Supply of Imitation Zari Thread/Yarn Attracts 5% GST: AAR:

Supply of Imitation Zari Thread/Yarn Attracts 5% GST: AAR The present application, dated August 27, 2024, has been filed by M/s. Sai Ram Jari Industries (Applicant) before the Gujarat Authority for Advance Ruling Goods and Services Tax D/5, Rajya Kar Bhavan, Ashram Road, Ahmedabad-380 009. The case was heard on July 29, 2025, and January 23, 2025. The applicant is a registered company under the act of GST Act, having GSTIN 24AANHA6507MIZ4, and is located at Plot No 235, Road No 2, GIDC, Sachin-394520, Surat, Gujarat.

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The applicant is involved in the business of manufacturing and supplying imitation zari thread or yarn made from lacquered coated polyester film/plastic film with aluminium metal. Previously, the applicant was classifying the imitation zari or yarn under HSN 5605 and was discharging GST (Goods and Services Tax) at 12% under Serial No. 137 of Schedule II of Notification No. 1/2017-Central Tax (Rate) issued on June 28, 2017, during the period between October 13, 2017, and July 26, 2023. Thereafter, in Schedule I of Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017, serial No. 218AA¹ was inserted; this reduced the GST rate on imitation zari thread or yarn known by any name in trade parlance from 12% to 5%. Additionally, amendments were introduced in Serial No. 137 of the Schedule-II through notification No. 09/2023 (Central Tax) dated July 26, 2023, which excluded imitation zari thread or yarn known by any name in trade parlance from the ambit of Serial No. 137 of the Schedule-II. The amendment introduced in Serial No. 137 of Schedule-II has created confusion for applicant HSN and the GST rate applicable to imitation zari thread or yarn made from plastic film/lacquered-coated polyester film with aluminium metal. Questions Raised by Applicant: Seeking the present Gujarat Authority for Advance Ruling (AAR) no. GUJ/GAAR/R/2025/58, the applicant has asked the following question: "Question: What is the HSN and GST rate applicable on the supply of imitation zari thread or yarn (also known as 'metallic yarn,' 'zari badla,' or any other name in trade parlance) made from plastic film / lacquered coated polyester film with aluminium metal?"

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Answer Given by AAR Gujarat: The Gujarat Authority for Advance Ruling (AAR) has given the following answer to the question asked by the applicant: Supply of imitation zari thread or yarn (also called 'Metallic Yarn,' 'Zari Badla,' or any other name in trade parlance) manufactured using plastic film/lacquered coated polyester film with aluminium metal falls under 56050020 and is liable for the GST imposition of GST at 5% under serial no. 218AA of Schedule I of Notification No. 1/2017-CT(Rate) dated 28.6.2017 from the period between July 27, 2023, and September 21, 2025, and under serial no. 353 of Schedule I of Notification No. 9/2025-CT(R) dated September 17, 2025, starting from September 22, 2025.