The Gujarat Authority for Advance Ruling (AAR) has mentioned that paper bags manufactured from paper or paperboard are charged to GST at 5% under the entry which includes paper sacks, paper bags and biodegradable bags, and not under the competing 18% entry applicable to specific goods falling under the same tariff heading.
The authority upheld that the concessional entry was rolled out to encourage environmentally friendly alternatives to plastic bags, and it said that “The very purpose of the Government in inserting this entry appears to be to promote the production of paper sacks/bags and bio-degradable bags which are eco-friendly and environmentally friendly alternatives to plastic bags.”
A bench including CGST Member Vishal Malani and SGST Member Sushma Vora delivered the advance ruling.
Canpac Trends Private Limited approached the Authority seeking an advance ruling on the GST rate applicable to paper bags manufactured from paper or paperboard. The company claimed that its products came under the entry specifying GST at the rate of 5% for paper sacks, paper bags, and biodegradable bags, rather than the competing entry drawing GST at 18%.
The company mentioned that its products are categorised as paper sacks and bags under the Customs Tariff. The newly inserted GST entry, which includes paper sacks, paper bags, and biodegradable bags, applies to its products.
The authority analysed the Customs Tariff, the relevant Chapter Notes, and the HSN Explanatory Notes, and stated that the products of the applicant are classifiable as paper sacks and bags.
After that, it directed the minutes of the 54th GST Council meeting, and it concluded that the purpose of rolling out the new entry was to promote paper sacks, paper bags, and biodegradable bags as environmentally friendly alternatives to plastic bags.
“The aspect of taxability of both paper sacks/bags as well as biodegradable bags has been taken into consideration by the Government, culminating in the insertion of the said Entry covering both paper sacks/bags and biodegradable bags.”
Therefore, the authority stated that the paper bags manufactured by Canpac Trends Private Limited are included under the GST entry for paper sacks, paper bags, and Biodegradable bags, which are accountable for 5% GST.
| Name of the Applicant | M/s Canpac Trends Private Limited |
| GSTIN | 24AABCV9858MIZL |
| Advance Ruling No. | GUJ/GAAR/R/2026/24 |
| Present for Applicant | Jay Mahendrabhai Pandya |
| Gujarat AAR | Read Order |
