The Authority for Advance Rulings (AAR) in Gujarat clarifies GST classification, rejecting lower tax rate claims.
In a significant ruling, the Gujarat Authority for Advance Rulings (AAR) has classified PVC/plastic raincoats under the Harmonized System of Nomenclature (HSN) code 3926, thereby attracting a Goods and Services Tax (GST) rate of 18%. This decision comes as a blow to manufacturers hoping for a lower tax rate under different classifications.
The case, brought forward by Pradeepkumar Gaurishankar Trivedi, trading as New Aashi Rainwear, involved a detailed examination of whether PVC/plastic raincoats should be classified as "Articles of Apparel and Clothing Accessories" under Chapter 62, which would attract a lower GST rate of 5% for items priced below Rs. 1,000. The applicant argued that their PVC raincoats, being similar to textile products, should fall under Chapter 62, benefiting from the lower tax rate.
However, the AAR bench, consisting of Member (SGST) Sushma Vora and Member (CGST) Vishal Malani, concluded that the raincoats should be classified under Chapter 39, specifically under HSN 3926. The ruling emphasized that the manufacturing process of these raincoats, which involves sealing or heat welding PVC sheets, does not align with the woven or textile-based products typically covered under Chapter 62.
The judgment cited explanatory notes to HSN 3926, which explicitly cover articles such as raincoats made by sealing sheets of plastics. The AAR also dismissed the applicant's reliance on previous rulings from other jurisdictions and the definition of man-made fibres, noting that advance rulings are persuasive but not binding.
This ruling aligns with the decision of the West Bengal Authority for Advance Ruling in a similar case involving PVC raincoats, further reinforced by the Appellate Authority. The Gujarat AAR's decision underscores the importance of specific product classification under GST and its implications on tax rates, affecting pricing strategies for manufacturers.
Bottom Line:
Classification of PVC/Plastic Raincoats under GST - PVC/Plastic Raincoats are classified under HSN 3926 and fall under Entry No. 127 of Notification No. 9/2025-CT (R) dated 17.09.2025, attracting GST at the rate of 18%.
Statutory provision(s): HSN 3926, Entry No. 127 of Notification No. 9/2025-CT (R), Notification No. 1/2017-CT (Rate), Customs Tariff Act, 1975, CGST Act, GGST Act.
Pradeepkumar Gaurishankar Trivedi, (AAR)(Gujarat) : Law Finder Doc Id # 2820223
