In a ruling that carries significant implications for the packaging industry, the Gujarat Authority for Advance Ruling has held that paper bags made from paper or paperboard and classifiable under HSN sub-heading 48194000 attract Goods and Services Tax at 5% — not at 18% as the applicant itself had argued. The ruling, passed in the case of M/s Canpac Trends Private Limited, turns on the interpretation of two competing entries in Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025, which superseded the earlier 2017 rate notification following the 54th GST Council meeting.
The applicant manufactures paper bags by cutting, printing, folding and pasting paper sheets into finished packaging containers. Being classifiable under Tariff Item 48194000 of the Customs Tariff Act, 1975 (covering sacks and bags of paper or paperboard), the applicant had approached the AAR arguing that its products fall squarely under Entry 185 of Schedule II of the 2025 notification, which covers all goods under Heading 4819 (except 4819.10 and 4819.20) at 18% GST. It was the applicant's own case that 18% was the applicable rate, and the AAR was asked to confirm this position.
The AAR declined to do so. Examining the 54th GST Council proceedings of September 2024, the AAR found that the newly inserted Entry 319 of Schedule I — covering "Paper Sacks/Bags and bio-degradable bags" under Chapters 39 and 48 at 5% GST — was introduced specifically to promote eco-friendly paper alternatives to plastic bags, following a push from Maharashtra and Meghalaya. The minutes of the Council meeting reveal that the fitment committee's recommendation to maintain the status quo at 18% was itself the trigger for the subsequent policy decision to reduce the rate. The entry that ultimately emerged — Entry 319 — was drafted broadly to encompass paper sacks and bags of Chapters 39 and 48, which necessarily includes sub-heading 48194000.
On the question of which entry prevails, the AAR applied the principle that a specific entry overrides a general one. Entry 319 specifically names "paper sacks/bags" as the product category, whereas Entry 185 is a residual provision covering all goods under Heading 4819 not elsewhere specified. When a product is specifically named in one entry and incidentally covered by a general entry, the specific entry must prevail. The AAR accordingly ruled that the applicant's paper bags attract GST at 5% under Entry 319, without needing to engage with the scope of Entry 185.
The ruling is notable for two reasons. First, it arrived at a result more favourable to the taxpayer than the taxpayer had sought — a rare outcome in advance ruling proceedings. Second, it gives legislative history and policy intent a prominent role in resolving a textual ambiguity between two notification entries. Manufacturers and traders dealing in paper packaging products should review their classification and rate positions in light of this ruling, which applies with effect from 22.09.2025, the date Notification 09/2025 came into force.
- 2026-juristway.com-2101-AAR(Gujarat)-GST | Authority for Advance Ruling, Gujarat | 03.07.2026