GST Classification and Tax Rate for Metallic Yarn and Imitation Jari
The Gujarat Authority for Advance Ruling classified metallic yarn and imitation zari under HSN 5605 00 20, attracting a 5% GST rate.
- Ruling
- GUJ/GAAR/R/2025/59 dated 29.11.2025
- Dated
- 29 Nov 2025
- 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
- Metallic yarn and imitation zari fall under HSN code 5605 00 20.
- The applicable GST rate for these products is 5%.
- The authority refused to rule on refund claims as they fall outside its scope.
In short
Sumilon Industries asked the Gujarat Authority for Advance Ruling (GAAR) to clarify the GST classification and tax rate for metallic yarn, imitation zari, and badla produced via micro-slitting. The company needed to know if these products fall under HSN 5605 00 20 or 5605 00 90 to determine the correct tax rate and eligibility for refunds.
What has changed
How it worked before
Businesses in the textile ancillary sector were uncertain about the correct HSN classification for metallic yarn and imitation zari following recent changes to GST notification entries.
What has changed
The authority confirmed that these products are classified under HSN 5605 00 20, which carries a 5% GST rate. This provides clarity for manufacturers on the correct tax liability for their goods, though it does not address past refund claims.
Who this affects
Manufacturers and suppliers of metallic yarn, imitation zari, and badla.
An example
A textile manufacturer produces imitation zari using a micro-slitting process. They are unsure if they should charge 5% or 12% GST. Based on this ruling, they can reasonably conclude that their product falls under HSN 5605 00 20 and is subject to the 5% rate. They should still consult their own tax advisor to confirm this applies to their specific manufacturing process.
What you should do
If you manufacture similar products, you may use this ruling as a reference for your tax classification. However, remember that an advance ruling is only legally binding for the company that requested it and its specific tax officer; it does not automatically apply to your business.
If you do nothing
If you assume this ruling applies to you and apply the 5% rate incorrectly, your local tax officer may disagree with your classification. This could lead to a demand for the difference in tax, along with interest and potential penalties for underpayment. Always verify your specific product classification with your own tax professional.
The terms explained
- HSN
- Harmonized System of Nomenclature is a standardized system used to classify goods for taxation purposes.
- Advance Ruling
- A formal decision provided by tax authorities on how GST laws apply to a specific business transaction.
- Micro-slitting
- A manufacturing process where thin films are cut into very narrow strips to create yarn or thread.
The ruling in detail
Authority for Advance Ruling
M/s. Sumilon Industries Private Limited
GUJ/GAAR/R/2025/59 dated 29.11.2025 · Gujarat
Questions before the authority
- Whether any significant difference is there between Metalized Yarn and Metallic Yarn or both are one and same and what will be their Classification?
- Whether the Supply made of Badla / Imitation Jari / Metallic Yarn made from Micro Slitting process done on Plain Polyester Film or Metalized Polyester Film or Metalized & Lacquered Film will fall under merit classification under HSN 56050090 or 56050020?
- If the answer to Question No. 2 mentioned above is 5605 0020, then whether the Applicant is eligible for concessional rate of 5% w.e.f. 27.07.2023?
- If the answer to Question No. 2 mentioned above is 5605 0020, then whether the Applicant is eligible for Refund on Polyester Yarn, Lacquered Film, Chemicals, Packing Material, and Coal etc. till Dt. 19.08.2023?
- If the answer to Question No. 2 mentioned above is 5605 0090, then whether the Applicant is liable to Rate of 12%?
- If the answer to Question No. 2 mentioned above is 5605 0090, then whether the Applicant is eligible for Refund on Polyester Yarn, Lacquered Film, Chemicals, Packing Material, and Coal etc.?
Facts
The applicant is a manufacturer and exporter of various products including Metalized Polyester Film, Lacquered Polyester Film, and Metallic Yarn. They sought clarification on the classification and applicable GST rate for their products, specifically Badla, Imitation Jari, and Metallic Yarn produced through a micro-slitting process. The applicant expressed confusion regarding the classification of Metalized Yarn following changes in notification entries.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification difference | Not answered Deemed outside the ambit of Section 97(2) |
| HSN Classification | HSN 5605 00 20 Applies to Badla, Imitation Jari, and Metallic Yarn made via micro-slitting |
| Applicable GST rate | 5% Per serial no. 218AA of schedule I of notification 1/2017-CT(Rate) and serial no. 353 of notification 9/2025-CT(R) |
| Refund eligibility (pre-2023) | Not answered Deemed outside the ambit of Section 97(2) |
| Liability to 12% rate | Infructuous Rendered infructuous by the ruling on HSN 5605 00 20 |
| Refund eligibility (general) | Not answered Deemed outside the ambit of Section 97(2) |
The Authority ruled that the supply of Badla, Imitation Jari, and Metallic Yarn made from the specified micro-slitting process falls under HSN 5605 00 20. Consequently, the applicable GST rate is 5% as per the relevant notifications. The Authority declined to answer questions regarding refunds and other procedural matters, stating they fall outside the ambit of Section 97(2) of the CGST Act.
Reasoning
The Authority relied on HSN 5605, Notification No. 1/2017-CT(Rate) as amended by Notification No. 9/2023-CT(Rate), and Circular No. 205/17/2023-GST to determine the classification. It concluded that the products in question are covered under the entry for imitation zari thread or yarn. The Authority further noted that Notification No. 9/2025-CT(R) superseded previous notifications, confirming the 5% rate. Procedural questions regarding refunds were rejected as they do not constitute classification or tax liability determinations under Section 97(2).
Provisions relied on
- Section 97(2) of the CGST/GGST Act
- HSN 5605
- Notification No. 1/2017-Central Tax (Rate)
- Notification No. 9/2023-Central Tax (Rate)
- Notification No. 9/2025-Central Tax (Rate)
- Circular No. 205/17/2023-GST
For the practitioner
This ruling provides **definitive classification** for Badla, Imitation Jari, and Metallic Yarn under HSN 5605 00 20, attracting a 5% GST rate. It is useful for manufacturers in the textile ancillary sector to confirm their tax liability. However, it explicitly refuses to adjudicate on refund claims, confirming that such procedural matters are **outside the scope** of advance ruling applications.
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/59_sumilon_industries_pvt_ltd_compressed.pdf
Legibility of the scan, as read: high.
Prepared 14-10-2026.
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