The Gujarat Authority for Advance Ruling (GAAR) has ruled that paper bags falling under HSN 48194000 are liable to 18% Goods and Services Tax (GST) and cannot claim the benefit of the concessional 5% GST rate available to certain paper sacks and bags under the amended GST rate notification.

The bench of Vishal Malani and Sushma Vora has observed that  the description under Entry 185 expressly provides that all goods of Heading 4819, other than specified cartons, boxes and cases, are taxable at 18%. This demonstrates the legislative intent to extend the concessional rate only to specifically identified products while retaining the standard rate for other packing containers such as sacks and bags. 

The advance ruling application was filed by a Gujarat-based manufacturer engaged in producing paper bags used for packaging and carrying goods. The company sought clarity on whether its products qualified for the reduced GST rate introduced through Notification No. 09/2025-Central Tax (Rate) following the recommendations of the 54th GST Council meeting. 

According to the applicant, its products are manufactured by cutting, printing, folding and pasting paper sheets into finished paper bags meant for packaging various goods. The company stated that these bags are classifiable under Tariff Item 48194000, which specifically covers “sacks and bags, including cones, of paper, paperboard, cellulose wadding or webs of cellulose fibres.” 

The applicant contended that despite the insertion of Entry 319 in Schedule I, the specific classification of paper bags under Heading 4819 continued to govern their tax treatment. It argued that the newly introduced entry was a general provision and therefore could not override the specific classification applicable to goods under Heading 4819. 

During the proceedings, the Authority examined the relevant provisions of the Customs Tariff Act, the applicable chapter notes and the GST rate notifications. It observed that Entry 185 of Schedule II specifically covers all goods falling under Heading 4819, except goods classified under tariff items 481910 and 481920. Since paper bags under HSN 48194000 are not among the excluded tariff items, they continue to remain within the scope of Entry 185 attracting GST at 18%. 

Rejecting the applicability of Entry 319, the Authority held that the entry is of a broader and more general nature and cannot supersede a specific tariff entry. Referring to the settled principle of classification that a specific entry prevails over a general entry, the Authority concluded that goods specifically falling under HSN 48194000 must continue to be classified under Entry 185 of Schedule II. 

Accordingly, the Gujarat AAR ruled that paper bags classifiable under HSN 48194000 attract GST at the rate of 18%, and are not eligible for the concessional 5% GST available under Entry 319 of Schedule I of Notification No. 01/2017-Central Tax (Rate), as amended by Notification No. 09/2025-Central Tax (Rate). The ruling reinforces the principle that specific tariff classifications take precedence over general descriptions while determining GST liability.

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