The Hon’ble AAR, West Bengal in Re: M/s Hooghly Motors Pvt. Ltd. [Order Number 06/WBAAR/2020-21 dated August 10, 2020] held that a three-wheeled electrically operated vehicle/rickshaw is classifiable under HSN 8703 (Motor Vehicles for carrying less than 10 passengers) as an electrically operated vehicle, provided it is fitted with the battery pack. Otherwise, it will be classifiable under HSN 8706.
M/s Hooghly Motors Pvt. Ltd. (“the Applicant”) is a manufacturer of “three-wheeled motor vehicles”, commonly known as “Toto”.
Whether three-wheeled vehicle is classifiable as an ‘electrically operated motor vehicle’ under HSN 8703 when supplied with a battery pack.
The Hon’ble AAR, West Bengal in Order Number 06/WBAAR/2020-21 dated August 10, 2020 held as under:
In our view, electrically operated vehicles shall be classifiable under Entry 242A of the Schedule I of the Notification No. 1/2017- Integrated tax (Rate) dated June 28, 2017 (“Goods Rate Notification”) (as amended vide Notification No. 12/2019- Integrated Tax (Rate) dated July 31, 2019 w.e.f. August 1, 2019). The Entry 242A reads as under:
|242A||87||Electrically operated vehicles, including two and three wheeled electric vehicles.
Explanation .- For the purposes of this entry, “Electrically operated vehicles” means 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.
As evident from the explanation above, electrically operated vehicle including three wheeled electric vehicle means vehicle that runs solely on electrical driven energy derived from an external source ‘or’ from electrical batteries. Therefore, battery pack is not an essential character of electrically operated vehicle, essential character is that it runs solely on electrical energy.
Thus, vehicles that run solely on electrical energy should be classified under Entry 242A of the Schedule I of the Goods Rate Notification, taxable @ 5% GST.
Further, refund on account of inverted duty structure is permissible on Electronic Vehicle taxable @ 5%, if they are excluded from the above-mentioned entry, no refund on account of inverted duty structure would be granted and may be disputed by the Department as the motor vehicles without battery are not termed as Electronic Vehicles as per the above ruling.
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