. 12/AAR/2018, dated 27-9-2018 [2018 (18) G.S.T.L.
324 (A.A.R. - GST)], holding non-woven fabric bags called as ‘Rice Bag’
falls under HSN 6305 33 00 and the applicable rate for the bag of value
not exceeding Rs. 1,000 per piece is 2.5% CGST as per Sl. No. 224 of
Schedule-I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and
2.5% SGST as per S. No. 224 of Schedule-I of G.O.(Ms.) No. 62, dated
29-6-2017 No. II(2)/CTR/532(d-4)/2017. In view of the above, it ap-
peared that the description of the goods manufactured by the applicant
viz., Non-woven Fabric Bags is covered under Sl. No. 224 of Schedule-I
of Notification No. l/2017-C.T. (Rate), dated 28-6-2017 and the applicable
rate of CGST is 2.5% for the sale value not exceeding Rs. 1,000/- per
piece.
5.1 We have carefully considered the various submissions made by the
applicant and the comments of the jurisdictional Central Tax Officer. The appli-
cant are manufacturers of polypropylene Non-woven Fabric Rice Bags meant for
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