The West Bengal Authority of Advance Ruling (AAR) has in its recent given ruling in regard to GST on electric vehicles wherein it ruled that three-wheeled motor vehicle is classifiable under HSN 8703 as an electrically operated vehicle, provided it is fitted with the battery pack and thus GST rate applicable will be 5%. Otherwise, it will be classifiable under HSN 8706 and GST rate applicable will be 28%.
Facts of the case:
The applicant, M/s Hooghly Motors Pvt. Ltd. submitted that the goods it manufactures are supplied with the battery pack and, therefore, should be classified under HSN 8703, being an electrically operated three-wheeled motor vehicle.
It is different from the body of a three-wheeled motor vehicle supplied without the battery pack. The latter may be classified as parts of a three-wheeled motor vehicle classifiable under HSN 8708.
Issue on which ruling was sought:
The applicant sought advance ruling on the issue of whether such a three-wheeled vehicle is classifiable as an “electrically operated motor vehicle‟ under HSN 8703 when supplied with a battery pack.
The ruling was further sought on the classification when supplied without the battery pack.
Order of West Bengal AAR: Ruling on GST on Electrical vehicles
- A combined reading of the provisions of section 2A (2) of the Motor Vehicles Act and Entry No. 242A of Schedule I of the Rate Notification establishes that the battery pack is an essential character of an e-rickshaw.
- An electrically operated three-wheeled vehicle is run entirely on electrical energy, derived from an external source or one or more electrical batteries fitted to such vehicles. If the battery pack is withdrawn, it will no longer be a three-wheeled electrically operated vehicle.
- Motor vehicles for carrying less than ten passengers are classified under Heading 8703 of the First Schedule of the Customs Tariff Act, 1975 which is adopted in the GST Act for classification.
- Erickshaws or electrically operated three-wheeled vehicles are classifiable under Tariff heading 8703 90 10 of the Tariff Act.
- A three-wheeled motor vehicle without the battery pack is not classifiable as a vehicle under Sub-heading 8703 of the Tariff Act. However, it includes the chassis fitted with the motor to convert electrical energy into the mechanical energy to put the vehicle into locomotion once the battery pack is attached. Such a device is called the engine of the vehicle. It is, therefore, classifiable under Tariff-head 8706 00 31, being the chassis fitted with an engine of a vehicle under sub-heading 8703.
In view of above deliberations the two-member bench of Susmita Bhattacharya and Parthsarthi Dey ruled that a three-wheeled motor vehicle is classifiable under HSN 8703 as an electrically operated vehicle, provided it is fitted with the battery pack. Otherwise, it will be classifiable under HSN 8706.
It may be noted here that electric vehicles classified under HSN 8703 are exigible to GST rate of 5%, whereas chassis which are classified under HSN 8706 are subject to GST rate of 18%.
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