GST Classification of Eucalyptus and Poplar Wood Logs
The Authority for Advance Ruling rejected the claim that specific wood logs qualify for a lower 5% GST rate.
- Ruling
- Ruling No-12/2018-19 dated 03.12.2018
- 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
- Sharda Timber asked if wood logs qualify as wood waste under HSN 4401.
- The applicant sought a 5% GST rate based on specific log dimensions.
- The authority ruled these logs do not fall under HSN 4401.
In short
Sharda Timber asked the Authority for Advance Ruling (AAR) if their Eucalyptus and Poplar wood logs could be taxed at a lower 5% Goods and Services Tax (GST) rate by classifying them as wood waste under HSN 4401. The company argued that because their logs had specific lengths and girths, they should be treated as waste rather than raw timber. The authority disagreed, noting that the tax tariff does not use these dimensions to define wood waste.
What has changed
How it worked before
Businesses often assumed that defining wood by specific physical dimensions like length or girth could determine its tax classification.
What has changed
The authority clarified that arbitrary dimensions do not change the nature of wood for tax purposes. Because the logs were classified as wood in the rough, they likely fall under HSN 4403, which carries a higher 18% GST rate instead of the 5% rate the company requested.
Who this affects
Timber traders and wood suppliers dealing in Eucalyptus or Poplar logs.
An example
A timber merchant sells Poplar logs and wants to pay 5% GST by calling them wood waste. They read this ruling and realize that simply measuring the logs does not make them waste. They must now check if their product is actually 'wood in the rough' under HSN 4403, which is taxed at 18%.
What you should do
This ruling only applies to Sharda Timber and their specific tax office. If you trade in similar wood, do not assume you can use the 5% rate; consult a tax professional to determine the correct HSN code based on the actual nature of your goods, not just their size.
If you do nothing
If you apply a lower tax rate based on an incorrect classification, you risk a tax demand for the difference plus interest and penalties. A tax officer may reject your classification during an audit, leading to costly legal disputes. Never assume a ruling for another business protects you from these consequences.
The terms explained
- HSN
- Harmonized System of Nomenclature is a code used to classify goods for taxation purposes.
- Wood in the rough
- Timber that has not been processed or manufactured, usually taxed at a higher rate than wood waste.
- Advance Ruling
- A formal decision from tax authorities on how GST applies to a specific business transaction.
The ruling in detail
Authority for Advance Ruling
M/s Sharda Timber
Ruling No-12/2018-19 dated 03.12.2018 · Uttarakhand
Questions before the authority
- Whether the commodity of Eucalyptus/Polar Wood Waste in Logs having length of 30 cm to 200 cm and Girth of approx. 10 cm to 60 cm is covered under HSN 4401
- Whether the commodity of Eucalyptus/Polar Wood Waste in Logs having length of 30 cm to 200 cm and Girth of approx. 10 cm to 60 cm is chargeable to tax under Uttarakhand State GST @ 2.5% and CGST @ 2.5%
Facts
The applicant is engaged in the trade of Eucalyptus and Poplar wood waste in logs. They sought an advance ruling to classify these specific logs under HSN 4401 and confirm the applicability of a 5% total GST rate. The applicant specifically defined the logs by their length and girth dimensions.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification under HSN 4401 | No The specified dimensions are not criteria for HSN 4401 classification |
| Applicability of 5% GST rate | No The goods do not qualify for the 5% rate under HSN 4401 |
The authority ruled in the negative, stating that the wood waste in logs as described does not fall under HSN 4401. Consequently, the requested tax rate of 5% is not applicable to the goods in question.
Reasoning
The authority examined the Customs Tariff and GST Tariff and found that neither mentions length or girth as criteria for classifying wood waste in logs. It noted that HSN 4403, which covers wood in the rough, attracts a higher rate of 18%. Because the applicant failed to correctly frame the classification based on the actual nature of the goods rather than arbitrary dimensions, the authority rejected the application. The decision turned on the interpretation of the scope of HSN 4401 versus HSN 4403.
Provisions relied on
- Section 97(1) of the CGST/SGST Act, 2017
- Section 100(1) of the CGST/SGST Act, 2017
- Chapter 44 of the Customs Tariff
For the practitioner
This ruling serves as a warning that applicants cannot force a classification by imposing arbitrary physical dimensions like length and girth if they are not recognized by the tariff. It clarifies that wood in the rough generally falls under HSN 4403 rather than the lower-taxed HSN 4401. Practitioners should note that this order **does not determine the correct HSN** for the applicant's goods, but merely rejects the specific classification sought.
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/uttrakhand_13-2018-19_sharda_timber.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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