Reusable Jute Bags Attract 5% or 18% GST Depending on Value, Rules Kerala AAR:

Reusable Jute Bags Attract 5% or 18% GST Depending on Value, Rules Kerala AAR Kerala Cooperative Milk Marketing Federation Limited (applicant) has filed an application seeking Kerala Authority for Advance Ruling (AAR) in the context of the activities it is engaged in. The applicant is a company registered as a society/club/trust/AOP having GSTIN 32AAAAK5375M6ZB and is located at Cattle Feed Plant, Malampuzha Road, Malampuzha, Palakkad, Kerala, 678651. Kerala Co-operative Milk Marketing Federation Limited (KCMMF), also known as MILMA, is involved in the manufacturing and supply of cattle feed and other dairy-related products through its various units in the State of Kerala. The applicant has sought the present ruling for its cattle feed plant at Malampuzha, Palakkad, which was set up in 1972 by the Animal Husbandry Department, Government of Kerala. The control over the plant was later shifted to KCMMF in 1983 under Operation Flood II.

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The plant is being used in the production of cattle feed and nutritional supplements using modern computerised systems, with a capacity of up to 300 metric tonnes per day, supplying products such as Milma Gomathi, Gomathi Rich, Gomathi Gold, Bypro feeds, MilmaMin, and Ksheerasamrudhi to dairy farmers across multiple districts through cooperative networks. Question Asked by Applicant: The following is the question asked by the applicant seeking the AAR Kerala: Question: What is the prevailing GST rate (CGST and SGST) for the sale of used gunny bags received during the purchase of raw materials for the cattle feed manufacturing process and sold as scrap?

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Ruling Given by AAR Kerala: The following is the ruling given by AAR Kerala in answer to the question asked by the applicant: Ruling: The Kerala Authority for Advance Ruling (AAR) has clarified that the used gunny bags (i.e., jute sacks without plastic coating that originated during the process of manufacturing and were sold by the applicant) cannot be classified as "scrap"; however, they can be considered as "reusable packing bags" falling under heading 6305 of the Customs Tariff Act, 1975. Consequently, the following GST rate will apply as per Notification No. 9/2025-Central Tax (Rate) dated September 17, 2025, as amended:

• 5% (2.5% CGST + 2.5% SGST) where the sale value does not exceed Rs 2500 per piece, and
• 18% (9% CGST + 9% SGST) where the sale value exceeds Rs 2500 per piece.

It was further clarified that the aforesaid advance ruling is merely applicable to goods that remain intact and reusable as packing bags. Further held that if such bags are worn out, torn, or cut into waste pieces so that they can no longer be reused for packing, their classification may be different and would need to be examined separately. Refer to the official advance ruling for complete information.