PVC Raincoats Classified as Plastic Articles, Attract 18% GST: West Bengal AAR
PVC Raincoats Classified as Plastic Articles, Attract 18% GST: West Bengal AAR
Introduction
The West Bengal Authority for Advance Ruling (AAR) has held that raincoats made of polyvinyl chloride (PVC) sheeting are to be classified as plastic articles and not as textile garments, attracting Goods and Services Tax (GST) at the rate of 18%.
Factual Background
The Waterproof Products Manufacturers & Traders Welfare Association, a Kolkata-based trade body, sought clarity on the tax classification of PVC raincoats. The association wanted to know whether PVC raincoats should be taxed under Chapter 62 of the Customs Tariff Act as “articles of apparel and clothing accessories, not knitted or crocheted” or under Chapter 39, covering “plastics and articles thereof.”
Contentions of Parties
Applicant: The applicant's counsel argued that since PVC is derived from man-made fibres, raincoats manufactured from PVC sheets should fall under HSN 6201 or 6202, attracting a lower tax rate.
Revenue: The revenue authorities contended that PVC raincoats are made from plastic sheeting and should be classified under Chapter 39, attracting GST at 18%.
Reasoning and Analysis
The bench comprising Mr. Susanta Kumar Maity (Joint Commissioner, State Tax) and Mr. Joyjit Banik (Senior Joint Commissioner, CGST & CX) observed that PVC sheets are produced by polymerisation and calendaring, without generating fibres, filaments or yarns. Therefore, PVC sheeting cannot be considered a textile material. The authority relied on the Harmonised System of Nomenclature (HSN) Explanatory Notes, which specifically cover articles such as aprons, bibs and raincoats made from plastic sheeting under tariff item 3926.20.
The AAR held that PVC raincoats fall under HSN 3926.20 as “articles of apparel and clothing accessories of plastics.”
Decision
The AAR ruled that PVC raincoats are taxable at 18% (9% CGST + 9% SGST) under Entry No. 111 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated June 28, 2017.
