2022 (8) TMI 807 - AAR - GST

Go-karts for amusement parks classified as rides under CTH 9508, not motor vehicles, attracting 18% GST

The AAR Karnataka ruled that Go-karts manufactured for amusement parks are classifiable under Chapter Tariff Heading 9508 as amusement park rides, not ... Classification of goods as 'amusement park rides' - non-applicability of Chapter 87 to non-roadworthy vehicles - definition of 'amusement park rides' in Chapter Note 6 to Chapter 95 - GST applicability under Schedule III Sl.No.441A (Chapter 9508) - admissibility of advance ruling on classification and notification applicabilityClassification of goods as 'amusement park rides' - definition of 'amusement park rides' in Chapter Note 6 to Chapter 95 - Amusement park ride karts (Go-karts) manufactured and supplied by the applicant are classifiable under Chapter Tariff Heading 9508 of the First Schedule to the Customs Tariff Act, 1975. - HELD THAT: - The Authority examined the amended Chapter Heading 9508 (effective 01.01.2022) and the Chapter Note which defines 'amusement park rides' as devices that carry, convey or direct persons over or through a fixed or restricted course or within a defined area for amusement or entertainment. The applicant's Go-karts are designed to run only on specially surfaced closed tracks and are primarily used as amusement rides for children and adults; accordingly they fall within the meaning of 'amusement park rides' in Chapter Note 6 and are therefore classifiable under CTH 9508. [Paras 15, 16]Go-karts are classifiable under CTH 9508.Non-applicability of Chapter 87 to non-roadworthy vehicles - Go-karts which are not roadworthy and cannot be registered with the RTO are not classifiable under Chapter Tariff Heading 8703 as motor vehicles meant for carrying passengers/persons. - HELD THAT: - Chapter Heading 8703 covers motor cars and other motor vehicles principally designed for the transport of persons. The Motor Vehicles Act definitions require adaptation for use upon roads and registration; the applicant's ARAI certificate shows these Go-karts are not roadworthy and cannot be registered. They are not designed for transport of persons but for closed-loop amusement use. Therefore they do not satisfy the character of goods covered by CTH 8703 and are excluded from that heading. [Paras 14]Go-karts are not classifiable under CTH 8703.GST applicability under Schedule III Sl.No.441A (Chapter 9508) - Supplies of the applicant's Go-karts attract GST at the combined rate of 18% under Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) as amended by Notification No.18/2021, by virtue of their classification under Chapter 9508. - HELD THAT: - Entry Sl.No.441A in Schedule III to the Notification prescribes the rate applicable to goods classifiable under Chapter 9508. Having held that the Go-karts fall under CTH 9508, the Authority applied the notification entry which results in tax at 9% CGST and 9% SGST (aggregate 18%). The ruling follows the notification entry for Chapter 9508 without recourse to other miscellaneous entries. [Paras 17, 18]Go-karts attract GST at 18% under Sl.No.441A of Schedule III (Notification No.1/2017 as amended).Final Conclusion: The Authority ruled that the applicant's Go-karts are classifiable as 'amusement park rides' under CTH 9508 (and not as motor vehicles under CTH 8703) and, consequently, supplies thereof attract GST at the aggregate rate of 18% under Sl.No.441A of Schedule III to the Notification. Issues Involved:1. Classification of 'amusement park ride karts' (Go-karts) under Chapter Tariff Heading 9508 or 8703 of the Customs Tariff Act, 1975.2. Applicability of GST rates on 'amusement park ride karts' (Go-karts).Issue-wise Detailed Analysis:1. Classification of 'amusement park ride karts' (Go-karts) under Chapter Tariff Heading 9508 or 8703 of the Customs Tariff Act, 1975:The applicant, engaged in the manufacture and supply of 'amusement park ride karts' (Go-karts), sought clarification on whether these karts should be classified under Chapter Tariff Heading 9508 or 8703 of the Customs Tariff Act, 1975. The applicant argued that their Go-karts, designed for joy riding or amusement purposes, are not roadworthy and cannot be registered with the Regional Transport Authority (RTO). They contended that Go-karts should be classified under Chapter Tariff Heading 9508, which covers amusement park rides, rather than under Chapter Tariff Heading 8703, which pertains to motor vehicles designed for the transport of persons.The applicant provided several points to support their argument:- Go-karts are primarily used for amusement and are not designed for transportation.- They are operated on specially designed tracks and are not roadworthy.- The Automotive Research Association of India (ARAI) has not certified Go-karts as motor vehicles.- The Motor Vehicles Act restricts children under 18 from driving motor vehicles, but no such restrictions apply to Go-karts.The authority examined the definitions under the Motor Vehicles Act and concluded that Go-karts do not qualify as 'motor cars' or 'motor vehicles' since they are not roadworthy and are not designed for the transport of persons. Instead, Go-karts are designed for amusement purposes and operate on fixed or restricted courses. Consequently, Go-karts are not classifiable under Chapter Tariff Heading 8703.2. Applicability of GST rates on 'amusement park ride karts' (Go-karts):The applicant sought clarification on the applicable GST rate for Go-karts. They argued that Go-karts should attract GST at the rate of 18% under Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017, as amended by Notification No.18/2021-Central Tax (Rate) dated 28-12-2021. This entry covers amusement park rides and similar amusements, which are taxable at 9% CGST and 9% SGST.The authority reviewed the relevant entries and concluded that Go-karts, being amusement park rides, fall under Chapter Tariff Heading 9508. The amended chapter tariff heading 9508 includes 'travelling circuses and travelling menageries; amusement park rides and water park amusements; fairground amusements, including shooting galleries; travelling theatres.' The Notes to Chapter 9508 define 'amusement park rides' as devices or equipment designed for amusement or entertainment, which align with the characteristics of Go-karts.Therefore, the authority ruled that Go-karts manufactured and supplied by the applicant are classifiable under Chapter Tariff Heading 9508 and attract GST at the rate of 18% as per Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017, as amended.Ruling:i. The 'amusement park ride karts' (Go-karts) manufactured and supplied by the applicant, meant solely for joy riding or amusement purposes and designed to run on specially designed tracks or closed circuits, are classifiable under Chapter Tariff Heading 9508 of the First Schedule to the Customs Tariff Act, 1975.ii. The 'amusement park ride karts' (Go-karts) manufactured and supplied by the applicant, which are not roadworthy and cannot be registered as Motor Vehicles with the Regional Transport Authority (RTO), are not classifiable as 'Motor Vehicles meant for carrying of passengers/persons' under Chapter Tariff Heading 8703 of the First Schedule to the Customs Tariff Act, 1975.iii. The 'amusement park ride karts' (Go-karts) manufactured and supplied by the applicant attract GST at the rate of 18% as per Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017, as amended by Notification No.18/2021-Central Tax (Rate) dated 28-12-2021.