No 12% GST for Rice Husk Boards! AAR Rejects Vegan Wood's Classification Under Wood Chapter, Cites Missing Lab Reports & Documentation [Read Order]

In a setback for manufacturers of eco-friendly building materials, the Gujarat Authority for Advance Ruling (AAR) has denied 12% GST classification to rice husk boards under the wood products category, citing insufficient technical documentation and unverified lab reports. The ruling highlights the challenges in classifying composite materials under traditional GST slabs.

The applicant, Rajkot-based Vegan Wood Pvt Ltd, manufactures 'Natural Fibre Composite Boards' using 30% rice husk powder, PVC resin (26%), and additives like calcium carbonate. The company sought classification under Chapter 44 (wood and wood articles) at 12% GST, arguing that rice husk qualifies as lignocellulosic material similar to wood under Bureau of Indian Standards (BIS) norms.

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However, the AAR dismissed the application as "non-maintainable," pointing to critical gaps in evidence. The bench noted that while BIS standards (IS 3129:1985) do recognize rice husk as raw material for low-density particle boards, Vegan Wood failed to provide: Test reports from government-recognized labs, BIS compliance certificates for their specific product, Purchase/sales invoices or technical brochures and Proof that their NABL-accredited lab tests covered all parameters

The authority observed striking similarities between Vegan Wood's submission and a 2019 ruling involving M/s. Papaka Herbs & Spices Ltd, raising doubts about the originality of claims. The lab report submitted contained a disclaimer that tested parameters weren't covered under the lab's NABL accreditation scope, further undermining its reliability.

Members Kamal Shukla (SGST) and P.B. Meena (CGST) emphasized that composite materials require rigorous technical proof to qualify for wood product classification. The ruling leaves Vegan Wood's rice husk boards subject to the default 18% GST rate for manufactured goods unless the company furnishes stronger evidence.

The decision underscores the AAR's strict stance on documentation for non-traditional materials. Manufacturers of agro-waste-based products may need to invest in certified testing and detailed technical dossiers to secure favorable GST classifications, especially when challenging conventional tax categories.

For now, the ruling maintains the status quo where composite boards with significant synthetic content (like PVC) face higher tax rates unless proven to functionally resemble traditional wood products. The order serves as a cautionary note for eco-material startups navigating India's complex GST classification system.

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