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2020 (8) TMI 250 - AAR - GSTClassification of goods - three-wheeled motor vehicles, commonly known as Toto - whether such a three-wheeled vehicle is classifiable as an electrically operated motor vehicle under HSN 8703 when supplied with a battery pack? - determination of classification when supplied without the battery pack - HELD THAT - Motor vehicles for carrying less than ten passengers are classified under Heading 8703 of the First Schedule of the Customs Tariff Act, 1975 (hereinafter the Tariff Act), which is adopted in the GST Act for classification. Sub-heading 8703 10 covers the vehicles specially designed for travelling on snow, golf cars and similar vehicles. The term similar narrows the scope to specific use other than carrying passengers on hire on regular roads. All other sub-headings except the residual sub-heading 8703 90, refer to vehicles fitted with an internal combustion engine. E-rickshaws or electrically operated three-wheeled vehicles are, therefore, classifiable under Tariff heading 8703 90 10 of the Tariff Act. A three-wheeled motor vehicle without the battery pack does not have the essential character of an electrically operated vehicle. However, it is neither a vehicle fitted with an internal combustion engine. Unless it is equipped with any device like solar panels that may supply energy for its locomotion, it 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. 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.
Issues:
1. Admissibility of the Application 2. Classification of three-wheeled motor vehicles under HSN 8703 Admissibility of the Application: The applicant, a manufacturer of "Toto" three-wheeled motor vehicles, sought clarification on the classification of these vehicles under HSN 8703 when supplied with or without a battery pack. The application was deemed admissible under section 97(2)(a) of the GST Act as the question was not pending or decided in any previous proceedings. The concerned revenue officer did not object to the admissibility, leading to the acceptance of the application. Classification of three-wheeled motor vehicles under HSN 8703: The applicant argued that their vehicles, when supplied with a battery pack, should be classified under HSN 8703 as electrically operated vehicles. The Bench observed that as per the Motor Vehicles Act, an e-rickshaw is a special-purpose battery-powered vehicle. The Rate Notification defines "electrically operated vehicle" as those running solely on electrical energy from external sources or batteries. The presence of a battery pack is crucial for classifying a three-wheeled electric vehicle under HSN 8703. Further, the Bench clarified that without the battery pack, a three-wheeled vehicle loses its essential character as an electrically operated vehicle. In such cases, the vehicle would not fall under the sub-headings of vehicles fitted with internal combustion engines. Instead, it would be classified under Tariff-head 8706 00 31 as a chassis fitted with an engine, enabling locomotion once the battery pack is attached. Therefore, the ruling stated that a three-wheeled motor vehicle is classifiable under HSN 8703 as an electrically operated vehicle only when equipped with a battery pack; otherwise, it falls under HSN 8706. In conclusion, the ruling provided clarity on the classification of three-wheeled motor vehicles under the specified HSN codes, emphasizing the significance of the battery pack in determining the classification under the GST Act. The ruling's validity was subject to the relevant provisions until declared void under the Act.
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