GST Rate on Standing Rubber Trees Sold for Cutting
Standing rubber trees sold under a contract to cut and remove them are taxable as goods at 18% GST.
- Ruling
- ORDER NO. CT/3270/18-C3 DATED 26/03/2018
- Dated
- 26 Mar 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
- The company asked if standing rubber trees were exempt from GST.
- The authority ruled these trees are goods once a contract requires their removal.
- Standing rubber trees are classified under HSN 4403 at an 18% tax rate.
In short
A contractor asked whether buying standing rubber trees to cut and remove them should be tax-free, as they were under previous tax laws. The authority looked at whether these trees count as 'goods' under the Goods and Services Tax (GST) law when a contract requires them to be cut down.
What has changed
How it worked before
Many businesses assumed that standing trees were part of the land and therefore not subject to GST, or that they fell under a different category with a zero tax rate.
What has changed
The authority decided that because the contract requires the trees to be cut and removed, they are legally considered 'goods' at the time of sale. This means the transaction is now taxable at 18% under HSN 4403, regardless of whether the wood is considered soft or hard.
Who this affects
Contractors, timber merchants, and businesses participating in auctions to purchase standing trees for logging.
An example
A timber trader wins an auction to harvest 500 teak trees from a government plantation. The contract requires the trader to cut and remove the trees within six months. Based on this ruling, the trader should expect to pay 18% GST on the purchase price, as the trees are treated as goods to be severed.
What you should do
If you are in a similar business, do not assume this ruling applies to your specific contract. An Advance Ruling is only binding on the person who asked for it and their specific tax officer. You should consult with a tax professional to review your own contract terms before deciding how to pay your taxes.
If you do nothing
If you assume this ruling applies to you and pay the wrong amount of tax, you risk a notice from your local tax office. If they disagree with your interpretation, you may be liable for the unpaid tax plus interest and penalties. Relying on another person's ruling does not protect you from these costs.
The terms explained
- HSN code
- A system of numbers used to classify goods so that tax rates can be applied consistently.
- Goods
- Under GST, this includes things attached to land that are agreed to be cut or removed before they are sold.
- Severed
- The act of cutting or detaching something, like a tree, from the land it is growing on.
The ruling in detail
Authority for Advance Ruling
Sri. N.C. Varghese, S/o. N.K.Chacko
ORDER NO. CT/3270/18-C3 DATED 26/03/2018 · Keralam
Questions before the authority
- Live rubber trees under HSN code 06 the rate of tax 0 but now insisting for payment of 18% GST which according to the auction there is no clarification issued by the GST Authorities as on date in spite of letter dtd.19-12-2017 hence as per the W.A.No.245/2018 of Hon'ble High Court for clarifying the GST rates.
- Both taxable rate of CGST and SGST for Standing Rubber Trees and Firewood.
Facts
The applicant is a small scale contractor who participated in an e-auction to cut and remove 6696 standing rubber trees from the State Farming Corporation Ltd. The applicant contended that standing rubber trees fall under HSN code 06 and should not be subject to GST, whereas the State Farming Corporation demanded 18% GST. The applicant argued that rubber wood is soft wood used for packing cases and plywood, and was exempt during the VAT period.
Ruling
| Question | What the authority ruled |
|---|---|
| Taxability of standing rubber trees | 18% under HSN 4403 Applicable to the rubber wood in the transaction |
The Authority ruled that the standing rubber trees, once agreed to be severed under a contract of supply, qualify as goods and are classified as wood in rough form. Consequently, the transaction is subject to an 18% tax rate under HSN 4403. The ruling clarifies the taxability of the rubber wood in the specific transaction.
Reasoning
The Authority relied on the definition of goods in Section 2(52) of the CGST Act, 2017, which includes things attached to or forming part of the land that are agreed to be severed before supply. Because the contract required the applicant to cut and remove the trees, they are treated as goods rather than standing timber. The Authority determined that the trees are classified as wood in rough form, rejecting the applicant's contention regarding HSN 06. It further noted that there is no differentiation between soft wood and hardwood under GST.
Provisions relied on
- Section 2(52) of the CGST Act, 2017
- HSN 4403
- HSN 4401
For the practitioner
This ruling confirms that standing trees sold under a contract requiring their severance are **taxable as goods** rather than being exempt as standing timber. It establishes that such rubber wood is classified under **HSN 4403 at an 18% rate**. Practitioners should note that this decision hinges on the contractual obligation to sever the trees before supply.
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/kerala-ct_3270-18-c3-ncv.pdf
Legibility of the scan, as read: high.
Prepared 16-10-2026.
About Patron Accounting LLP
Patron Accounting LLP is a CA and CS-led accounting and compliance firm that has been working with businesses across India since 2019. We handle the work that keeps a company correct with every department it answers to: day-to-day bookkeeping and accounting, GST registration and returns, income tax filing and assessments, TDS, payroll and PF/ESI, company and LLP incorporation, ROC and MCA compliance, statutory and internal audit, physical stock and inventory audits, trademark and other registrations, and the certificates and reports that banks, buyers and regulators ask for.
Our clients range from a first proprietorship registering for GST to established companies running operations across several states. Much of our work is exactly this: reading what a department has published and telling a business, in plain terms, whether it changes anything for them.
We operate from five offices and serve clients across the rest of India remotely:
- Pune (HQ): RTC Silver, B4-708, Sai Satyam Park, Wagholi, Pune, Maharashtra 412207
- Mumbai: 104, Rajshila Building, 597 J.S.S. Road, Marine Lines, Mumbai 400002
- Delhi: 3rd Floor, B-6/154-155, Sector 5, Rohini, Delhi 110085
- Gurugram: Pioneer Urban Square, B109, Golf Course Ext Road, Sector 62, Gurugram 122098
- Ahmedabad: Phoenix Tower, 1107, near Commerce Six Road, Drive In Road, Navrangpura, Ahmedabad, Gujarat 380009
If anything on this page affects you and you would like somebody to look at your own position, we are glad to help. Call +91 94594 56700, write to sales@patronaccounting.com, or visit patronaccounting.com. The first conversation costs nothing.