The Tamil Nadu Authority for Advance Ruling (GST AAR) has issued an important clarification on the applicable GST rate for lime products, bringing relief to manufacturers and buyers who were facing uncertainty for a long time. As per the ruling, Quick Lime with around 90% purity and Hydrated Lime with purity ranging between 85% and 95% will attract GST at the rate of 5%, effectively settling the debate over whether such products should be taxed at 5% or 18%. This ruling is particularly significant for industries and government bodies that regularly procure lime for industrial and water treatment purposes.
Background of the GST Rate Dispute
The applicant, M/s Kaycee Industrial Chemicals Private Limited, located in Thoothukudi, Tamil Nadu, approached the GST AAR seeking clarity on the correct GST rate applicable to its lime products. The issue arose because customers, including large institutional buyers such as the Kerala Water Authority, expressed concerns over varying interpretations adopted by different states. In some cases, lime products of lower purity were being considered under higher tax slabs, leading to confusion, compliance challenges, and disputes during procurement and billing.
Examination by Tamil Nadu GST AAR
During the proceedings, the Authority carefully examined the manufacturing process, chemical composition, and classification of the products supplied by the applicant. It was observed that Quick Lime manufactured by the company contains about 90% Calcium Oxide, while Hydrated Lime contains approximately 85% to 95% Calcium Hydroxide. The remaining percentage consists of impurities ranging from 10% to 15%, which plays a crucial role in determining the correct tariff classification under GST law.
The AAR noted that products classified under Heading 2825 of the Customs Tariff are meant for chemically defined, pure Calcium Oxide or Calcium Hydroxide. Since the applicant’s products do not meet the criteria of being chemically pure due to the presence of impurities, they cannot be classified under this heading, which attracts a higher GST rate.
Correct HSN Classification and Applicable GST Rate
Based on the detailed analysis, the Authority held that the correct classification for these products falls under HSN 2522. This heading covers Quicklime, Slaked Lime, and Hydraulic Lime, which are specifically recognized as industrial lime products. As per Notification No. 1/2017 and the amended Notification No. 9/2025, goods falling under HSN 2522 are taxable at a concessional GST rate of 5%.
Accordingly, the AAR ruled that both Quick Lime with 90% purity and Hydrated Lime with purity between 85% and 95% are liable to GST at 5%, split equally as 2.5% CGST and 2.5% SGST. This clarification aligns the tax treatment of such lime products with their industrial nature and composition.
Binding Nature of the Ruling
The Authority further clarified that this advance ruling will remain binding on the applicant as well as the concerned jurisdictional tax officers unless there is any change in facts, legal provisions, or circumstances. This provides a level of certainty to the applicant and similarly placed businesses operating in the lime manufacturing sector.
Applicant Details
| Particulars | Details |
|---|---|
| Applicant Name | M/s Kaycee Industrial Chemicals Private Limited |
| GSTIN | 33AACCK1996Q1ZX |
| Authority | Tamil Nadu GST Authority for Advance Ruling |
Impact on Industry and GST Compliance
This ruling is expected to have a wider impact beyond the applicant, as it offers a clear reference point for manufacturers, suppliers, and buyers dealing in Quick Lime and Hydrated Lime of similar purity levels. It reduces ambiguity in classification, minimizes the risk of disputes with tax authorities, and helps businesses apply the correct GST rate with confidence. For industries such as water treatment, construction, and chemical processing, the clarification ensures smoother procurement and cost predictability under the GST regime.