The Gujarat Authority for Advance Ruling (AAR) has held that fresh and unprocessed Psyllium (Isabgol) seeds procured through Agricultural Produce Market Committee (APMC) auctions and supplied without any processing are exempt from Goods and Services Tax (GST).
The bench of Vishal Malani and Sushma Vora clarified that the supplies fall under the exemption available to fresh plants and parts of plants used primarily in pharmacies and are not taxable at 2.5% GST.
The applicant proposed to purchase Psyllium (Isabgol) seeds directly from farmers through APMC auctions and supply them to Psyllium processing units. The seeds would be procured in the same condition in which they are brought by farmers and would not undergo any processing, grading, drying, freezing, polishing, crushing, roasting, milling, or chemical treatment before supply.
The applicant sought an advance ruling on two key questions: Whether fresh, raw and unprocessed Psyllium seeds supplied without undergoing any processing qualify as “fresh” plants and parts of plants and are exempt from GST under Entry No. 87 of Notification No. 10/2025-Central Tax (Rate). Whether such Psyllium seeds can alternatively be treated as “goods of seed quality” and claim exemption under Entry No. 77 of the same notification.
The applicant contended that Psyllium seeds are agricultural produce obtained directly from cultivation and harvested by farmers. The seeds remain in their natural form from harvest until supply to processing units, with no intervention that alters their essential character. According to the applicant, the process of threshing merely separates seeds from the plant and forms part of the harvesting process rather than a manufacturing activity.
It was further argued that Psyllium seeds are classifiable under Chapter Heading 1211 of the Customs Tariff, which covers plants and parts of plants, including seeds and fruits, used primarily in pharmacy. Since Psyllium husk is extracted from the seeds and widely used in pharmaceutical and nutraceutical products, the seeds themselves should qualify for exemption when supplied in fresh and unprocessed condition.
The Authority examined the nature of the product, the method of procurement, storage and supply, and the relevant GST exemption notifications.
The AAR observed that the seeds are procured directly from farmers through APMC auctions and remain in the same condition as harvested. The applicant neither undertakes drying, dehydration, freezing nor any processing activity before supplying the seeds to processing units. The seeds retain their original botanical identity and essential characteristics throughout the supply chain.
The Authority also referred to GST circulars discussing the distinction between “fresh” and “dried or frozen” products. It noted that fresh agricultural produce loses its fresh character only when subjected to processes such as drying, freezing or dehydration. Since no such treatment was proposed in the present case, the Psyllium seeds continued to retain the character of fresh agricultural produce.
After analysing Notification No. 10/2025-Central Tax (Rate), the AAR concluded that Psyllium seeds are classifiable under Heading 1211 and constitute plants or parts of plants used primarily in pharmacy.
Accordingly, fresh and unprocessed Psyllium seeds supplied in their natural form qualify for exemption under Entry No. 87, which covers:
“Plants and parts of plants (including seeds and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes, fresh or chilled.”
The Authority therefore held that the applicant’s proposed supplies would attract Nil GST.
On the second question, the AAR declined to extend exemption under Entry No. 77 relating to “all goods of seed quality”.
The Authority noted that Entry No. 87 is a specific exemption dealing with products classifiable under Heading 1211, whereas Entry No. 77 is a general entry covering seed-quality goods under Chapter 12. Applying the principle that a specific entry prevails over a general one, the Authority held that Psyllium seeds intended for pharmaceutical use are specifically covered by Entry No. 87 and cannot simultaneously claim exemption under Entry No. 77.
The Gujarat AAR ruled that fresh, raw and unprocessed Psyllium (Isabgol) seeds procured through APMC auctions and supplied without drying, freezing, crushing or any other processing qualify as “fresh” plants and parts of plants under Heading 1211 and are exempt from GST under Entry No. 87 of Notification No. 10/2025-Central Tax (Rate). Such Psyllium seeds are not entitled to exemption as “goods of seed quality” under Entry No. 77 because the specific exemption under Entry No. 87 applies.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
Read More: Reply Format For Show Cause Notice Issued Only For Interest Demand Under FORM DRC-01
