Calcutta HC Rules Against Mega Flex Plastics in GST Dispute
Mega Flex Plastics reported that the Calcutta High Court ruled its PP Leno bags fall under HSN 3923 2900, attracting an 18% GST rate. The company had paid ₹6,57,38,093 under protest for the differential demand and plans to file an SLP with the Supreme Court, stating no immediate financial impact.
*this image is generated using AI for illustrative purposes only.
mega flex plastics has disclosed a material litigation update regarding a GST classification dispute following a judgment by the Hon'ble Division Bench of the Calcutta High Court on May 20, 2026. The case, titled Mega Flex Plastics Limited & Anr. v. Union of India & Ors., addresses the classification of polypropylene leno bags manufactured by the company.
Background of the Dispute
The dispute stems from an order dated October 25, 2018, by the West Bengal Appellate Authority for Advance Ruling. The authority classified PP Leno Bags under Heading 63053300, attracting a GST rate of 5% or 12%, rather than Chapter Heading 39232990, which attracts 18%. Consequently, the company made a payment under protest of ₹6,57,38,093 for the differential GST demand for the quarter ended December 31, 2024.
Court Judgment
The Division Bench of the Calcutta High Court has ruled that the polypropylene leno bags manufactured by the company fall under HSN 3923 2900. Consequently, the goods are taxable at the rate of 18%. The court's decision settles the classification dispute in favor of the tax authorities, overturning the company's previous classification claims.
Financial Impact and Future Action
The company stated that the disputed amount had already been paid under protest in FY 2018–2019. As Mega Flex Plastics intends to file a Special Leave Petition (SLP) before the Supreme Court of India against the judgment, it reported that there is presently no further financial impact resulting from the order.
| Particular | Details |
|---|---|
| Authority | Hon'ble Division Bench of the Calcutta High Court |
| Date of Order | 20-05-2026 |
| Disputed Amount Paid | ₹6,57,38,093 |
| Tax Rate Upheld | 18% (HSN 3923 2900) |
| Next Step | Filing Special Leave Petition in Supreme Court |
Historical Stock Returns for Mega Flex Plastics
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| 0.0% | 0.0% | -7.86% | +37.52% | +123.22% | +146.49% |
If the Supreme Court upholds the 18% GST classification in the SLP, how significantly could the cumulative tax liability impact Mega Flex Plastics' profit margins and cash flow going forward?
How might a Supreme Court ruling on PP Leno Bag classification affect other manufacturers in the polypropylene packaging industry who may be similarly classifying their products under the lower tax bracket?
Could the Calcutta High Court's judgment prompt GST authorities to initiate retrospective tax demands on Mega Flex Plastics beyond the already disputed period, and what would be the potential financial exposure?
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