GST on Psyllium Seeds: Rajasthan Authority for Advance Ruling RAJ/AAR/2026-27/17
The Rajasthan Authority for Advance Ruling decided that raw Psyllium seeds (Isabgol) are taxable at 5% GST, not exempt.
- Ruling
- ADVANCE RULING NO. RAJ/AAR/2026-27/17 dated 25.08.2026
- Dated
- 25 Aug 2026
- 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
- The company asked if raw Psyllium seeds qualify for GST exemption.
- The Authority ruled the seeds are not 'fresh' or 'chilled'.
- The 'seed quality' argument for exemption was rejected.
- Psyllium seeds are now taxable at 5% GST.
In short
The company asked the Rajasthan Authority for Advance Ruling (AAR) whether their raw Psyllium seeds (Isabgol) should be exempt from Goods and Services Tax (GST). They argued that because the seeds were unprocessed and bought directly from farmers, they should be treated as fresh agricultural produce. The Authority disagreed, ruling that these seeds do not meet the criteria for exemption and are subject to a 5% tax rate.
What has changed
How it worked before
Many businesses assumed that raw, unprocessed agricultural seeds procured directly from farmers were exempt from GST under the category of fresh produce.
What has changed
The Authority clarified that Psyllium seeds are not considered 'fresh' or 'chilled' because they are typically dried to extend their shelf life for pharmaceutical use. This means businesses trading in these seeds must now collect and pay 5% GST on their supplies, as they do not qualify for the exemptions under Notification No. 10/2025-Central Tax (Rate).
Who this affects
Traders, suppliers, and businesses dealing in Psyllium seeds (Isabgol) or similar agricultural produce.
An example
A trader in Gujarat buys raw Isabgol from local farmers to sell to pharmaceutical companies. They previously treated these sales as exempt from GST. After this ruling, they should realize that their tax officer may now view these sales as taxable at 5%. The trader should review their invoices and consult a professional to confirm if their specific supply chain matches the conditions described in this ruling.
What you should do
If you trade in Psyllium seeds, you should prepare to charge 5% GST on your sales. Remember that an Advance Ruling only binds the company that asked and its specific tax office; it is not a law that applies to your business automatically. However, it shows how tax authorities currently interpret the rules, so you should consult your tax advisor to assess your own liability.
If you do nothing
If you assume this ruling does not apply to you and continue to claim an exemption that is not valid, you risk a tax demand from your local officer. You may be required to pay the unpaid 5% GST along with interest and potential penalties. Relying on an incorrect tax position can lead to costly disputes during an audit.
The terms explained
- Advance Ruling
- A formal decision provided by tax authorities to a specific business regarding how GST laws apply to their particular transaction.
- Exemption
- A provision in the tax law that allows certain goods or services to be supplied without charging GST.
- HSN
- The Harmonized System of Nomenclature is a code used to classify goods for taxation purposes.
The ruling in detail
Authority for Advance Ruling
M/s RUKHM INDUSTRIES LIMITED
ADVANCE RULING NO. RAJ/AAR/2026-27/17 dated 25.08.2026 · Rajasthan
Questions before the authority
- Whether fresh Psyllium Seeds (Isobgul) procured through Agricultural Produce Market Committee (APMC)/KUMS auctions from farmers/cultivators directly or through subsequent traders, without undergoing any drying, freezing, crushing or other processing qualifies for exemption under Entry 87 (HSN 1211) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 as Plants and parts of plants (including seeds and fruits) of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose, fresh or chilled?
- If Answer to Question (1) is No, whether Psyllium Seeds (Isobgul) being goods of seed quality and capable of sowing and germination as discussed above qualifies for exemption from GST under Entry 77 (HSN 12) of Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025?
- If the answers to Questions (1) and (2) are both in the negative, what is the correct classification of, and the rate of tax applicable to, the supply of the said Psyllium Seeds (Isobgul) by the Applicant?
Facts
The applicant is a public limited company intending to trade in raw and fresh Psyllium seeds (Isobgul) procured from farmers through APMC auctions. They claim the seeds are supplied in their natural, raw, and unprocessed form without any drying, freezing, or value addition. The applicant seeks to determine if these seeds qualify for GST exemption as fresh agricultural produce.
Ruling
| Question | What the authority ruled |
|---|---|
| Exemption under Entry 87 (HSN 1211) | No The seeds are not considered fresh or chilled at the time of supply. |
| Exemption under Entry 77 (HSN 12) | No The authority rejected the contention that the seeds qualify as goods of seed quality. |
| Classification and Rate | HSN 1211 9013; 5% GST Taxable under Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025. |
The Authority ruled that the Psyllium seeds supplied by the applicant do not qualify as 'fresh' or 'chilled' and are therefore not exempt under Entry 87. Furthermore, they do not qualify for exemption under Entry 77 as 'goods of seed quality'. Consequently, the supply is held to be taxable at 5% under Notification No. 09/2025-Central Tax (Rate).
Reasoning
The Authority reasoned that the applicant failed to provide evidence that the seeds remain in a 'fresh' state from harvest until supply, noting that shelf life is typically extended by drying. It concluded that the seeds are intended for pharmaceutical use and are dried, thus falling under the scope of 'dried' goods rather than 'fresh or chilled'. The ruling relies on the interpretation of Notification No. 09/2025 and 10/2025, and the principle that exemption notifications must be construed strictly. It also referenced Circular No. 163/19/2021-GST to distinguish between fresh produce and produce subjected to intentional dehydration.
Provisions relied on
- Section 97(2) of CGST/RGST Act, 2017
- Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025
- Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025
- Circular No. 163/19/2021-GST dated 06.10.2021
For the practitioner
This ruling clarifies that Psyllium seeds (Isobgul) are **taxable at 5%** and do not benefit from the exemptions for fresh agricultural produce. It serves as a warning that the burden of proof lies with the applicant to demonstrate that goods remain in a 'fresh' state without any intentional drying or processing. Practitioners should note that the Authority **rejected the 'seed quality' argument** for exemption under Entry 77.
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/6-order_17_rukhm_industries.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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