Electric Vehicles Without Battery Remain Classifiable Under HSN 8703/8711 at 5% GST: WBAAR

In re Jaidka Power Systems Private Limited (GST AAR West Bengal)

Summary: The West Bengal Authority for Advance Ruling considered the application of Jaidka Power Systems Private Limited, a registered taxable person engaged in manufacture of electrically operated vehicles including E-Rickshaw commonly known as “TOTO”, E-Scooter, E-Cart and Ecovat Hydraulic. The applicant stated that it procures raw materials, accessories and batteries through imports on payment of IGST and from domestic registered suppliers on payment of applicable GST, avails input tax credit and has accumulated credit because certain inward supplies bear a higher rate than the outward supply of the finished electric vehicles. The application sought clarification on classification and GST rate where the two-wheeler and three-wheeler vehicles are supplied with or without battery attachment and also sought refund of accumulated ITC arising from inverted duty structure under section 54(3)(ii) of the GST Act. The Authority examined the scope of Section 97(2) and admitted only the first question, holding that the refund question was not covered by the statutory categories on which an advance ruling could be sought. The applicant’s submissions relied on the explanation to entry 242A of Schedule I of Notification No. 1/2017-Central Tax (Rate), the HSN Explanatory Notes, Circular No. 179/11/2022-GST dated 03.08.2022, Ministry of Road Transport and Highways Letter No. RT-11036/72/2017-MVL dated 12.08.2020, and earlier rulings concerning electric vehicles supplied without batteries. The applicant contended that fitting the battery at the time of supply is not a concomitant factor for determining whether the vehicle is electrically operated, because the vehicle is designed to run solely on electrical energy and its essential character does not change merely because the battery is supplied separately. The Revenue did not express any view on the merits. In considering the admitted question, the Authority reproduced and relied on the clarification in Circular No. 179/11/2022-GST that electrically operated vehicles, including three-wheeled electric vehicles, are to be classified under HSN 8703 even when the battery is not fitted at the time of supply. The Authority also considered the Odisha AAR ruling in Anjali Enterprises and the principle arising from Reva Electric Car Co. (P.) Ltd., under which pre-fitting of a battery is not a pre-condition for classification as an electrically operated vehicle. The Authority referred to its rulings in AMWA Moto LLP and Rohit Singh Kharwar, where e-rickshaws supplied without batteries were treated as electrically operated motor vehicles under tariff heading 8703, and applied the same reasoning to the e-scooter. On tariff classification, the Authority examined Chapter 87 of the First Schedule to the Customs Tariff Act, 1975, noting that tariff item 87038040 covers the three-wheeled vehicles concerned, while tariff item 87116020 specifically covers scooters. It considered the nature of Battery Electric Vehicles and distinguished them from hybrid, plug-in hybrid and fuel-cell vehicles, observing that the vehicles in the application derive traction energy solely from electrical energy and have no alternate source of propulsion. It concluded that where the motor, inverter, control module and drivetrain are fitted on a chassis with the body and the vehicle is capable of transporting people or goods, the vehicle retains its character under tariff heading 8703 in the case of three-wheelers and 8711 in the case of two-wheelers, and that it is immaterial whether the battery is fitted. For the GST rate, paragraph 4.11 records that the three-wheeled vehicles fall under tariff item 87038040 and the e-scooter under tariff item 87116020, and that all are covered by serial no. 441 of Schedule I of Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025, relating to electrically operated vehicles including two- and three-wheeled electric vehicles. The detailed finding states that all the goods are taxable at 2.5% CGST plus 2.5% SGST. However, the formal Ruling reproduces the question as asking whether the goods are classifiable under HSN 8703 and 8711 and are taxable at 5% GST, and answers that question in the affirmative. This creates a material internal inconsistency between the detailed rate determination and the formal concluding answer. The Full Text has been retained without correction, and the Summary likewise preserves that distinction. The substantive conclusion is therefore that the specified electric vehicles remain classifiable under HSN 8703/8711 whether supplied with or without battery attachment, while the detailed rate finding states 5% in aggregate as 2.5% CGST plus 2.5% SGST, notwithstanding the affirmative formal answer to the 5% GST question.

Cases Discussed

• In re Anjali Enterprises (GST AAR Odisha)
• In re AMWA Moto LLP (GST AAR West Bengal)
• In re Rohit Singh Kharwar (GST AAR West Bengal)
• Reva Electric Car Co. (P.) Ltd.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL

1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like manner except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the above, henceforth, for the purposes of these proceedings, the expression “GST Act” would mean both the CGST Act and the WBGST Act.

1.2 The applicant, Jaidka Power Systems Private Limited, is engaged in the manufacture of various types of electrically operated vehicles, including E-Rickshaw commonly known as “TOTO”, E-Scooter, E-Cart and Ecovat Hydraulic. In the course of manufacture, the applicant procures various raw materials, accessories and batteries both through imports on payment of IGST and from domestic registered suppliers on payment of applicable GST and avails input tax credit thereon. The applicant claims refund of accumulated input tax credit arising on account of inverted duty structure, since the rate of tax on certain inward supplies is higher than that applicable to the outward supply of the finished electric vehicles. In this background, the applicant has sought an advance ruling regarding the correct classification and applicable rate of GST on the aforesaid battery-operated two-wheeler and three-wheeler vehicles, whether supplied with or without battery pack, and its entitlement to refund of accumulated input tax credit under section 54(3)(ii) of the GST Act.

1.3 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made thereunder, seeking an advance ruling in respect of the following question:

1. Whether the goods as mentioned in chart given in Point No.12.B above under description of „E-Rickshaw‟ , „E-Cart‟ , „E-Cart Fateh‟ „Ecovat Hydraulic‟ and E-Scooter‟ – all low-cost battery-operated two-wheeler or three-wheeler vehicles sold with or without battery attachment is classifiable under HSN: 8703 and 8711 – all are taxable @5% under the Act.

2. Whether the Petitioner is entitled to claim Refund of accumulated ITC due to inverted tax structure u/s 54(3)(ii) of the Act. The Petitioner begs most respectfully to place his following submissions regarding classification of the goods under description of „E-Rickshaw‟ , „E-Cart‟ , „E-Cart Fateh‟ , „Ecovat Hydraulic‟ and E-Scooter‟ – all low-cost battery-operated two or three-wheeler vehicles sold with or without battery attachment.

1.4 Before admitting the questions, we will refer to Section 97(2) of the CGST Act, 2017, to remind ourselves of the questions on which an advance ruling can be sought. The following is the excerpt of the relevant portion: (2) The question on which the advance ruling is sought under this Act, shall be in respect of,—

(a) classification of any goods or services or both;

(b) applicability of a notification issued under the provisions of this Act;

(c) determination of time and value of supply of goods or services or both;

(d) admissibility of input tax credit of tax paid or deemed to have been paid;

(e) determination of the liability to pay tax on any goods or services or both;

(f) whether applicant is required to be registered;

(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.

1.5 In our view, the question placed under serial no. 1 is covered by clause (a) of Section 97(2). But the question placed under serial no. 2 is not covered by any of the clauses of the said section. The applicant‟s representative has been informed of our view.

1.6 The applicant states that the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act.

1.7 The officer concerned from the Revenue has raised no objection to the admission of the application.

1.8 The first question raised in the application is admitted and the other question is not admitted.

2. Submission of the Applicant

2.1 The Applicant submits that it is a registered taxable person engaged in the manufacture of various types of electric vehicles, namely E-Rickshaw commonly known as „TOTO‟, E-Scooter, E-Cart and Ecovat Hydraulic. To manufacture these electric vehicles, the Applicant uses various types of raw materials, accessories, and batteries, which are procured either by way of imports from outside India on payment of applicable IGST or through inward supplies received from various registered taxable persons on payment of applicable IGST, CGST, and SGST. The Applicant submits that it is legally entitled to avail the input tax credit of the IGST, CGST and SGST so paid and accordingly takes such credit in its Electronic Credit Ledger. The details of the finished goods manufactured by the Applicant along with their respective HSN are as under:

2.2 The Applicant submits that it has accumulated Input Tax Credit on account of an inverted tax structure, wherein the rate of GST applicable on its inward supplies of inputs is higher than the rate of GST applicable on its outward supplies of the finished electric vehicles. Accordingly, the Applicant claims refund of the accumulated input tax credit arising due to such inverted duty structure under section 54(3)(ii) of the CGST Act, 2017. In this regard, the Applicant seeks a legal clarification regarding the classification and applicable rate of GST on the electric vehicles manufactured and supplied by it, namely E-Rickshaw, E-Cart, Ecovat Hydraulic and E-Scooter, which are low-cost battery-operated three-wheeler or two-wheeler vehicles and are supplied either with or without battery attachment. The Applicant specifically seeks clarification as to whether the said vehicles are classifiable under HSN 8703 and 8711, as applicable, and attract GST at the rate of 5 percent.

2.3 The Applicant submits that clarification regarding the GST rate and classification of electrically operated vehicles, based on the recommendations of the GST Council in its 47th meeting held on 28th and 29th June 2022, was issued by the Government of India, Ministry of Finance, Department of Revenue, Tax Research Unit, vide Circular No. 179/11/2022-GST dated 3rd August 2022. The Applicant relies upon the said Circular, particularly the clarification relating to electric vehicles, whether or not fitted with a battery pack.

2.4 The Applicant submits that, as per the explanation to entry 242A of Schedule I of Notification No. 1/2017-Central Tax (Rate), the expression „Electrically operated vehicles‟ covers vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and includes E-bicycles. The Applicant submits that the said definition makes it evident that an electrically operated vehicle is one which runs solely on electrical energy derived from an external source or from electrical batteries. Therefore, the physical fitting of the battery to the vehicle at the time of supply cannot be considered to be a concomitant factor for determining whether a vehicle qualifies as an electrically operated vehicle.

2.5 The Applicant further submits that the HSN Explanatory Notes issued by the World Customs Organization also do not consider the battery to be a component whose absence would change the essential character of an incomplete, unfinished or unassembled vehicle. The Applicant also draws attention to the HSN Explanatory Notes relating to Chapter 87, which provide that motor chassis fitted with cabs fall under headings 87.02 to 87.04 and not under heading 87.06.

2.6 The Applicant submits that Circular No. 179/11/2022-GST dated 3rd August 2022 specifically clarifies that electrically operated vehicles are to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply and consequently attract GST at the rate of 5 percent in terms of entry 242A of Schedule I of Notification No. 1/2017-Central Tax (Rate).

2.7 The Applicant further submits that the Ministry of Road Transport and Highways has permitted registration of electric vehicles without pre-fitted batteries. Reliance is placed upon Letter No. RT-11036/72/2017-MVL dated 12th August 2020, which clarified that vehicles without batteries can be sold and registered on the basis of the type approval certificate issued by the testing agency and that there is no requirement to specify the make, type or other details of the battery for registration.

2.8 The Applicant submits that the Government is striving to create an ecosystem to accelerate adoption of electric mobility in the country. For promotion of electric two-wheeler and three-wheeler vehicles, the cost of the battery may be delinked from the vehicle cost and the battery may be provided separately by the original equipment manufacturer or by an energy service provider under a battery-as-a-service or battery-swapping model. Such a model reduces the upfront cost of electric vehicles and promotes the electric mobility ecosystem.

2.9 The Applicant submits that its products, namely „E-Rickshaw‟, „E-Cart‟, „Ecovat Hydraulic‟ and „E-Scooter‟, are low-cost battery-operated three-wheeler and two-wheeler vehicles and continue to qualify as electric vehicles even when supplied without battery attachment. The fact that such vehicles may be supplied without the battery does not alter their essential character as electrically operated vehicles.

2.10 The Applicant further relies upon the decision of the Authority for Advance Rulings, Odisha in the case of Anjali Enterprises [(2021) 130 taxmann.com 343 (AAR-ODISHA), dated 15.04.2021]. The Applicant submits that the said case concerned whether fitting of a battery was mandatory in two and three-wheeled battery-powered electric vehicles at the time of sale for availing the 5 percent GST rate applicable to electrically operated vehicles.

2.11 The Applicant submits that in the aforesaid case it was considered that the only difference between electric vehicles supplied with batteries and those supplied without batteries was the absence of the battery in the latter. Otherwise, the vehicles were complete in themselves to function as means of transportation propelled by an electric motor. It was therefore submitted that fitting of the battery could not be considered a concomitant factor for determining whether the vehicle is a battery-powered or electrically operated vehicle.

2.12 The Applicant submits that the Department, in the said proceedings, also contended that even without the battery, an E-Rickshaw having a motor fitted on a chassis along with the body and being capable of transporting persons retains its original character as a vehicle. The absence of the battery does not by itself convert the E-Rickshaw into a mere chassis.

2.13 The Applicant submits that the Authority for Advance Rulings, Odisha, after considering the definition of electrically operated vehicles, observed that an electrically operated vehicle exclusively uses electrical energy stored in rechargeable battery packs and has no secondary source of propulsion such as a hydrogen fuel cell or internal combustion engine. The Applicant submits that classification as an electrically operated vehicle is not dependent upon whether the battery is physically fitted at the precise time of supply.

2.14 The Applicant submits that the Authority for Advance Rulings, Odisha, also relied upon the decision in the case of Reva Electric Car Co. (P.) Ltd., wherein it was held that electrically battery-operated cars exported without batteries fitted at the time of export continued to be classifiable as battery-powered road vehicles. Accordingly, it was ruled that a two or three-wheeled battery-powered electric vehicle supplied with or without a battery pack is classifiable under HSN 8703 as an electrically operated vehicle and is taxable at 5 percent GST.

2.15. The Applicant submits that the aforesaid Circular issued by the Government of India, the clarification issued by the Ministry of Road Transport and Highways and the decision of the Authority for Advance Rulings, Odisha, collectively support the Applicant’s contention that electric vehicles can be supplied without a pre-fitted battery while retaining their character as electrically operated vehicles. The Applicant accordingly seeks clarification in respect of its battery-operated two-wheeler and three-wheeler vehicles, whether supplied with or without battery packs, regarding their classification under HSN 8711 and HSN 8703, as applicable, and their eligibility to attract GST at the rate of 5 percent.

2.16 The Applicant submits that the determination of the correct classification and applicable rate of GST is material for the Applicant‟s outward supplies as well as for the refund of accumulated Input Tax Credit arising due to inverted tax structure under section 54(3)(ii) of the CGST Act, 2017. The Applicant therefore seeks clarification regarding whether the battery-operated two-wheeler and three-wheeler vehicles manufactured and supplied by it, with or without battery packs, are covered under HSN 8711 and HSN 8703, as applicable, and attract GST at the rate of 5 percent.

3. Submission of the Revenue

The concerned officer from the revenue has not expressed any view on the merit of the issue raised by the applicant.

4. Observations & Findings of the Authority

4.1 We have gone through the records of the issue as well as submissions made by the authorized representatives of the applicant during personal hearing. The Revenue has not given any view in respect of the issues raised in the application for advance ruling.

4.2 As per the facts submitted before us, the applicant is a manufacturer of various types of e-vehicle, i.e. e-rickshaw commonly known as „TOTO‟, e-scooter, e-cart, ecovat hydraulic by using various types of raw materials, accessories and battery etc., procured by importing from outside of India on payment of IGST and also by making inward supplies from various RTP under the Act, paying due tax of IGST, CGST & SGST at applicable rate.

4.3 Under these circumstances, the applicant has placed the following question before this authority:

Question 1: Whether goods under description of e-rickshaw, e-scooter, e-cart, ecovat hydraulic – all low cost battery operated two or three wheeler vehicles sold with or without battery attachment are classifiable under HSN 8703 and 8711 and are taxable @5% GST?

Question 2: Whether the applicant is entitled to claim refund of accumulated ITC due to inverted tax structure under Section 54(3) (ii) of the CGST Act, 2017?

4.4 In Paragraph 1.5 supra, we have discussed the reason for admitting only question No. 1 out of the two questions placed before us. In our considered view, the question placed under serial number 1 is covered by the scope of Section 97(2) of the CGST Act, 2017, while the other question vide serial number 2 is not covered by the scope of the referred section. So we will limit our discussion to answer the question under serial number 1 only.

4.5 The applicant has referred to Circular No.179/11/2022-GST dated 03.08.2022. The relevant portion of the circular is reproduced as under:

2. Electric vehicles whether or not fitted with a battery pack, attract GST rate of 5% :

2.1. Representations have been received seeking clarification regarding the applicable rate of GST on electrically operated vehicle without any battery fitted to it.

2.2. The explanation of „Electrically operated vehicles‟ in entry 242A of Schedule I of notification No. 1/2017-Central Tax (Rate) reads as: „Electrically operated vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include E- bicycles.‟

2.3. As is evident from the explanation above, electrically operated vehicle including three wheeled electric vehicle means vehicle that runs solely on electrical energy derived from an external source or from electrical batteries. Therefore, the fitting of batteries cannot be considered as a concomitant factor for defining a vehicle as an electrically operated electric vehicle.

2.4. It is also pertinent to state that the WCO‟s HSN Explanatory notes have also not considered batteries to be a component, whose absence changes the essential character of an incomplete, unfinished or unassembled vehicle.

2.5. Also, the HSN explanatory notes for Chapter 87 have clearly stated that Motor Chassis fitted with cabs i.e. the chassis fitted with cabin body falls under 87.02 to 87.04 and not in heading 87.06.

2.6. In view of the above, it is clarified that electrically operated vehicle is to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply and thereby attract GST at the rate of 5% in terms of entry 242A of Schedule I of notification No. 1/2017-Central Tax (Rate).

The applicant‟s representative draws our attention to the ruling pronounced by Odisha Advance Ruling Authority in the case of Anjali Enterprises. The question placed before the said authority was “Whether fitting of battery is mandatory in two & three-wheeled battery powered electric vehicles (here-in-after referred to as „the subject goods‟) while selling the same to the dealers for getting the benefit of 5% GST rate applicable for electrically operated vehicles ?”

In their ruling, the authority defined electrically operated vehicles as those “vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include e-bicycles”. That means it is a type of Electric Vehicle (EV) that exclusively uses chemical energy stored in rechargeable battery packs, with no secondary source of propulsion (e.g. hydrogen fuel cell, internal combustion engine, etc.). An Electric Vehicle with battery pack uses electric motors and motor controllers instead of Internal Combustion Engines (ICEs) for propulsion. It derives all power from battery packs and thus has no internal combustion engine etc. Electrically operated vehicles are designed to run only on electrical energy. As such, they will run on battery as and when put to use. Hence, for vehicles to be classified as electrically operated vehicles, it must be such that it would run solely on electrically energy derived from one or more electrical batteries, as and when put to use.

The AAR relied upon the case of Reva Electric Car Co. (P.) Ltd which holds that if electrically battery-operated cars exported, though not fitted with batteries at the time of export, the same is still classifiable ‘battery powered road vehicles’ and would run on battery when put to use. Hence, we hold that fitting of battery in the vehicle, at or before the time of supply, is not a pre-condition for the same to be classified as electrically operated vehicle.

It was therefore ruled that A two or three-wheeled “battery-powered electric vehicle”, when supplied with or without a battery pack, is classifiable under HSN 8703 as an ‘electrically operated vehicle’ and is taxable @ 5% GST.

4.6 The Revenue has not given any view in respect of the matter referred to in the application for advance ruling.

4.7 The question placed before us and admitted by us has two limbs. First, whether the vehicles referred to in the application, i.e. e-rickshaw, e-scooter, e-cart, ecovat hydraulic – all being battery-operated vehicles are classifiable under HSN 8703 and 8711 when sold with or without battery. Secondly, whether all these products are taxable @ 5%?. The goods referred to in the application, except battery-operated e-scooters, are all battery- operated three-wheeled vehicles. The Arjun e-rickshaw is commonly known as „toto‟. E- cart Fateh is an electric three-wheeled goods carrier and utility vehicle powered by a battery. Ecovat hydraulic is an electric three-wheeler cargo and garbage loader vehicle featuring a hydraulic tipping mechanism. These battery-operated e-carts are widely used for municipal waste collection and utility goods transport. On the other hand, e-scooter is a battery operated two wheeled vehicle. What is common to all these vehicles is that an electric motor is used for the propulsion whose energy is supplied exclusively by battery/ batteries installed in the vehicle. This battery pack can be charged by plugging into an electric grid.

With effect from 07.01.2015 e-cart and e-rickshaw has been brought into the ambit of the Motor Vehicles Act, 1988. Section 2A has been added to the Act, which provides as under: Section 2A. e-cart and e-rickshaw.—(1) Save as otherwise provided in the proviso to sub- section (1) of section 7 and sub-section (10) of section 9, the provisions of this Act shall apply to e-cart and e-rickshaw.

(2) For the purposes of this section, “e-cart or e-rickshaw” means a special purpose battery powered vehicle of power not exceeding 4000 watts, having three wheels for carrying goods or passengers, as the case may be, for hire or reward, manufactured, constructed or adapted, equipped and maintained in accordance with such specifications, as may be prescribed in this behalf.

The above-noted three-wheeled vehicles are included in e-cart or e-rickshaw. For the first limb of the question, let us refer to the relevant portions of the First Schedule to the Customs Tariff Act, 1975. Chapter 87 of Section XVII of the Schedule refers to „Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof‟. Tariff heading 8703 refers to motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars. It is to be noted that tariff heading 8702 stands for motor vehicles for the transport of ten or more persons, including the driver.

Subheading 870380 included in the above tariff heading refers to „other vehicles, with only electric motor for propulsion‟. Tariff item 87038040 under this sub heading refers to three wheeled vehicles. Clearly the three wheeled vehicles referred to in the present application are covered by tariff item 87038040.

On the other hand, tariff heading 8711 refers to motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars. Subheading 871160 included in this tariff heading refers to the category of vehicles under tariff heading 8711 which are fitted with an electric motor for propulsion. Tariff item 87116020 specifically covers scooters.

4.8 Now the issue before us is to decide whether the referred vehicles can be classified under the same appropriate tariff heading, i.e. 8703 and 8711 respectively, when supplied with or without a battery. That is, whether fitting a battery is a precondition to consider e- rickshaw, e-cart, ecovat hydraulic, and e-scooter as electrically operated vehicles. As we have already discussed, all the above-noted vehicles have the same basic propulsion system. The energy for propulsion is derived from battery/ batteries installed in the vehicle and this battery pack can be charged by plugging into an electric grid. The only difference between them is that the e-rickshaw, e-cart and ecovat hydraulic are all three- wheeled vehicles, and the e-scooter is a two-wheeled vehicle.

As per the NITI Aayog website of the Government of India (e-amrit.niti.gov.in), vehicles are classified into four kinds. They are as under:

A) Battery Electric Vehicles (BEVs): These vehicles are fully powered by electricity. They are also known as All-Electric Vehicles (in short AEVs). Electric Vehicles using BEV technology run entirely on a battery-powered electric drivetrain. The electricity used to drive the vehicle is stored in a large battery pack which can be charged by plugging into the electricity grid. The charged battery pack then provides power to one or more electric motors to run the electric car.

B) Hybrid Electric Vehicles (HEVs): The vehicle uses both the internal combustion (usually petrol) engine and the battery-powered motor powertrain. The petrol engine is used both to drive and charge when the battery is empty.

C) Plug-in Hybrid Electric Vehicles (PHEVs): These vehicles use both the internal combustion engine and the battery charged from an external socket (they have a plug). This means the vehicle‟s battery can be charged with electricity rather than the engine.

D) Fuel Cell Electric Vehicles (FCEVs): They employ „fuel cell technology‟ to generate the electricity required to run the vehicle. The chemical energy of the fuel is converted directly into electric energy.

In the present application, we are concerned with BEVs. According to the information on the above-noted website, BEVs convert DC battery power to AC for the electric motor. As the accelerator is pressed, a signal is sent to the controller. The controller adjusts the vehicle speed by changing the frequency of the AC power from the inverter to the motor. The motor then connects and leads to the turning of the wheels through a cog. If the brakes are pressed, or the electric car is decelerating, the motor becomes an alternator and produces power, which is sent back to the battery. The main components of such vehicles are an electric motor, Inverter, Battery, Control Module and drivetrain.

Serial number 441 of Schedule I of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025 refers to „Electrically operated vehicles, including two- and three-wheeled electric vehicles‟. The Explanation part of the said entry has defined „electrically operated vehicles‟ as vehicles which are run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include E- bicycles.

4.9 In view of the above discussion, we can conclude that electrically operated vehicles are those which derive their traction energy solely from electrical energy and that energy is coming from an external force or one or more electrical batteries fitted to such vehicles. There cannot be any other source of traction energy. Typically, these vehicles use the chemical energy stored in rechargeable batteries for propulsion of motors. There is no alternate source of propulsion in these vehicles. In our considered view, if an electrically operated vehicle has motor, inverter, control module and drive train fitted on a chassis along with the body and is capable of transporting people and goods, it retains its original character as goods referred to in customs tariff heading 8703 (in case it is a three wheeled vehicle) and 8711(in case it is a two wheeled vehicle). It is immaterial whether battery is fitted or not with the vehicle.

4.10 We have in our hand the rulings pronounced by this Authority in the cases of AMWA Moto LLP and Rohit Singh Kharwar. In both the cases reference was made to another advance ruling pronounced by Odisha Authority for Advance Ruling in the case of Anjali Enterprises where the authority concurred with the position taken by the Revisionary Authority of Department of Revenue of Odisha in Reva Electric Car Co. (P) Ltd. The quoted portion of the ruling is as under:

“In this regard, it would be relevant to refer the judgment passed by the Department of Revenue- Revisionary Authority in the case of Reva Electric Car Co. (P.) Ltd. (supra) which holds that if electrically battery operated cars exported, though not fitted with batteries at the time of export, the same is still classifiable ‘battery powered road vehicles’ and would run on battery when put to use. Hence, we hold that fitting of battery in the vehicle, at or before the time of supply, is not a pre-condition for the same to be classified as electrically operated vehicle”.

In all the above cases, it was ruled that an electrically operated vehicle, commonly known as an e-rickshaw, when supplied without a battery, is also classifiable as an “electrically operated motor vehicle‟ under tariff heading 8703. The ratio of the rulings can be applied to e-scooter as well.

Moreover, there has been a circular bearing No. 179/11/2022-GST dated 03.08.2022 issued by CBIC. The relevant portion of the circular is reproduced as under:

2. Electric vehicles whether or not fitted with a battery pack, attract GST rate of 5%:

2.1. Representations have been received seeking clarification regarding the applicable rate of GST on electrically operated vehicle without any battery fitted to it.

2.2. The explanation of „Electrically operated vehicles‟ in entry 242A of Schedule I of notification No. 1/2017-Central Tax (Rate) reads as: „Electrically operated vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include E-bicycles.‟

2.3. As is evident from the explanation above, electrically operated vehicle including three wheeled electric vehicle means vehicle that runs solely on electrical energy derived from an external source or from electrical batteries. Therefore, the fitting of batteries cannot be considered as a concomitant factor for defining a vehicle as an electrically operated electric vehicle.

2.4. It is also pertinent to state that the WCO‟s HSN Explanatory notes have also not considered batteries to be a component, whose absence changes the essential character of an incomplete, unfinished or unassembled vehicle.

2.5. Also, the HSN explanatory notes for Chapter 87 have clearly stated that Motor Chassis fitted with cabs i.e. the chassis fitted with cabin body falls under 87.02 to 87.04 and not in heading 87.06.

2.6. In view of the above, it is clarified that electrically operated vehicle is to be classified under HSN 8703 even if the battery is not fitted to such vehicle at the time of supply and thereby attract GST at the rate of 5% in terms of entry 242A of Schedule I of notification No. 1/2017-Central Tax (Rate).

In our considered view, the vehicles referred to in this application including e-scooter are to be considered as electrically operated vehicles whether supplied with or without batteries.

4.11 Regarding the tax rate of the goods referred to in the application, we will refer to the discussion in Paragraph 4.7 supra. There, we have already discussed that three-wheeled vehicles like e-rickshaw, e-cart and ecovat hydraulic will be covered by tariff item no. 87038040 and e-scooter will come under tariff item no. 87116020. All of them are electrically operated vehicles. As such, all the above vehicles are covered by serial no. 441 of Schedule I of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025. The related chapter heading is 87. This entry is applicable for both three and two wheeled electrically operated vehicles, the specific description being „Electrically operated vehicles, including two and three wheeled electric vehicles‟. So far as tariff heading 8711 is concerned, we can find this heading in Serial no. 546 of Schedule II and serial no. 8 of Schedule III of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025. Since electrically operated two-wheeled vehicles are carved out and, for the purpose of taxation under the GST laws, have been put to serial no. 441 of Schedule I, none of these entries are applicable for e-scooter. In our considered view, all the goods under question are to be taxed @ 2.5% CGST + 2.5% SGST vide serial no. 441 of Schedule I of Notification No. 09/2025 – Central Tax (Rate) dated 17.09.2025.

In view of the foregoing, we rule as under:

RULING

Question: Whether goods under description of e-rickshaw, e-scooter, e-cart, ecovat hydraulic – all low cost battery operated two or three wheeler vehicles sold with or without battery attachment are classifiable under HSN 8703 and 8711 and are taxable @5% GST?

Answer: The answer to both questions is in the affirmative.