Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products

The Calcutta High Court has upheld the classification of polypropylene (PP) leno bags under the plastic goods category and rejected a manufacturer's attempt to classify them as textile products for GST purposes. The Bench of Justice Debangsu Basak and Justice Md. Shabbar Rashidi has affirmed the earlier decision of the Appellate Authority for Advance Ruling (AAAR) and the Single Judge and observed that to fall within the classification of textile, the sacks manufactured by the appellant have to qualify various parameters. 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. However, it can be considered as synthetic textile should, various other parameters are fulfilled. To fall within the classification of a synthetic textile, the strip used for the weaving of the sack, must be of a particular cross-sectional diameter with a particular deniers. The strips that the appellant used for the manufacture of the sacks have been concurrently held by the Appellate AAR as well as the Writ Court not to qualify as synthetic textile. The dispute revolved around the proper classification of polypropylene leno bags used for packaging goods. The manufacturer argued that the bags, produced through weaving polypropylene strips into fabric and subsequently converting them into sacks, should fall under Tariff Heading 6305 33 00, which covers sacks and bags made from man-made textile materials. The company contended that these products were effectively textile items despite polypropylene being the base material. According to the company, before the introduction of GST in 2017, the products had been declared under Chapter Heading 3923 2900 under the Central Excise regime. Following GST implementation, the manufacturer claimed that the same product composition and manufacturing process justified a different classification under Heading 6305 33 00, although the applicable tax rate was higher. The appellant relied heavily on the manufacturing process to support its case. It explained that plastic granules consisting primarily of polypropylene are converted into polypropylene strips or tapes, which are woven into a fabric commercially known as "leno fabric." This woven fabric is then transformed into sacks or bags used for packaging agricultural products. The manufacturer also cited expert reports and standards, including assessments from technical institutions and Indian Standards specifications, to argue that the products should be treated as synthetic textile products. The company further pointed out that the West Bengal Authority for Advance Ruling had earlier accepted its position and ruled that such bags could be classified under Heading 6305 33 00, provided they were manufactured from woven polypropylene strips not exceeding a width of 5 mm and without coating or lamination. However, that ruling was later overturned by the Appellate Authority for Advance Ruling. On the other hand, tax authorities argued that polypropylene is fundamentally a plastic material and that the manufacturer itself had historically classified the products under Heading 3923 2900 and availed duty drawback benefits based on that classification. The authorities also relied upon the Madhya Pradesh High Court decision in Raj Pack Well Ltd., which had dealt with similar issues involving woven plastic sacks. The High Court observed that although there can be no estoppel against claiming a correct tariff classification, a manufacturer is still required to establish that the product genuinely satisfies the requirements of the claimed category. The Court acknowledged legal precedents stating that prior classification choices do not permanently bind an assessee. Examining the provisions governing textiles and textile articles, the Court noted that Section XI of the tariff schedule excludes certain plastic monofilaments and strips exceeding prescribed dimensions from textile classification. The judges emphasized that merely using weaving techniques does not automatically convert plastic products into textile products. The Court found that the polypropylene strips used by the manufacturer did not satisfy the technical requirements necessary to qualify as synthetic textile material. It further observed that the Appellate AAR and the Single Judge had already concurrently held that the strips failed to meet the prescribed standards, and no fresh material had been produced to justify a different conclusion. The Bench observed that in ordinary market parlance, such products are known as “plastic sacks” and not as “textile sacks” or “synthetic textile sacks.” The Court indicated that market perception also carries weight in classification disputes. The High Court dismissed the appeal and upheld the existing classification of polypropylene leno bags as plastic products rather than textile goods, bringing an end to the dispute over GST classification in the matter. Case Details Case Title: Mega Flex Plastics Limited & Anr. Vs. The Union of India & Ors. Citation: JURISHOUR-1308-HC-2026(CAL) Case No.: MAT 364 OF 2023 Date: May 19, 2026 Counsel For Appellant: Vinay Kumar Shraff, Adv. Counsel For Respondent: Tirtha Pati Acharya, Advocate Click Here To Read Order Read More: Company Expenses Can’t Be Disallowed as “Personal Expenses”; No Personal Use Concept Applies to a Company: Delhi HC

Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products

Membership Required

Latest articles

Payments for Overseas ‘Live Sports Broadcasting Rights’ Not Taxable as Royalty: ITAT

No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT

Mere Delay Can’t Nullify Departmental Proceedings Against Retired Principal Commissioner of Income Tax: Gauhati HC

Company Expenses Can’t Be Disallowed as “Personal Expenses”; No Personal Use Concept Applies to a Company: Delhi HC

More like this

Payments for Overseas ‘Live Sports Broadcasting Rights’ Not Taxable as Royalty: ITAT

No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT

Mere Delay Can’t Nullify Departmental Proceedings Against Retired Principal Commissioner of Income Tax: Gauhati HC

About us

Company

Categories