The Isabgol classification dispute — which pits Rajasthan against Gujarat on whether APMC-procured Psyllium seeds (Isabgol) supplied without processing are "fresh" (NIL GST) or "dried" (5% GST) — has now been affirmed by at least four separate Rajasthan AAR rulings, all rendered between July and August 2026. The rulings in Shrigopal Jaju (RAJ/AAR/2026-27/04), Jai Mata Di (RAJ/AAR/2026-27/05), Rajendra Prasad Purshotammoondra (RAJ/AAR/2026-27/06) and a fourth related ruling all reach the same conclusion as the earlier Surendra Bucha ruling (RAJ/AAR/2026-27/03): storage of Psyllium seeds in dry ventilated godowns before supply to processing units imparts a "dried" character, and the seeds must be treated as "dried" at the point of supply — attracting 5% GST under Entry 71 of Notification No. 09/2025-CT(R) rather than NIL under Entry 87 of Notification No. 10/2025-CT(R).
All four applicants are APMC-licensed traders in Rajasthan engaged in the same business model: purchase of Isabgol seeds at APMC auctions directly from farmers, storage in dry godowns without any processing, and supply to Isabgol processing units for husk extraction. In each case, the applicant made extensive submissions: that there is no marketable product called "dried Isabgol seeds" in commercial practice; that the seeds are always in their natural harvested form; that no intentional drying, dehydration or chemical treatment takes place; and that the CBIC FAQ (December 2017) itself contemplates NIL rate for "fresh" Isabgol seeds. Each applicant also cited the Gujarat AAR ruling in Jigneshkumar Narayandas Patel (Akshar Traders) (May 2026), which had held on identical facts that such seeds are "fresh" and NIL-rated.
The Rajasthan AAR rejected all these submissions consistently. The core reasoning — applied identically in each case — is that the test is the condition of goods at the time of supply by the applicant, not at the time of harvest by the farmer. Storage in dry ventilated godowns, even without deliberate drying equipment, naturally reduces moisture content over time and imparts a dried character. The CBIC Circular No. 163/19/2021-GST (on fresh vs dried fruits and nuts) was applied by analogy: goods lose their "fresh" character when they are stored in a manner that results in drying, even if no deliberate drying process is undertaken. The Gujarat AAR ruling was considered but not followed, correctly noting that advance rulings bind only within the jurisdiction of the issuing AAR.
The inter-state divergence is now stark: every Rajasthan AAR that has examined the question holds 5%; the Gujarat AAR (Akshar Traders) holds NIL. APMC traders in Rajasthan supplying Isabgol to processing units face clear 5% GST liability and must ensure compliance. Those in Gujarat may continue to rely on the Gujarat ruling, though that position remains vulnerable if challenged. The divergence is unlikely to self-resolve through the AAR system — the AARs of different states are not bound by each other's rulings and there is no cross-state binding mechanism. Resolution will require either a Supreme Court ruling, a GST Council clarification, or an Appellate AAR decision in one of the states that creates binding precedent within that jurisdiction.
2026-juristway.com-2270/2309/2346/2347-AAR(Rajasthan)-GST | Authority for Advance Ruling, Rajasthan | RAJ/AAR/2026-27/04, 05, 06 & 07 | July–August 2026