In India, GST rate notifications classify goods by reference to the First Schedule to the Customs Tariff Act, 1975, so a GST rate dispute is in substance a tariff-classification dispute. CBIC settles recurring questions through consolidated circulars issued under §168(1) of the Central Goods and Services Tax Act, 2017 (CGST Act) after most GST Council meetings — binding on field formations, and the first document to reach for on a reclassification notice.
TL;DR for founders
The rate on your product is not written in a GST rulebook. It is written against a code borrowed wholesale from the customs tariff, and if the department disagrees with your code you are arguing about chapter notes, not about GST. Three things decide most of these disputes. What the goods actually are, judged on composition and character rather than what you call them or how you pack them. What the Section and Chapter Notes of the tariff direct, which can override the entry that looks more specific. And whether CBIC has already answered the point in a circular — because a circular in your favour binds the officer sitting across the table, and there are more of them than most people realise.
Why a GST rate dispute is really a tariff dispute
Notification 1/2017-Central Tax (Rate) and its exemption counterpart Notification 2/2017-Central Tax (Rate) contain no classification scheme of their own. They identify goods by tariff item, sub-heading, heading and chapter of the First Schedule to the Customs Tariff Act, 1975, and expressly adopt that Schedule's Section and Chapter Notes and its General Rules for Interpretation. Everything follows from that borrowing.
Circular 235/29/2024-GST (CIR_235_2024) shows the machinery deciding a case. A Roof Mounted Package Unit air conditioner supplied for Indian Railways sits under HS 8415 at 28% rather than HS 8607 (railway parts) — not because 8415 is more specific, but because Section Note 2 of Section XVII of the Customs Tariff directs it. The same circular moves car seats for four-wheelers to HS 9401 at 28% from 10 October 2024 while motorcycle seats stay at HS 8714. Circular 6/6/2017-GST (CIR_6_2017) resolves a purely mechanical version of the same problem: the "-" in the lottery rate entries means "Any Chapter", which unblocked portal filing for lottery operators who could not otherwise enter a classification code.
Services run on a different track. They are classified by Service Accounting Code under the Scheme of Classification of Services annexed to Notification 11/2017-Central Tax (Rate), and the determinative material is the Explanatory Notes to that Scheme. Circular 84/03/2019-GST (CIR_84_2019) demonstrates the method: printing of pictures falls under SAC 998386 (photographic and videographic processing) at 18%, not SAC 998912 (printing and reproduction of recorded media) at 12% — because the Explanatory Notes to 998386 expressly cover colour printing of images from film or digital media, and those to 998912 expressly exclude it.
Three interpretive rules that decide most cases
Form and packing do not change substance — unless a rate entry says they do. Circular 13/13/2017-GST (CIR_13_2017) holds that cutting fabric from bundles or thans into unstitched salwar-suit pieces leaves the classification untouched: the goods remain fabric under Chapters 50 to 55 by constituent material at 5%, with no refund of unutilised credit, and the buyer's intention to stitch them is irrelevant. Circular 20/20/2017-GST (CIR_20_2017) applies the same substance-over-label reasoning to extend the nil rate for idols made of clay to terracotta idols, terracotta being fired clay. The counter-example is deliberate: the pre-packaged and labelled regime makes packing itself the operative fact, and Circular 191/03/2023-GST (CIR_191_2023) taxes Rab at 5% pre-packaged and labelled, nil loose, from 1 March 2023.
End-use matters where the entry is written in end-use terms. Circular 54/28/2018-GST (CIR_54_2018) holds that simple fertilisers under headings 3102 to 3105 supplied for making complex fertilisers that ultimately go to soil or crop attract 5% under S. Nos. 182A to 182D of Schedule I; the 18% residual rate applies only where the goods are clearly not to be used as fertilisers — molten urea for melamine, or urea for urea-formaldehyde resins. Circular 113/32/2019-GST (CIR_113_2019) reads Chapter Note 2(b) to hold that parts of medical devices under HS 9018, 9019, 9021 and 9022 take the same 12% rate as the device, not the 18% residual.
Cumulative conditions are read conjunctively. Circular 189/01/2023-GST (CIR_189_2023) is the standard illustration: the 22% compensation cess on sport utility vehicles applies only where all conditions hold together — HS 8703, popularly known as an SUV, engine above 1,500 cc, length above 4,000 mm, and ground clearance of 170 mm or more. Fail one and the entry does not apply. The same circular classifies Rab under heading 1702 at 18% relying on the Supreme Court in Krishi Utpadan Mandi Samiti v. Shankar Industries, and puts carbonated beverages of fruit drink at HS 2202 99, 28% plus 12% compensation cess.
Veritect Legal AI
The single most consequential authority in this area is one CBIC applied to itself. Circular 80/54/2018-GST (
CIR_80_2018), deciding whether fish meal and meat-and-bone-meal raw materials attract 5% under S. No. 103 of Notification 1/2017-Central Tax (Rate) or nil under S. No. 102 of Notification 2/2017-Central Tax (Rate), relied on the Supreme Court Larger Bench in Dilip Kumar (2018) 361 ELT 577 — that an exemption notification is construed strictly, and any ambiguity resolves in favour of the revenue — to hold that inputs to feed are not feed. Any submission that an exemption entry should be read expansively meets that authority head-on, and the practical consequence is directional: a rate argument is fought on the tariff and can be won on ambiguity, while an exemption argument must be won on the plain words. The same circular runs eleven other determinations, from PP woven bags under HS 3923 at 18% to bagasse board at 12% and the finding that inter-State movement of cranes and rigs not on wheels by a service provider on its own account is not a supply at all. Veritect Legal AI holds the full circular chain from 2017 to 2025 with each determination indexed to its HSN and serial number, so a query such as "what rate applies to laminated PP bags and on what reasoning" resolves against the operative clarification rather than an advance ruling from another State.
The consolidated circular chain, and how to use it
After most GST Council meetings CBIC issues a consolidated rate-and-classification circular under §168(1). Together these form the single most efficient research surface in the vertical — each one disposes of five to twelve live disputes in a few pages:
| Circular | Council meeting | Effective | Representative determinations |
|---|---|---|---|
CIR_80_2018 |
— | 31 Dec 2018 | Fish meal 5% on Dilip Kumar; PP woven and BOPP bags HS 3923 at 18%; bagasse board 12%; turbo charger HS 8414 80 30 at 18% |
CIR_113_2019 |
— | 11 Oct 2019 | Almond milk HS 2202 99 90 at 18%; mechanical sprayers HS 8424 at 12%; medical-device parts at 12%; solar evacuated tubes at 5% |
CIR_163_2021 |
45th | 6 Oct 2021 | Fresh against dried fruit and nuts; tamarind seed, copra and henna at 5%; scented supari at 18%; UPS and battery taxed separately at 18% and 28% |
CIR_189_2023 |
48th | 13 Jan 2023 | Rab 18%; pulse-milling by-products exempt; carbonated fruit beverages 28% plus 12% cess; the four-condition SUV cess test |
CIR_200_2023 |
50th | 1 Aug 2023 | Un-fried snack pellets 5%; fish soluble paste 5%; imitation zari 5%; HSN 9021 implants at 5% with no refund for past 12% |
CIR_229_2024 |
53rd | 15 Jul 2024 | Dual-energy solar cookers 12%; all sprinklers 12%; poultry-machinery parts HS 8436 91 00 at 12%; the 25 kg pre-packaged carve-out |
CIR_235_2024 |
54th | 11 Oct 2024 | Extruded savoury products HS 1905 90 30 at 12% from 10 Oct 2024; RMPU air conditioners HS 8415; car seats HS 9401 at 28% |
CIR_247_2025 |
55th | 14 Feb 2025 | Consolidated goods rate and classification clarifications on the 55th Council's recommendations |
Two working habits follow. First, read the circular for the period in dispute, not the latest one — several of these change a rate prospectively and regularise the past separately, so citing the current position against a 2022 transaction concedes the point. Second, check the companion notification: CIR_229_2024's poultry-parts and pre-packaged determinations were given effect by Notifications 2/2024 and 3/2024-Central Tax (Rate), and a circular determination unsupported by an amending entry is on weaker ground.
The as-is-where-is device, and what it costs
Where a classification has been genuinely doubtful, CBIC increasingly closes the past period as is where is — whichever treatment was actually adopted stands, with no recovery and no refund. CIR_200_2023 used it for desiccated coconut to 27 July 2023, biomass briquettes to 12 October 2017, areca-leaf plates before 1 October 2019, and HSN 9021 implants, stating expressly that no refund arises where 12% was paid. CIR_229_2024 used it for sprinklers and poultry-machinery parts, and attached conditions for past supplies of pulses and cereals to government distribution agencies: a Deputy-Secretary-rank certificate within 180 days and input tax credit reversal within 180 days.
The device is genuinely protective against demands, but it is asymmetric. A taxpayer who paid the higher rate through the doubtful period has no route back, so the commercial decision to adopt the conservative rate during a live classification controversy is effectively irreversible. That asymmetry is worth pricing into the original position rather than discovering after the circular lands.
FAQ
Q: How are goods classified for GST rate purposes?
A: GST rate notifications do not contain their own classification scheme. Notification 1/2017-Central Tax (Rate) and its exemption counterpart Notification 2/2017-Central Tax (Rate) identify goods by tariff item, sub-heading, heading and chapter of the First Schedule to the Customs Tariff Act, 1975, and expressly adopt the Section and Chapter Notes and the General Rules for Interpretation of that Schedule. A GST classification dispute is therefore a customs-tariff dispute in substance. Circular 235/29/2024-GST (CIR_235_2024) shows the machinery in operation: a Roof Mounted Package Unit air conditioner for Railways falls under HS 8415 rather than HS 8607 because Section Note 2 of Section XVII of the Customs Tariff so directs.
Q: Are CBIC classification circulars binding?
A: They bind field formations, not taxpayers or courts. CBIC issues classification and rate clarifications under §168(1) of the Central Goods and Services Tax Act, 2017 (CGST Act), which empowers the Board to issue orders, instructions and directions to central tax officers for uniformity in implementation. A circular favourable to the taxpayer is therefore directly enforceable against an officer taking a contrary view, and is one of the strongest grounds in a §73 or §74 reply. A circular adverse to the taxpayer does not foreclose the argument, because a circular cannot override the notification or the statute it purports to explain.
Q: What is the 'as is where is' regularisation that recent circulars use?
A: It is a device for closing a past period without generating either recoveries or refunds. Where a rate or classification has been genuinely doubtful, CBIC regularises the intervening period on an as-is-where-is basis — whichever treatment was actually adopted stands. Circular 200/12/2023-GST (CIR_200_2023) applied it to desiccated coconut for 1 July 2017 to 27 July 2017, to biomass briquettes to 12 October 2017, and to HSN 9021 implants, expressly stating no refund is available where 12% had been paid. Circular 229/23/2024-GST (CIR_229_2024) went further on past-period supplies of pulses and cereals to government distribution agencies, conditioning the regularisation on a Deputy-Secretary-rank certificate and input tax credit reversal within 180 days.
Q: How strictly are exemption entries construed?
A: Very strictly, and Circular 80/54/2018-GST (CIR_80_2018) is the clearest CBIC application of the rule. Deciding whether fish meal and meat-and-bone-meal raw materials attract 5% under S. No. 103 of Notification 1/2017-Central Tax (Rate) or nil under S. No. 102 of Notification 2/2017-Central Tax (Rate), the Board relied on the Supreme Court Larger Bench decision in Dilip Kumar (2018) 361 ELT 577 — that an exemption notification is construed strictly and any ambiguity resolves in favour of the revenue — to hold that inputs to feed are not themselves feed, and so attract 5%. Any argument that an exemption entry should be read expansively runs directly into this authority.
Q: Does changing the form or packing of goods change their classification?
A: Generally no, unless a specific entry or a packaging-linked rate says so. Circular 13/13/2017-GST (CIR_13_2017) holds that cutting fabric from bundles or thans into unstitched salwar-suit pieces does not change the classification: the goods remain fabric under Chapters 50 to 55 by constituent material at 5%, and the fact that the buyer intends to stitch them is irrelevant. Circular 20/20/2017-GST (CIR_20_2017) applies the same substance-over-label logic in reverse to extend the nil rate for clay idols to terracotta idols. The counter-example is the pre-packaged-and-labelled regime — Circular 191/03/2023-GST (CIR_191_2023) taxes Rab at 5% pre-packaged and nil loose.
Q: Are services classified the same way?
A: No. Services are classified by Service Accounting Code under the Scheme of Classification of Services annexed to Notification 11/2017-Central Tax (Rate), and the determinative material is the Explanatory Notes to that Scheme rather than the Customs Tariff. Circular 84/03/2019-GST (CIR_84_2019) shows the method: printing of pictures is classified under SAC 998386, photographic and videographic processing services, at 18% rather than SAC 998912, printing and reproduction services of recorded media, at 12% — because the Explanatory Notes to 998386 expressly cover colour printing of images from film or digital media while those to 998912 expressly exclude it.
Q: Where multiple conditions define a rate entry, must all be satisfied?
A: Yes, where the entry is framed cumulatively — and CBIC reads such entries as conjunctive. Circular 189/01/2023-GST (CIR_189_2023) is the standard illustration: the 22% compensation cess on sport utility vehicles applies only where all the specified conditions hold together — classification under HS 8703, popularly known as an SUV, engine capacity above 1,500 cc, length above 4,000 mm and ground clearance of 170 mm or more. A vehicle failing any one condition is outside the entry. The same circular classifies Rab under heading 1702 at 18% relying on the Supreme Court decision in Krishi Utpadan Mandi Samiti v. Shankar Industries.
Related on Veritect: Tracking GST rate notifications and tariff changes · GST Council 2024-2025 rate changes and reforms · §73 vs §74 show cause notice — which applies
Sources
Primary CBIC and Government of India sources relied on for this explainer:
- CBIC Tax Information Portal — circular and notification text: taxinformation.cbic.gov.in
- CBIC GST portal (archival circulars, 2017–2022): cbic-gst.gov.in
- GST Council — 45th, 48th, 50th, 53rd, 54th and 55th meeting recommendations underlying the circular chain: gstcouncil.gov.in
- CGST Act, 2017 — §§9, 11, 168: indiacode.nic.in
- Gazette of India — rate notification publication: egazette.gov.in
Corpus anchors: CIR_6_2017, CIR_13_2017, CIR_20_2017, CIR_54_2018, CIR_80_2018, CIR_84_2019, CIR_113_2019, CIR_163_2021, CIR_189_2023, CIR_191_2023, CIR_200_2023, CIR_229_2024, CIR_235_2024, CIR_247_2025.
This explainer is general information on Indian central GST law and is not legal or tax advice. Verify the classification entry and circular applicable to the period in dispute before acting.
Beyond this brief Preview
This article covers the method. The full picture includes the verbatim text of each consolidated circular with every determination, its HSN, serial number and Schedule reference; the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 with the Section and Chapter Notes that decide the hard cases; the Explanatory Notes to the Scheme of Classification of Services for the SAC side; the complete eleven-item table of Circular 80/54/2018-GST including its treatment of LPG supplied by fractionators to oil marketing companies and the cranes-and-rigs non-supply finding; and the past-period regularisation conditions attached to each as-is-where-is determination. Veritect Legal AI holds all fourteen anchor circulars cited above in full text, supersession-tracked and indexed by HSN, so practitioners can resolve queries such as "what rate applied to extruded savoury snacks in FY 2023-24 and what changed on 10 October 2024" or "does the as-is-where-is regularisation for HSN 9021 implants permit a refund of the 12% paid" against the operative sources rather than secondary summaries. Access through veritect.ai.