GST Tax Rate for Tapioca Residue: Tamil Nadu Advance Ruling TN/25/AAR/2023
The Authority for Advance Ruling decided that fibrous tapioca residue is taxable at 5% under HSN 2303.10, not exempt as flour.
- Ruling
- Advance Ruling No. 25 /AAR/2023 Dated: 20.06.2023
- 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
- Tapioca residue is classified as starch manufacturing waste, not flour.
- The product is taxable at 5% under HSN 2303.10.
- Registration is mandatory if aggregate turnover exceeds the Section 22 threshold.
In short
V.S. Trading Company asked the Authority for Advance Ruling (AAR) in Tamil Nadu whether their tapioca product was exempt flour or taxable industrial residue. The company argued it was flour under HSN 1106, which is often exempt from Goods and Services Tax (GST). The authority disagreed, ruling that because the product is a fibrous byproduct of starch extraction, it falls under a different category.
What has changed
How it worked before
Businesses often assumed that crushed tapioca products could be classified as flour under HSN 1106 to claim a tax exemption.
What has changed
The authority clarified that residues from starch manufacturing are taxable at 5% under HSN 2303.10. This means businesses selling this byproduct must collect and pay GST rather than treating it as an exempt item.
Who this affects
Traders and manufacturers dealing in tapioca starch byproducts or fibrous residues.
An example
A starch factory owner sells the fibrous 'kappi' left over after processing. They previously classified it as flour to avoid GST. After this ruling, they should reclassify it under HSN 2303.10 and begin charging 5% GST to avoid future tax demands.
What you should do
If you sell similar residues, review your HSN classification to ensure you are not incorrectly claiming an exemption. Remember that an advance ruling only binds the specific business that asked and their local tax office; it is not a universal law for all taxpayers.
If you do nothing
If you misclassify your goods, a tax officer may issue a demand for unpaid GST plus interest and penalties. Relying on a ruling that does not apply to your specific facts can lead to costly disputes during an audit.
The terms explained
- HSN
- Harmonized System of Nomenclature is a code used to classify goods for taxation purposes.
- Aggregate turnover
- The total value of all taxable and exempt supplies made by a business across India.
- Advance ruling
- A formal decision by tax authorities on how GST applies to a specific business transaction.
The ruling in detail
Authority for Advance Ruling
M/s. V.S. Trading Company
Advance Ruling No. 25 /AAR/2023 Dated: 20.06.2023 · Tamil Nadu
Questions before the authority
- Classification of goods i.e. Tapioca flour obtained by crushing the dried roots, and remnants of tapioca roots/tubers.
- Applicability of Notifications issued under the provisions of Act in respect of goods falling under entry No.78 and Tariff item 1106 of Part A of Exempted goods, and tariff item 1106 in Sl.No.59 of Part C in Schedule I of the said Act.
- Determination of the liability to pay tax in respect of the said goods, tariff No.1106 as mentioned in Sl.No.78 of Part A of Exempted goods, and Sl.No.59 of Part C of First Schedule to the Act.
- Whether such trader/ dealer is required to be registered.
Facts
The applicant is a dealer engaged in the purchase and sale of tapioca flour, which they manufacture by drying and crushing the fibrous residue (kappi) obtained after extracting starch from tapioca roots. They contended that this product is classifiable under HSN 1106 and is exempt from tax as it is sold unbranded. The jurisdictional authority argued that the product is a residue of starch manufacturing and should be classified differently.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of product | HSN 2303.10 Residues of Starch manufacture and similar residues |
| Applicability of exemption notifications | Not applicable The product does not fall under tariff item 1106 |
| Tax liability | Taxable at 5% (2.5% CGST + 2.5% SGST) Under Schedule I of Notification No.II(2)/CTR/532(d-4)/2017/G.O.Ms.No.62 |
| Registration requirement | Liable to be registered Subject to conditions prescribed under Section 22 of the GST Act |
The Authority ruled that the product is not tapioca flour under HSN 1106 but is instead classifiable as residues of starch manufacture. Consequently, the product is taxable at 5% under HSN 2303.10. The applicant is required to be registered if their aggregate turnover exceeds the prescribed threshold under Section 22 of the CGST Act.
Reasoning
The Authority reasoned that the product is a fibrous residue obtained during the starch extraction process, not flour directly prepared from roots. Therefore, it fits the specific description of **residues of starch manufacturing** under HSN 2303.10 rather than the general category of flour under HSN 1106. The ruling relies on the distinction between primary products and manufacturing residues, noting that the product is used for animal feed and adhesives, not human consumption. It cites Section 22 of the CGST Act regarding registration thresholds.
Provisions relied on
- Section 98(4) of the CGST Act, 2017
- Section 98(4) of the TNGST Act, 2017
- Section 22 of the CGST Act
- HSN 1106
- HSN 2303.10
- Notification No.II(2)/CTR/532(d-4)/2017/G.O.Ms.No.62
- Circular No. 80/54/2018-GST
For the practitioner
This ruling clarifies that fibrous residues from starch manufacturing are **taxable at 5% under HSN 2303.10** and do not qualify for the nil-rated exemption applicable to certain flours under HSN 1106. It serves as a warning for traders misclassifying industrial residues as food-grade flours. It does not decide the specific registration status of the applicant, which remains contingent on their actual aggregate turnover.
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/25_aar_2023_trading.pdf
Legibility of the scan, as read: high.
Prepared 18-10-2026.
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