AAR and AAAR Weekly Round Up

This round-up analytically summarises the key rulings of the Goods and Services Tax Authorityfor Advance Ruling ( AAR ) and Appellate Authority for Advance Ruling ( AAAR ) reported at Taxscan.in during the period from February 20, 2025 to March 16, 2025.

GST Classification of Rice Husk Board: AAAR Remands Matter for Adjudication on Record of New Evidence In Re:Vegan WoodPrivate Limited CITATION : 2026 TAXSCAN (AAAR) 103

The Gujarat Appellate Authority for Advance Ruling has set aside a classification ruling and has remitted the case back to the lower authority for fresh adjudication. This is in light of the new documentary evidence and records furnished by the appellant for the first time during the appellate proceedings.

The Appellate Bench consisted of Ms. Arti Kanwar (Member SGST) and Ms. Rimjhim Pandey (Member CGST) stated that the interest of justice would call for a fresh hearing. It also stated that "the material produced for the first time needs to be verified for its factual accuracy and relevance to the issue in question."

Service of Transporting Segregated Waste to Dumpsites for Municipal Corporation is "Pure Service", Exempt from GST: AARIn Re: HariNarayan Singh CITATION : 2026 TAXSCAN (AAR) 109

In a significant ruling, the West Bengal Authority for Advance Ruling (WBAAR) has clarified that transporting segregated municipal waste to designated dumpsites for the Howrah Municipal Corporation qualifies as a “pure service” under GST law.

The applicant, Hari Narayan Singh, had sought clarity on whether his conservancy‑related services carrying waste from secondary transfer points to dumpsites using fuel‑operated vehicles qualified for exemption under entries 3, 3A, or 4 of the notification.

The bench, Shafeeq S, and Jyadip Kmar Chakrabarti ( Members of West Bengal Authority for Advance Ruling ) ruled that: “The referred activity will qualify for serial no. 3 of Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017, as amended. As such, it is exempted from tax.”

Advance Received Falls Under Ambit of 'Consideration': AAR Rules on GST Liability In Re: PC SnehalConstruction Private Limited CITATION : 2026 TAXSCAN (AAR) 110

The Gujarat Authority of Advance Ruling at Ahmedabad decided a matter regarding Goods and Service Tax liability wherein it was held that the advance received by the applicant fell under the ambit of ‘consideration’.

The adjudicating authority notes that the applicant is providing works contract services to AUDA. It was observed that the deposit made through an advance would qualify as ‘consideration’. It was held that as per Schedule II of the CGST Act, works contract shall be treated as a supply of service. Additionally, as per Section 13, the liability to pay tax on services shall arise at the time of supply.

Restaurants Cannot Serve Hookah under 5% Tax, Food Stays at 5%, But Hookah Faces 18% or 40% Tax: AAR In Re: IndianWire Products Company CITATION : 2026 TAXSCAN (AAR) 111

In a recent ruling, the West Bengal Authority for Advance Ruling (WBAAR) has drawn a clear line between food and hookah under the Goods and Services Tax (GST) . Authority held that meals served in restaurants will continue to enjoy the concessional 5% tax rate, and herbal hookah will attract 18% GST, and tobacco-based hookah will face the steep 40% GST plus cess.

Food served in restaurants (not in specified premises) will continue to be taxed at 5% GST (2.5% CGST + 2.5% SGST). Tobacco-based hookah, classified under HSN 2403, is treated as goods and taxed at a steep 40% GST (20% CGST + 20% SGST) plus cess. Herbal or non-tobacco hookah, prepared from ingredients like tea leaves, mint, or rose petals, is also treated as goods but taxed at a lower 18% GST (9% CGST + 9% SGST).

Classification of Ice Cream Sold from Retail Outlets: AAR rules 5% GST Applicable on Supply of Ice Cream as Goods In Re: MohammedSajid Mohammed Sharif Kakuwala CITATION : 2026 TAXSCAN (AAR) 112

The Authority forAdvance Ruling (AAR) Gujarat has issued guidelines on taxation related to ice cream sales. The ruling has stated that ice cream supply through retail outlets and manufacturing units would be classified as a 'supply of goods' and would be liable to 5% tax on GST along with Input Tax Credit benefits, unless it is classified as 'restaurant services.'

The Bench comprising Sushma Vora (Member SGST) and Vishal Malani ( Member CGST) clarified that in the case of B2B and retail sales of ice cream as a product even though the same is being manufactured at the outlet and the activity amounts to a "Supply of Goods." The AAR held that the supplies are liable to 5% GST with the benefit of ITC.

GST Classification of Flavoured Mouth Fresheners: AAR Rules 5% GST Applicable on Paan Kapsul and Related Products IN Re: KARTIKPINAKIN BHATT CITATION : 2026 TAXSCAN (AAR) 113

The Gujarat Authority for Advance Ruling [AAR] has provided clarity on the Goods and Services Tax classification for a range of mouth fresheners and digestive candies holding them to be categorized under the food preparation tax levied at a moderate rate of 5%.

The AAR bench comprising Sushma Vora (Member SGST) and Vishal Malani ( Member CGST) held that Paan Kapsul (Silver Coated, Regular, and Rose) would be classified as HSN 2106 90 30 whereas Chat Pata Twins, Tangy Twins, Ginger Shots, Amla Shots, and GoGas Candy would be classified as HSN 2106 90 99.

Paddle Wheel Aerators Not Classified as Agricultural Machinery: AAR rules 18% GST applicable for Aquaculture Equipment Sagar Aqua Culture Private Limited CITATION : 2026 TAXSCAN (AAR) 114

The Authority forAdvance Ruling (AAR) Gujarat held that Paddle Wheel Aerators being specific equipment used in the operation of aquaculture, are not classified as agricultural machinery. Hence, Paddle Wheel Aerators fall under the mechanical appliances and are liable to a 18% Goods and Services Tax (GST) rate.

The Authority comprising Sushma Vora (Member SGST) and Vishal Malani ( Member CGST) in passing judgment, opined that inclusion of fishers in general policy does not mandate that they be included in specific tax classifications. It cited Supreme Court precedents that in interpreting taxation legislation "pisciculture is not agriculture."

It further held that, in any case a press release from the Ministry of Fisheries cannot be utilized in classifying products since taxation legislation is within the sole jurisdiction of the Ministry of Finance. Since no entry specifically covers "aquaculture aerators," the bench ruled that they fall under HSN 8479, attracting an 18% GST.

Medical Covers for Ultrasound and Laparoscopy Classified as 'Accessories', Taxable at 18% GST: AAR In Re:Hi Care Remedy Private Limited CITATION : 2026 TAXSCAN (AAR) 115

The West Bengal Authority for Advance Ruling [AAR] has made an important ruling on the classification and applicable rates of various types of plastic medical disposables under HSN codes. The AAR has made a distinction between generic protective wear and special purpose equipment intended for medical equipment accessories.

Therefore, the covers that are being used for Ultrasound and Laparoscopy purposes are classified under HSN 90330000 (12% GST) as they are being used as accessories for Chapter 90 equipment. However, the Authority rejected the classification of the product under the tariff item garment.Instead, the product is classified under HSN 3926 (12% GST) as the product is plastic.

No GST Exemption on Security Services to Government Entities such as FCI: AAR clarifies Scope of Central Tax Notification In Re: Food Corporation of India CITATION : 2026 TAXSCAN (AAR) 116

In a recent ruling, the West Bengal Authority for Advance Ruling (WBAAR) has clarified that the Goods and Services Tax (GST) exemption under Notification No. 12/2017 –Central Tax (Rate) Dated 28.06.2017 does not extend to security services procured by Government Entities such as the Food Corporation of India (FCI).

The bench of Shafeeq S and Jaydip Kumar Chakrabarti also observed that the Notification exempted pure services provided to Government Entities. But after 1 January 2022, the terms “Governmental Authority” and “Government Entity” were removed, meaning such services became taxable again.

Accordingly, the authority confirmed that security services for FCI are pure services but not exempt from GST, and that they attract 18% GST under reverse charge from 2022.

Shaving Cream Eligible for 5% GST, Shaving Foam Classified Separately at 18%: AAR McNROE Consumer Products Private Limited CITATION : 2026 TAXSCAN (AAR) 117

The West Bengal Authorityfor Advance Ruling (WBAAR) has clarified the Goods and Services Tax (GST) treatment of shaving products, ruling that shaving cream qualifies for the concessional 5% rate, while shaving foam is classified separately and taxed at 18%.

The bench of Shafeeq S and Jaydip Kumar Chakrabarti confirmed that shaving cream and shaving foam are not the same product. Shaving cream, shaving lotion, and after-shave lotion are taxed at 5% GST, and shaving foam falls under the residual category and is taxed at 18% GST.

Non-Alcoholic Beverages are taxable at 40% GST, while Iced Tea and Tea Extracts are at 5%:AAR In Re: Sage Organics Private Limited CITATION : 2026 TAXSCAN (AAR) 118

The West Bengal Authority for Advance Ruling (WBAAR) has issued a detailed order on the Goods and Services Tax (GST) classification of non-alcoholic beverages, iced tea preparations, syrups, and tea extracts, ruling that while iced tea and tea extracts qualify for the concessional 5% GST rate, other non-alcoholic drinks fall under a higher 40% slab.

The bench of Shafeeq S and Jaydip Kumar Chakrabarti concluded that the non-alcoholic beverages, as specified by the applicant, will be taxed 40%, and Iced tea & tea extracts, Syrups & concentrates will be taxed 5% for both.

Sun-Cured, Graded & Butted Tobacco Leaves Qualify as Tobacco Leaves, Taxable at 5% GST: AAR In Re: Om Jai Balajee Construction Private Limited CITATION : 2026 TAXSCAN (AAR) 119

The West Bengal Authority for Advance Ruling (WBAAR) has held that sun‑cured, graded, and butted tobacco leaves continue to qualify as “tobacco leaves” under the Goods and Services Tax(GST) law, and are therefore taxable at the concessional rate of 5%.

The authority stated that Tobacco leaves purchased from farmers attract 5% GST under reverse charge, and Subsequent sales by traders also attract 5% GST under forward charge. It was also mentioned that activities like grading, bundling, or butting do not convert leaves into “unmanufactured tobacco” for 28% GST.

GST TDS on Institutions of National Importance: AAR Mandates TDS Liability for IIM Ahmedabad As Specified Person In Re: M/s. Indian Institute of management CITATION : 2026 TAXSCAN (AAR) 120

The Authority for Advance Ruling (AAR) Gujarat held that the Indian Institute of Management, Ahmedabad (IIMA), being an institution of national importance clearly falls into the category of "specified persons" as defined in Section 51 of the CGST Act.

The AAR comprising Sushma Vora (Member SGST) and Vishal Malani ( Member CGST) held that since IIMA was set up by an Act of Parliament therefore it is a notified entity that is liable to deduct TDS.

Accordingly,the Bench explained that the condition of deduction at a sum of Rs. 2,50,000 applies to the aggregate value of a single contract excluding GST even if multiple small invoices are issued.

Classification of Dialysis Components as Chemicals, Not Medical Instruments: AAR Mandates 18% GST on Dry Citrate Powder and Bicarbonate Bags In Re: Soxa Formulations and Research Pvt. Ltd CITATION : 2026 TAXSCAN (AAR) 121

The Authority for Advance Ruling (AAR) Gujarat has passed a notable ruling pertaining to the taxation of health supplies i.e the Dialysis Component ,stating that as chemical components utilized in hemodialysis do not fall under the category of Medical Instruments.

The AAR found that chemical powders or cartridges that are used up or consumed during a procedure did not have the physical attributes of an instrument.

Accordingly,the Bench found that Dry Citrate Powder was essentially a chemical compound classified under HSN 2833 while the Bicarbonate Bags were essentially sodium bicarbonate classified under HSN 2836. Both products would attract an 18% GST. Hence,the therapeutic value of a substance did not alter its essential nature as a chemical for tax purposes.

Artificial Insemination of Livestock Exempt from GST: Gujarat AAR Defines 'Job Work' In Re: M/s JIVA SCIENCES PRIVATE LIMITED CITATION : 2026 TAXSCAN (AAR) 122

The Gujarat Authority for Advance Ruling (AAR) defined ‘job work’ and reiterated that artificial insemination of livestock is exempt from Goods and Service Tax (GST).

The bench members Sushma Vora (SGST) and Vishal Malani (CGST) also noted that according to Entry No. 55A of Notification No.12/2017-CT(R) dated 28.06.2017 ‘services by way of artificial insemination of livestock (other than horses)’ are exempt from GST, and held accordingly. The same is backed by Entry No.24 which covers support services for agriculture, forestry, fishing, and animal husbandry.

GST Applicable on Arbitration Settlement for Pre-GST Hydro Project Disputes: AAR Examines Taxability of ₹94.56 Cr In Re: Karam Chand Thapar & Bros (Coal Sales) Limited CITATION : 2026 TAXSCAN (AAR) 123

The Authority for Advance Ruling (AAR) West Bengal has ruled that arbitration settlement related to pre GST contracts would be subject to tax under the Goods and Services Tax (GST) Act if it is an upward revision of the original contract price.

​The Authority consisting of Shafeeq S (Member CGST) and Jaydip Kumar Chakrabarti (Member SGST) has carefully analyzed the claim and stated that as per Section 142(2)(a) of the CGST Act any upward price revision of a pre GST contract is considered a supply under GST.

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