GST Exemption Status for Psyllium Seeds (Isabgol) Sales
The Rajasthan Authority for Advance Ruling decided that stored Psyllium Seeds do not qualify for fresh produce GST exemption.
- Ruling
- RAJ/AAR/2026-27/12 dated 04.08.2026
- Dated
- 04 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 are exempt from GST.
- The Authority ruled these seeds are taxable at 5%.
- Storage in a godown causes seeds to lose their 'fresh' status.
- The burden of proof for 'fresh' status lies with the trader.
In short
The company asked if selling Psyllium Seeds (Isabgol) at an agricultural market qualifies for a GST exemption meant for fresh produce. The tax authority looked at whether these seeds, after being stored in a godown, still count as 'fresh' or if they have become 'dried' goods.
What has changed
How it worked before
Many traders assumed that agricultural produce sold in its natural state at a market remained exempt from GST regardless of storage duration.
What has changed
The Authority decided that storing seeds in a godown means they are no longer 'fresh' under GST rules. This means traders must now pay a 5% GST rate on these sales instead of claiming the exemption.
Who this affects
Traders, commission agents, and agricultural produce market participants dealing in Psyllium Seeds or similar crops.
An example
A trader in a different district sells Psyllium Seeds that have been stored in a warehouse for several weeks. They might hope to claim the same exemption as the applicant in this case. Based on this ruling, the tax department would likely argue that the seeds are 'dried' rather than 'fresh' and demand the 5% GST payment.
What you should do
If you trade in similar produce, you should review your storage practices and tax filings. Remember that an Advance Ruling only binds the specific business that asked for it and their local tax office; it is not a universal law for all businesses.
If you do nothing
If you assume this ruling does not apply to you and continue to claim an exemption that the tax department disagrees with, you risk a tax demand notice. You may be required to pay the unpaid GST plus interest and potential penalties. A tax officer is not obligated to follow this specific ruling for your business, but they may use the same logic to deny your exemption.
The terms explained
- Advance Ruling
- A formal decision from the tax department that answers a specific question about how tax laws apply to a particular business's situation.
- Fresh or chilled
- A category of agricultural goods that have not been processed or dried, allowing them to qualify for certain tax exemptions.
- Tariff Item
- A specific code used to classify goods for tax and customs purposes.
The ruling in detail
Authority for Advance Ruling
M/s SANTOSH DEVI DAGA, KANKARIA KATLA, BIKANER ROAD, NOKHA, Bikaner, Rajasthan-334803
RAJ/AAR/2026-27/12 dated 04.08.2026 · Rajasthan
Questions before the authority
- Whether Psyllium Seeds (Isabgol) 12119013 brought by cultivators/farmers to an Agricultural Produce Market Committee (APMC) and sold through the auction mechanism in their natural, raw and unprocessed form - without undergoing drying, dehydration, freezing, grading, polishing, crushing, milling, roasting, chemical treatment or any other processing activity - are classifiable under Tariff Item 12119013 and are accordingly exempt from levy of GST under Entry No. 87 of Notification No. 10/2025 -Central Tax (Rate) dated 17.09.2025, as amended from time to time?
- Whether threshing undertaken by cultivators for separating Psyllium Seeds (Isabgol) from the harvested crop constitutes merely a harvesting activity and not processing or manufacture for the purpose of classification and exemption under GST?
Facts
The applicant is a commission agent and trader facilitating the auction of agricultural produce, specifically Psyllium Seeds (Isabgol), at the APMC in Nokha, Rajasthan. The applicant contends that the seeds are traded in their natural, raw, and unprocessed state as brought by farmers. The applicant seeks to confirm that these seeds qualify for GST exemption as fresh agricultural produce.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification and exemption of Psyllium Seeds | Classifiable under Tariff Item 12119013; NOT exempt under Entry No. 87 of Notification No. 10/2025-Central Tax (Rate); liable to tax at 5% under Notification No. 09/2025-Central Tax (Rate). The Authority held that the seeds supplied by the applicant do not qualify as 'fresh' or 'chilled'. |
| Whether threshing constitutes harvesting activity | Not answered. The Authority found this question did not fall within the ambit of Section 97(2) of the GST Act. |
The Authority ruled that while Psyllium Seeds are classifiable under Tariff Item 12119013, they do not qualify as 'fresh' Isabgol seeds when supplied by the applicant. Consequently, they are not exempt under Entry No. 87 of Notification No. 10/2025-Central Tax (Rate) and are liable to tax at 5% under Notification No. 09/2025-Central Tax (Rate). The Authority declined to answer the second question regarding threshing, stating it did not fall within the scope of Section 97(2) of the GST Act.
Reasoning
The Authority reasoned that for the exemption under Entry No. 87 to apply, the goods must be in a 'fresh or chilled' condition. It observed that the applicant stores the seeds in a godown, and in the absence of evidence regarding the duration, it cannot be accepted that the produce remains in the same 'fresh' condition as when harvested. The Authority relied on Circular No. 163/19/2021-GST, which clarifies that goods lose their 'fresh' character if they are intentionally subjected to drying or similar preservation processes. Consequently, the seeds are considered 'dried' and fall under the taxable category of Notification No. 09/2025-Central Tax (Rate).
Provisions relied on
- Section 97(2) of the CGST/RGST Act, 2017
- Tariff Item 12119013 of the Customs Tariff Act, 1975
- Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025
- Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025
- Circular No. 163/19/2021-GST dated 06.10.2021
For the practitioner
This ruling serves as a **cautionary precedent** for traders of agricultural produce who store goods in godowns, as the Authority may deny 'fresh' produce exemption status due to the potential for moisture reduction or drying during storage. It clarifies that the burden of proof lies with the applicant to establish that the goods remain in a 'fresh or chilled' state at the time of supply. It does not provide a definitive ruling on whether threshing is a harvesting activity, as the Authority declined to address that question.
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/1-order_12_santosh_devi_daga_c.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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