2023 (9) TMI 851 - AAR - GST

Classification of goods - Automobile Accessories - Electrical mechanical spare parts of electric vehicle - to be classified under HSN code 87031010 or not - HELD THAT - In view of the clarification by Circular No. 179/11/2002-GST in f.no. CBIC-190354/172/2002-TRU of Govt. of India Ministry of Finance, all electrically operated vehicles including three wheeled electric vehicles are classified under HSN 8703 for the purpose of taxation under GST. Further the above entry does not have any reference to electrical and mechanical spare parts of the electrical vehicle. The Hon ble Supreme Court of India (5 Member constitution bench) in VVS. SUGARS VERSUS GOVERNMENT OF ANDHRA PRADESH AND OTHERS 1999 (4) TMI 519 - SUPREME COURT held that A taxing statute must be interpreted as it reads, with no additions and no subtractions on the ground of legislative intent or otherwise . Therefore it cannot be inferred that parts of electrical vehicles fall under the above HSN code. Hence the goods Electrical and Mechanical spare parts of electrical vehicles fall under S.No 453 of Schedule-III of Notification no. 01/2017 dt 28.06.2017 i.e., Goods which are not specified in Schedule I, II, IV, V or VI falling in any chapter of HSN.

Summary

Issues Involved:
The issues involved in the judgment are the classification of products under the Harmonized System of Nomenclature (HSN) code for taxation under the GST Act.

Classification of Electric Vehicles:
The applicant sought clarification on the appropriate HSN code for electric vehicles. The ruling clarified that all electrically operated vehicles, including three-wheeled electric vehicles, are classified under HSN 8703 for GST purposes. The clarification was based on Notification No. 01/2017 and Circular No. 179/11/2002-GST issued by the Government of India Ministry of Finance.

Classification of Electrical & Mechanical Spare Parts:
Regarding the classification of electrical and mechanical spare parts of electric vehicles, the ruling stated that these parts are not covered by any specific description in Notification No. 01/2017. Therefore, they fall under the residual entry S.No 453 of Schedule-III of the same notification, which includes goods not specified in other schedules of the HSN.

Personal Hearing:
During the personal hearing, the authorized representatives of the applicant reiterated their case, confirming that no similar case was pending or decided under any provisions of the Act. The representatives provided additional information to support their application.

Discussion & Findings:
The ruling cited Notification No. 01/2017 and Circular No. 179/11/2002-GST to clarify the classification of electric vehicles under HSN 8703 for GST taxation. It highlighted that the presence of batteries is not a determining factor for classifying a vehicle as electrically operated. Additionally, the ruling referenced the HSN explanatory notes for Chapter 87 to support the classification decision.

Conclusion:
In conclusion, the ruling provided specific HSN codes for the classification of electric vehicles and clarified that electrical and mechanical spare parts of electric vehicles fall under the residual entry of Schedule-III of Notification No. 01/2017. The judgment was based on the interpretation of relevant notifications and explanatory notes to determine the appropriate classification for taxation under the GST Act.