2018 (5) TMI 699 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (12) G. S. T. L. 467 (A. A. R. – GST), [2018] 2 GSTL (AAR) 72 (AAR) – Classification of goods – rate of tax – E-rickshaw tyres – What is the classification and rate of Central Goods and Service Tax leviable on the product “E-rickshaw tyres”?
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Held that: – Three Wheeled Electric Motor Vehicle (known as E-Rickshaw in market) is a Motor Vehicle in Motor Vehicle Act also. It has to be registered with State Transport Authorities as a Motor Vehicle. Tyres and Tubes used in these Vehicles are Automobile Tyres and Tubes of size 300-12, 300-14, 90-90/12 and 3.75-12, which are duly prescribed as Automobile Tyres in Bureau of Indian Standards for Two and Three Wheeled Motor Vehicles IS 15627:2005. By no means the Tyres and Tubes cleared by them are Tyres and Tubes of Three Wheeled Powered Cycle Rickshaw – the Tyres cleared by these manufacturers attract a peak rate of 14% percent instead of 2.5% percent, as these Tyres and
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matic tyres, of rubber. The schedule entry is provided with the exclusion clause.
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Ruling:- The product is classified and covered by Tariff Heading 4011 and the rate of tax shall be at the rate of 14 percent under MGST ACT, 2017 and 14 percent under CGST ACT, 2017. – GST-ARA-07/2017/B-10 Dated:- 9-3-2018 – Shri. B. V. Borhade, Joint Commissioner of state tax and Shri. Pankaj Kumar, Joint Commissioner of Central tax PROCEEDINGS (Under section 98 of the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-07/2017/B- 06 Mumbai, dt. 09/03/18 The applicant, M/S Ceat Ltd. has filed the application under section 97 of the Maharashtra Goods and Services Tax Act, 2017 and requested to decide the question What is the classification and rate of Central Goods and Service Tax leviable on the product "E-rickshaw tyres. 02. Fact of the case:- 1. M/s Ceat Ltd. (hereinafter referred to as 'Applicant') having its corporate head office at, Ceat Limited, RPG House, 463, Dr. Annie B
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8%. 4. It is observed by the applicant that there is an anomaly in the Customs Tariff as well as in the GST Tariff Schedules in so far as 'e-rickshaw tyres' are concerned. The term 'e-rickshaw tyres' fails to find a mention in both, the Customs Tariff and the GST Rate Schedules. Furthermore, it is observed that Chapter Heading No. 4011 of the Customs Tariff is covered by two separate entries in two distinct Schedules i.e. SI. No. 190 of Schedule-I attracting CGST and Sl. No. 46 of Schedule-IV attracting CGST@14% as per Notification No. 1/2017- Central Tax (Rate) dated 30.06.2017. 5. Sl. No. 190 of Schedule-I and Sl. No. 46 of Schedule-IV of the Notification No. 1/2017Central Tax (Rate) dated 30.06.2017 reads as under: Sch. SI. NO. Chapter Heading/ Sub-Heading Description of goods Rate of Tax (CGST) I. 190. 4011,4013 Pneumatic tyres or inner tubes, of rubber, of a kind used on / in bicycles, cycle -rickshaws and three wheeled powered cycle rickshaws 2.5% IV. 46. 4011 New
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New pneumatic tyres, of rubber' and the term 'e-rickshaw tyre' is not specifically covered in the entire Tariff. Furthermore, even HSN Explanatory Notes to Chapter Heading No. 4011 are silent in so far as 'e-rickshaw tyres' are covered. 7. The prevailing ambiguity is caused by the omission of the term 'e-rickshaw' and further, by specific mention of the term 'three-wheeled powered cycle rickshaws ' in Sl. No. 190 of Schedule-I of Notification No. 1/201 7-CentraI Tax (Rate). It shall be noted that 'Three-wheeled powered cycle rickshaw' was a vehicle that comprised of three wheels and was used to carry passengers or light goods over a short distance. It was a modification of the three wheeled-powered cycle rickshaws by adding a small battery to the same in order to ease the burden of the driver by using the mechanical energy generated as electrical energy to propel the rickshaws over short distances. It is understood that the legal principle of
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haws should be treated as similar to three-wheeled powered cycle rickshaws in law and clubbed with the same for the purpose of taxation under GST. 10. The lack of mention of 'tyres used in e-rickshaws' along with three-wheeled powered cycle rickshaws in Sl. No. 190 of Schedule-I to Notification No. 1-Central Tax (Rate) gives rise to the ambiguity that whether the product in question shall be perceived to be covered under Schedule I or Schedule IV of Notification No. 1-Central Tax (Rate). This further gives rise to the ambiguity regarding applicability of GST @ 5% or 28% on the product in question which is an effective tax differential of 23%. 03. The legal submission of applicant:- A.1 That the sub-section (c) of Section 95 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "CGST Act"), defines the term 'applicant' as under:- applicant" means any person registered or desirous of obtaining registration under this Act …Emphas
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ory, from where he makes taxable supply of goods or services or both; b. If the aggregate turnover in the financial year exceeds rupees twenty lakh. A.5 The Applicant submits that as on date, it is registered in Maharashtra and also making taxable supplies of goods from the same to its customers located in State of Maharashtra. Further, the turnover of the Applicant exceeds rupees twenty lakhs in the financial year. Given this, it is submitted that Applicant clearly satisfies to be 'applicant' in terms of subsection (c) of the Section 95 of the CGST Act. A.6 That sub-section (I) of the Section 95 of the CGST Act defines the term 'advance ruling' as under:- (a) "advance ruling" means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be underta
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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. …Emphasis Supplied A.8 In view of the above, it is submitted that advance ruling may be sought by the Applicant on the questions concerning classification of goods or services or both, on the question involving determination if any thing done by the applicant with respect to a goods or services or both amounts to or results in a supply of goods or services or both. The Applicant submits that the questions for determination in the instant advance ruling application concern both (1) if the Applicant is making supply of goods or services and (2) what is the correct classification of goods or services supplied by the Applicant A.9 Further, Section 96 of the CGST Act provides for appointment of advance ruling authority and reads as under:- '96. Subject to the provisions of this Chapter, for the purpo
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e officers of central tax; and (ii) one member from amongst the officers of State tax, to be appointed by the Central Government and the State Government respectively. (3) The qualifications, the method of appointment of the members and the terms and conditions of their services shall be such as may be prescribed. …Emphasis Supplied A.11 The Applicant submits that in terms of the above referred section 96 of the Maharashtra Goods and Service Tax Act, 2017, the Government of Maharashtra has issued a Notification No. MGST-1017/CR 193/Taxation dated 24.10.2017, which constitutes this authority as Maharashtra Authority for Advance Ruling. The Applicant submits that by virtue of Section 96 of the Maharashtra Goods and Service Tax Act, 2017, the questions for determination in advance ruling lie before the Maharashtra Authority for Advance Ruling. A.12 In view of the foregoing, the Applicant submits that it is eligible to file the present advance ruling application before the Maharasht
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common in the Asian countries, especially in India and Bangladesh. The various types of rickshaws have also evolved over time with the earliest ones being the pulled-rickshaws. Other variations of the mode of transport include the powered cycle-rickshaw, the auto-rickshaw and the relatively newer iteration of the e-rickshaws. Historically, India's urban as well as rural areas have depended on the various rickshaw types for their travel requirements. The most recent modification called the battery operated e-rickshaws (Referred as battery rickshaws subsequently in the study was introduced in the city of New Delhi during the Commonwealth Games 2010. As well as the notification No. 1/2017- Central Tax (Rate) dated 28th June 2017 reads as under:- The GST Rate schedules. Sr. no .190 Of schedule -1 to Notification no-1 central tax rate covers chapter heading no 4011 and 4013 Pneumatic tyres or inner tubes, of rubber, of a kind used on / in bicycles, cycle -rickshaws and three wheeled po
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because three wheeled powered cycle rickshaws are different than electric rickshaws. Cycled rickshaws were first driven manually. To carry more loads and reduce burden on the person who rides it manually power was added to it. This means three wheeled power cycled rickshaws is up gradation of cycled rickshaws. The dealer who is requesting for levy of tax 2.5% was earlier charging the same goods at an aggregate pre-GST tax of around 12.5% As per Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017, three wheeled powered cycle rickshaws are mentioned along with bicycles, rickshaws. The Electric Motor Vehicle Three Wheeled (commonly known as E-Rickshaw) are completely different from three wheeled powered cycle rickshaws. While the tyres/tubes of the former are liable to be taxed at 14% and that of the latter are chargeable @ just 2.5%. It appears that Electric Motor Vehicle Three Wheeled Tyres and Tubes are tried to be classified as Tyres and Tubes of 'Three Wheeled Powere
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n notification no. 8/2003-Central Excise dated 1st March. 2003deiines the powered cycle rickshaw is defined as under: "Powered cycle or powered cycle rickshaw means a mechanically propelled cycle or as the case may be mechanically propelled cycle rickshaw. Which may also be pedalled if any necessity arises for so doing It clearly shows that the Tyres cleared by these manufacturers attracts a peak rate or 14% percent instead of 2.5% percent, as these Tyres and Tubes are meant for Electric Motor Vehicles (known as E-Rickshaw). The sizes of these tyres and tubes mentioned are also used widely in scooters and motorcycles. It is necessary to verify what duty these companies were paying in pre-GST era. In Chapter head 4011 and 4013, Pneumatic Tyres or Inner Tubes, of Rubber, of a kind used on/in Bicycles, Cycle Rickshaws and Three Wheeled Powered Cycle Rickshaws attract a GST Rate of 2.5% In Chapter head 4011, New Pneumatic Tyres of Rubber {Other than of a kind used on/in Bicycles, Cycl
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5 – SUPREME COURT . Therefore, It is settled that Powered Cycle Rickshaw referred to in the Explanation would not cover an Auto Rickshaw and would only cover an ordinary Cycle Rickshaw to which a motor or petrol engine has been fitted. The next question is, why Three Wheeled Electric Vehicle (E-Rickshaw) is not a Powered Cycle Rickshaw? Because – a) It is not a Cycle Rickshaw. b) It does not have pedal which is pre-requisite for Powered Cycle Rickshaw and it cannot be peddled, if any necessity arises for so doing. c) It is powered solely by electric motor which is not auxiliary in nature. d) It is a motor vehicle under "Motor Vehicle Act". e) It has to be registered with Local Transport Authority; hence it is a motor vehicle. Therefore, it is very clear that E-rickshaw and powered cycle rickshaw are not one and the same but two different items. As on day and with the present GST law: From the above empowered discussions, it is apparent that Tyres used in E-Rickshaw are not ty
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017, for the purpose of the impugned product in question, read as under: SI. No. Chapter Heading/ Sub-Heading Description of Goods Rate of Tax (GST) Prescribed Sch. for rate of tax (1) (2) (3) (4) 190. 4011,4013 Pneumatic tyres or inner tubes, of rubber, of a kind used on / in bicycles, cycle -rickshaws and three wheeled powered cycle rickshaws. 2.5% I. 46. 4011 New pneumatic tyres, of rubber [other than of a kind used on/in bicycles, cycle-rickshaws and three wheeled powered cycle rickshaws; and Rear Tractor tyres; and of a kind used on aircraft] 14% IV. 5.2 a) Three Wheeled Electric Motor Vehicle (known as E-Rickshaw in market) is a Motor Vehicle in Motor Vehicle Act also. It has to be registered with State Transport Authorities as a Motor Vehicle. Tyres and Tubes used in these Vehicles are Automobile Tyres and Tubes of size 300-12, 300-14, 90-90/12 and 3.75-12, which are duly prescribed as Automobile Tyres in Bureau of Indian Standards for Two and Three Wheeled Motor Vehicles IS 156
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attract a GST Rate of 2.5%, In Chapter head 4011, New Pneumatic Tyres of Rubber {Other than of a kind used on/in Bicycles, Cycle-Rickshaws and Three Wheeled Powered Cycle Rickshaws; and Rear Tractor Tyre} attract a GST Rate of 14% e) To ascertain the GST Rates on tyres used on/ in E-rickshaw, we have to find out what is the meaning of Powered Cycle Rickshaw and whether it is synonymous with E Rickshaw? The term 'powered cycle rickshaw' in the explanation to the notification number 102/76 dated 16-3-1976 is as follows: "Explanation.- The expression term 'Powered Cycle' or 'Powered Cycle Rickshaw' means a mechanically propelled cycle or as the case may be mechanically propelled cycle rickshaw, which may also be paddled , if any necessity arises for so doing". Here it is very clear that e-Rickshaws cannot be paddled is such necessity arises g) Further, the meaning of Powered Cycle Rickshaw was clearly explained in the case of Delhi Kinetic Engineering Lt
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ckshaw must be pedal driven. The term "Cycle rickshaw" connotes a pedal driven, human powered, single track vehicle, having three wheels attached to a frame. The vehicle is usually a tricycle, pedal-driven by a driver, though some are equipped with an electric motor to assist the driver. In common parlance, the people understand a "cycle rickshaw" is a pedal driven, human powered, single track vehicle, having three wheels attached to a frame. This view is fortified with the ruling of Hon. Apex Court. The meaning of Powered Cycle Rickshaw was clearly explained in the case of Delhi Kinetic Engineering Ltd. Vs Collector Of Central Excise and upheld by Supreme Court bench on 21.03.1996 and reported in 1997 (94) ELT A157(SC) = 1996 (3) TMI 555 – SUPREME COURT. It is well settled principle that in interpreting the entries of tax statute, preference should be given to the common parlance meaning and the one defined in local dictionary. In common as well as in commercial pa
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sider the plain meaning of "cycle" in common parlance. With this understanding, let us turn to the maxim "noscitur a sociis", which means the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it. A man may be known by the company he keeps and a word is known by the accompanying words. Words derive colour from the surrounding words. The coupling of words together shows that they are to be understood in the same sense. Where the meaning of a particular word is doubtful, it may be ascertained by looking at adjoining words. In the construction of statutes, the rule noscitur a sociis is frequently applied, the meaning of a word, and, consequently, the mens legis is ascertained with reference to the context, and by considering whether the word in question and the surrounding words are, in fact, ejusdem generis, and referable to the same subject-matter. The meaning of law can be collected by comparing one part with another a
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elated to advancement of technology. The courts have observed that there is no change in the class of goods. The textile remains as textile. The change in method of manufacturing does not change the product. In present case we have seen that the Three wheeled power cycle rickshaw and E-rickshaw are two different and very distinct commercial commodity understood in market. We respectfully opine that the ratio of the judgment cited by the applicant is not squarely applicable to this case. It is settled principle that the "entry" in a tax statute is to be considered or interpreted in respect of a product or an item and its name in the commercial parlance is to be considered and if there is no clear identity or there is no clarity on the said aspect, the court may consider the composition of the product used or other dictionary meaning, etc. When the pro-duct is well known and understood amongst the buyers in commercial parlance, the other test namely, its composition or its actu
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rrower meaning, the question whether the wider or the narrower meaning should be given depends on the context and the background of the case. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described, then, there is no difficulty for statutory classification under a particular entry. In view of detailed discussions as above it is clear that when legislature has classified the product and put them under a different entries Entry 160 of schedule-I and Entry-46 of schedule-IV and being capable to be understood in common parlance as a different commercial commodity, the basis of the classification is not open to question. Moreover, the schedule entry 46 is very specific in nature and is considered for all pneumatic tyres, of rubber. The schedule entry is provided with the exclusion clause. The exclus
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