In re Sai Motors (GST AAR Karnataka)
The retrofitted vehicle merits classification under heading 8711 20 19 and hence attracts GST @ 28% and applicant is entitled for input tax credit of tax paid on purchase of vehicle i.e. scooter.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICE TAX ACT, 2017 AND UNDER 98(4) OF THE KARNATAKA GOODS AND SERVICES TAX ACT, 2017
1. M/s Sai Motors, # 215, 100 Feet Ring Road, 3rd Stage, 3rd Phase, 2nd Block, Banashankari, Bengaluru-560085, having a GSTIN 29AASFS7259M1ZO, have filed an application for Advance Ruling under Section 97 of CGST Act,2017 86 KGST Act, 2017 read with Rule 104 of CGST Rules 2017 86 KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The applicant is a proprietary concern registered under the provisions of the Goods and Services Act, 2017. The applicant states that he is engaged in the business of supplying two wheelers.
3. The applicant has sought advance ruling in respect of the following questions:
Whether he can bill the scooter at 5% GST under HSN 8713 along with retrofitment and it shall not restrict any input tax credit on purchase of vehicle under HSN 8711 at 28% GST
4. The applicant furnishes some facts relevant to the stated activity.
a. The applicant states that he purchases vehicles from M/s Hero Motocorp , under HSN 87112019 which is liable to GST at 28%. He also purchases retro fitment fitting, under HSN 87131090 at GST 5%. This retro fitment fitting is fixed to the vehicles purchased and sold to the differently abled customers.
b. The applicant states that he is presently collecting GST from the customers of Retrofitted vehicles at two rates – Vehicles at 28% and Retro Fitment Fitting at 5%.
c. The applicant states that other dealers in the market are selling such vehicles i.e. after fitting retrofitment at GST 5% on the entire sale value including vehicles under HSN 87131090. Hence some of his differently abled customers were demanding him to charge GST on entire sale value of the vehicles (after retrofitment) at 5% under HSN 87131090. Hence, the applicant has sought to know whether he can bill the entire value of the vehicle after retrofitment, purchased by differently abled customers at 5% under HSN 87131090.
d. The applicant states that if he is allowed to sell the vehicles at 5%, whether he can claim ITC on the entire 28% paid for purchase of vehicles even though on sale he will be allowed to charge 5% on the output.
5. The applicant states that the goods sold by him i.e. retrofitted two wheelers are to be classified under serial number 243 under HSN 8713 – Carriage for disabled persons, whether or not motorized or otherwise mechanically propelled and is liable to tax at 5%. He states that the Cars for physically handicapped persons under HSN 8703 are given special treatment subject to conditions and the two wheelers require more facility for specially abled compared to Motor Car.
PERSONAL HEARING: / PROCEEDINGS HELD ON 20.02.2020
6. Sri Harish.S., Chartered Accountant and duly authorised representative of the applicant appeared for personal hearing proceedings on 20.02.2020 before this authority and reiterated the facts.
7. DISCUSSION & FINDINGS
7.1 We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by him when he appeared for the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts.
7.2 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act.
7.3 The applicant herein purchases the two wheelers, covered under the HSN 8711 20 19 and also purchases the retro fitment equipment, covered under HSN 8713 10 90. The applicant then retrofits the equipments to the two wheelers and makes it compatible to use of differently abled persons. The applicant contends that the impugned retro fitted vehicles qualify to be motorized carriages for disabled persons 86 merits classification under heading 8713 1090 and hence attracts GST @5%, in terms of Entry No.243 of Schedule I to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017.
7.4 It is observed that Entry No.243 of Schedule Ito the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. specifies that the goods having description of “Carriages for disabled persons, whether or not motorised or otherwise mechanically propelled” attract 5% GST (CGST-2.5% 86 SGST-2.5%). The .applicant contended that their product “Retrofitted two-wheeler” merits I-Ossification under heading 8713. Therefore, the question before us to decide is w ether the impugned retrofitted two-wheeler qualifies to be classified under heading 8713 or not. Thus, we proceed to examine the classification of the said product i.e. Retrofitted two-wheeler. We draw attention to the Chapter Heading which reads as under:
