GST Rate on Irregular Wood Waste Supplied to Paper Mills
The Uttar Pradesh AAR ruled that hollow or irregular wood logs supplied for pulping attract 5% Goods and Services Tax under HSN 4401.
- Ruling
- Order No. 11 dated 14.06.2018
- Dated
- 14 Jun 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Trader asked if hollow wood logs for paper mills attract 5% GST.
- Ruling confirmed irregular wood unsuitable for timber falls under HSN 4401.
- Applicable GST rate is 5% instead of the 18% rate for rough timber.
- Tax officials cannot classify defective pulping wood as commercial timber.
In short
M/S Aman Traders supplied hollow and irregular Eucalyptus, Subabool, and Poplar wood logs to paper mills for making paper pulp. Tax officers stopped their transit vehicles, arguing the wood was structural timber under Harmonized System of Nomenclature (HSN) 4403 taxable at 18% Goods and Services Tax (GST). The trader argued that because the logs were unusable as timber, furniture, or poles, they qualify as wood waste under HSN 4401, which carries a lower 5% GST rate.
What has changed
How it worked before
Tax officers routinely treated all wood logs as rough timber under HSN 4403, charging 18% GST. Suppliers who provided low-quality or hollow wood to paper mills faced vehicle seizures and high tax demands because there was no clear administrative decision on wood unfit for timber.
What has changed
The Authority for Advance Ruling (AAR) in order UP_AAR_11 decided that irregular, hollow, or defective wood logs supplied strictly for pulping qualify as wood waste under HSN 4401. This means such supplies attract 5% GST (2.5% CGST and 2.5% SGST) under Schedule-I of Notification No. 1/2017-Central Tax (Rate). It clarifies that tax officers should look at the physical usability of the wood rather than imposing 18% GST on every log.
Who this affects
Businesses in India that supply damaged, hollow, or low-grade wood waste, logs, or branches to paper mills and pulp manufacturers.
An example
Raj Timber Supplies collects hollow Eucalyptus and Poplar wood pieces from local farmers in Uttar Pradesh and sells them to a nearby paper manufacturing plant for making pulp. The local tax inspector stops their truck and demands 18% GST, claiming all wood logs fall under timber HSN 4403. Raj explains that the logs are hollow and physically unfit for furniture or construction. Following the logic of the Aman Traders ruling, such wood qualifies as wood waste under HSN 4401 attracting only 5% GST.
What you should do
Check whether the wood you supply is physically incapable of being used as commercial timber, poles, or veneer sheets. If your tax officer insists on charging 18% GST, you can refer to this ruling as persuasive guidance during audits. Remember that an advance ruling applies legally only to the business that asked for it, so consider applying for your own ruling if faced with repeated tax demands.
If you do nothing
If you assume this ruling automatically covers your business without verifying your wood quality, tax officers may inspect your shipments and reclassify them as timber under HSN 4403. This could lead to demands for the 13% tax difference along with interest and penalties. You may also face vehicle detentions at check posts, disrupting your supply chain.
The terms explained
- HSN Code
- A standard international numerical code used to classify goods for tax calculation under GST.
- Wood Waste
- Defective, hollow, or irregular wood pieces that cannot be used as structural timber, furniture, or poles, typically used for fuel or paper pulp.
- Advance Ruling
- A binding decision given by tax authorities to a specific taxpayer explaining how GST law applies to their business transaction.
The ruling in detail
Authority for Advance Ruling
M/s Aman Traders
Order No. 11 dated 14.06.2018 · Uttar Pradesh
Questions before the authority
- Whether debark/bark Eucalyptus wood waste, debark/bark Subabool wood waste, and debark/bark Poplar wood waste (length about 2 meters and girth between 15 to 60 cm) supplied to paper mills for pulping fall under HSN 4401 taxable at 5% GST?
Facts
The applicant is engaged in the supply of debarked/bark Eucalyptus, Subabool, and Poplar wood waste to paper mills strictly for pulping. The commercial tax department intercepted transit vehicles and sought to demand tax at 18% treating the items as timber under HSN 4403 instead of 5% under HSN 4401. The applicant sought an advance ruling to clarify the correct HSN classification and applicable GST rate.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification and GST rate for Eucalyptus, Subabool, and Poplar wood waste supplied for pulping | HSN 4401, 5% GST (2.5% CGST + 2.5% SGST) Applicable provided the wood cannot be used as structural timber, poles, veneer, or matchsticks |
The Authority held that logs or heaps of wood that cannot be used as timber, utility poles, ballies, matchsticks, veneer, or woodware qualify as **wood waste and scrap**. Such supplies fall under HSN 4401, covered under S. No. 198 of Schedule-I of Notification No. 1/2017-Central Tax (Rate), and are taxable at **5% GST** (2.5% CGST + 2.5% SGST).
Reasoning
The Authority referred to HSN Explanatory Notes for Chapter 44, which define wood waste and scrap as materials unusable as timber, used particularly for pulping in paper manufacturing or as fuel. In contrast, Heading 4403 covers wood in the rough intended for sawmilling, poles, or veneer sheets. Because the applicant's wood logs are hollow, irregular, and unfit for timber or poles, they qualify as **wood waste under HSN 4401**. Consequently, they attract 5% GST under S. No. 198 of Schedule-I of Notification No. 1/2017-Central Tax (Rate).
Provisions relied on
- Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 (Schedule-I, S. No. 198)
- U.P. Notification No. KA.NI.-2-836/XI-9(47)/17-U.P. Act-1-2017-Order-(06)-2017 dated 30.06.2017
- HSN Heading 4401
- HSN Heading 4403
For the practitioner
This ruling establishes that irregular or hollow wood logs supplied exclusively for pulping in paper mills qualify as **wood waste under HSN 4401** taxable at 5% GST. Tax practitioners can use this precedent to resist reclassification under HSN 4403 (18% GST) where the wood is demonstrably unsuitable for use as structural timber, poles, or veneer.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/up_aar_11_14.06.2018_sat.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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