Retrofitted Two-Wheelers Classified Under 28% GST, Input Tax Credit Available

The Authority ruled that retrofitted two-wheelers should be classified under heading 8711 20 19, attracting 28% GST. The applicant can claim input tax credit on the tax paid for the purchase of the scooter at 28% GST, as per Section 17(5) of the CGST Act. The retrofitting did not change the basic structure of the two-wheelers, leading to exclusion from heading 8713. The vehicles were considered adapted vehicles under the original classification of 8711 20 19, not qualifying as carriages for disabled persons.

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Issues:
Classification of retrofitted two-wheelers for GST billing and input tax credit eligibility.

Analysis:
The applicant sought an advance ruling on whether they can bill retrofitted scooters at 5% GST under HSN 8713 without restricting input tax credit on the purchase of vehicles at 28% GST. The applicant purchases vehicles at 28% GST and retro-fitment fitting at 5%, selling retrofitted vehicles at both rates. Other dealers sell such vehicles at 5% GST on the entire sale value, leading to customer demand for the same. The applicant questioned if they can bill the entire vehicle value at 5% GST under HSN 8713 for differently abled customers and claim ITC on the 28% GST paid for vehicle purchase.

During the personal hearing, the applicant's representative reiterated the facts. The Authority considered the submissions and issues involved, noting the similarity between CGST and KGST Acts. The applicant retrofits two-wheelers with equipment to cater to differently abled individuals, claiming classification under HSN 8713 for 5% GST. The Authority analyzed the relevant provisions and classification criteria under Chapter Heading 8713, determining that the retrofitted two-wheelers did not qualify as carriages for disabled persons under this heading.

The Authority further clarified that retrofitting did not alter the basic structure of the two-wheelers, leading to exclusion from heading 8713. As per the Explanatory Notes, the retrofitted two-wheelers were considered simply adapted vehicles, falling under the original classification of 8711 20 19. Regarding input tax credit eligibility, the Authority referred to Section 17(5) of the CGST Act, allowing credit for motor vehicles purchased for further supply. Therefore, the applicant was deemed eligible for input tax credit on the tax paid for the purchase of scooters at 28% GST.

In conclusion, the ruling stated that the retrofitted vehicles should be classified under heading 8711 20 19, attracting 28% GST, and the applicant was entitled to claim input tax credit on the tax paid for the purchase of the scooter.

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