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2022 (8) TMI 807 - AAR - GSTClassification of manufactured goods - rate of GST - amusement park ride karts commonly known as Go-karts - classifiable under Chapter Tariff Heading 9508 of the First Schedule to the Customs Tariff Act, 1975 or not? - Go-karts manufactured and supplied by the Applicant which are not roadworthy and cannot be registered as Motor Vehicles with the Regional Transport Authority (RTO for short) are classifiable as Motor Vehicles meant for carrying of passengers / persons under Chapter Tariff Heading 8703 of the First Schedule to the Customs Tariff Act, 1975 or not? - Applicability of Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017 as amended by Notification No.18/ 2021-Central Tax (Rate) dated 28-12-2021 or Sl.No.453 of Schedule III to Notification No.1/2017-Central Tax (Rate), dated 28-06-2017. HELD THAT - The applicant states that they are engaged in manufacture and supply of amusement park ride karts' commonly known as 'Go karts', which are mainly used for joy riding or amusement ride by both children as well as adults. The Applicant submits that the products manufactured by them are designed and shaped to run or drive only on extremely smooth, specially designed tracks or closed circuits and not on track or normal automobiles are able to operate - the Applicant states that they were under the impression that Go Karts are classifiable under Chapter Tariff Heading (CTH) 9503 but were advised to classify under CTH 8703 and pay GST at 28%. So the applicant wants to know whether 'amusement park ride karts' commonly known as 'Go karts', are to be classified under CTH 8703 taxable at 28% or under CTH 9503 taxable at 18%. Further as per the provisions of Section 39 of the Motor Vehicles Act, 1988 motor vehicles are not permitted to drive on roads without registration with the registering authority i.e., RTO - The applicant submits that as per the Motor Vehicles Act, Children below the age of 18 years are not permitted to ride or drive motor vehicles and require driving license to drive the vehicle. However, no such restrictions are imposed under any of the statute to use Go-karts by children below the age of eighteen years. Further, the 'amusement park ride karts' supplied by the applicant neither qualify as 'motor cars' nor as 'motor vehicle' under the Motor Vehicles Act, 1988 as they are not road worthy. They are also not designed for transport of persons and are meant only for amusement or entertainment for use on a fixed or restricted course. Hence they are not classifiable under CTH 8703. Whether the 'amusement park ride karts' supplied by the applicant are classifiable under CTH 9508? - HELD THAT - Since the Go Karts manufactured and supplied by the applicant are designed and shaped to run or drive only on extremely smooth specially designed surfaced tracks and the same are primarily used across the globe as an amusement ride for children and families the same may be considered as amusement park rides as per the meaning assigned to amusement park rides . Whether the 'amusement park ride karts' commonly known as 'Go-karts' can be classified under Sl.No.441A of Schedule III of Notification No.18/2021-Central Tax (Rate) dated 28-12-2021? - HELD THAT - As per serial No. 441A, CHAPTER number 9508, the amusement park rides are taxable at 9% CGST and 9% SGST.
Issues Involved:
1. Classification of 'amusement park ride karts' (Go-karts) under Chapter Tariff Heading 9508 or 8703 of the Customs Tariff Act, 1975. 2. Applicability of GST rates on 'amusement park ride karts' (Go-karts). Issue-wise Detailed Analysis: 1. Classification of 'amusement park ride karts' (Go-karts) under Chapter Tariff Heading 9508 or 8703 of the Customs Tariff Act, 1975: The applicant, engaged in the manufacture and supply of 'amusement park ride karts' (Go-karts), sought clarification on whether these karts should be classified under Chapter Tariff Heading 9508 or 8703 of the Customs Tariff Act, 1975. The applicant argued that their Go-karts, designed for joy riding or amusement purposes, are not roadworthy and cannot be registered with the Regional Transport Authority (RTO). They contended that Go-karts should be classified under Chapter Tariff Heading 9508, which covers amusement park rides, rather than under Chapter Tariff Heading 8703, which pertains to motor vehicles designed for the transport of persons. The applicant provided several points to support their argument: - Go-karts are primarily used for amusement and are not designed for transportation. - They are operated on specially designed tracks and are not roadworthy. - The Automotive Research Association of India (ARAI) has not certified Go-karts as motor vehicles. - The Motor Vehicles Act restricts children under 18 from driving motor vehicles, but no such restrictions apply to Go-karts. The authority examined the definitions under the Motor Vehicles Act and concluded that Go-karts do not qualify as 'motor cars' or 'motor vehicles' since they are not roadworthy and are not designed for the transport of persons. Instead, Go-karts are designed for amusement purposes and operate on fixed or restricted courses. Consequently, Go-karts are not classifiable under Chapter Tariff Heading 8703. 2. Applicability of GST rates on 'amusement park ride karts' (Go-karts): The applicant sought clarification on the applicable GST rate for Go-karts. They argued that Go-karts should attract GST at the rate of 18% under Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017, as amended by Notification No.18/2021-Central Tax (Rate) dated 28-12-2021. This entry covers amusement park rides and similar amusements, which are taxable at 9% CGST and 9% SGST. The authority reviewed the relevant entries and concluded that Go-karts, being amusement park rides, fall under Chapter Tariff Heading 9508. The amended chapter tariff heading 9508 includes "travelling circuses and travelling menageries; amusement park rides and water park amusements; fairground amusements, including shooting galleries; travelling theatres." The Notes to Chapter 9508 define 'amusement park rides' as devices or equipment designed for amusement or entertainment, which align with the characteristics of Go-karts. Therefore, the authority ruled that Go-karts manufactured and supplied by the applicant are classifiable under Chapter Tariff Heading 9508 and attract GST at the rate of 18% as per Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017, as amended. Ruling: i. The 'amusement park ride karts' (Go-karts) manufactured and supplied by the applicant, meant solely for joy riding or amusement purposes and designed to run on specially designed tracks or closed circuits, are classifiable under Chapter Tariff Heading 9508 of the First Schedule to the Customs Tariff Act, 1975. ii. The 'amusement park ride karts' (Go-karts) manufactured and supplied by the applicant, which are not roadworthy and cannot be registered as Motor Vehicles with the Regional Transport Authority (RTO), are not classifiable as 'Motor Vehicles meant for carrying of passengers/persons' under Chapter Tariff Heading 8703 of the First Schedule to the Customs Tariff Act, 1975. iii. The 'amusement park ride karts' (Go-karts) manufactured and supplied by the applicant attract GST at the rate of 18% as per Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017, as amended by Notification No.18/2021-Central Tax (Rate) dated 28-12-2021.
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