2025 (8) TMI 478 - AAR - GST

Motor Vehicle Seats Taxed at 28% GST Under Entry 210A, Parts Taxed at 18% Under Entry 435A

In Re: Sri. Gubbi Rajashekarappa Mahesh, Prop. M/s. Macho Engineering Industries.

The AAR, Karnataka held that parts of seats used for motor vehicles fall under Tariff heading 9401, with wooden parts under 9401 91 00 and other parts ... Classification of the commodity/goods manufactured and supplied by the applicant - parts of seats of a kind used for Motor Vehicles - applicable rate of tax. Classification of goods - HELD THAT:- Section XX of the First Schedule to the Customs Tariff Act, 1975 covers Miscellaneous Manufactured Articles; Chapter 94 covers Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishing; luminaires and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated building; Tariff heading 9401 covers Seats (Other than those of Heading 9402), whether or not convertible into Beds, and parts thereof and Tariff heading 9401 20 00 covers Seats of a kind used for motor vehicles. The parts of seats of wood are covered under Tariff heading 9401 91 00 and all other parts of seats are covered under Tariff heading 9401 90 00. Thus the seats of a kind used for motor vehicles and Parts thereof are covered under Tariff heading 9401 (up to 4 digit heading). Further the Circular No. 235/29/2024-GST dated 11.10.2024, at para 3.3 also clarifies and confirms that Tariff heading 9401 20 00 specifically covers seats of a kind used for motor vehicle. Rate of GST applicable on parts of seats of a kind used for Motor Vehicles - HELD THAT:- The rate of GST on any goods is arrived at in terms of the respective schedule of the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time. The Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 as amended, notifies the rate of the central tax in respect of goods specified in respective Schedule appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on intra-State supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, sub heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules. A new entry 210A, under Schedule IV has been carved out of earlier entry No.435A of Schedule III in terms of the goods having description “Seats of a kind used for motor vehicles” and the said description does not cover the word “parts thereof”; whereas the amended entry 435A contains the word “Parts thereof”. In view of the above the applicant contended that the Seats of a kind used for motor vehicles are covered under entry No.210A of Schedule IV to the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended & attract GST @ 28% and the parts thereof are still covered under Entry No.435A of Schedule III & attract GST rate of 18% - the Seats of a kind used for motor vehicles are covered under entry No.210A of Schedule IV to the Notification 1/2017-Central Tax(Rate) dated 28.06.2017, as amended & attract GST @ 28% and the parts thereof are still covered under Entry No.435A of Schedule III & attract GST rate of 18%. ISSUES: Whether the goods described as 'parts of seats of a kind used for motor vehicles' are classifiable under tariff heading 9401 and the applicable GST rate thereon.Interpretation of amended entries in Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, specifically entries 435A (Schedule III) and 210A (Schedule IV) concerning seats and parts thereof used for motor vehicles.Determination of the correct GST rate applicable on parts of seats of a kind used for motor vehicles after amendments effective from 10-10-2024. RULINGS / HOLDINGS: The parts of seats of a kind used for motor vehicles are classifiable under Tariff heading 9401, specifically under Tariff Heading 9401 90 00.'Seats of a kind used for motor vehicles' are covered under entry number 210A of Schedule IV to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, and attract GST @ 28%.The parts thereof are covered under entry number 435A of Schedule III to the said Notification and attract GST @ 18%.The amended entry 435A excludes 'seats of a kind used for motor vehicles' but retains 'parts thereof,' thereby distinguishing the taxation rates for seats and their parts. RATIONALE: The classification was determined by applying the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975, including Section and Chapter Notes, and the General Explanatory Notes, as mandated by Explanation (iv) to Notification No. 01/2017-Central Tax (Rate), dated 28.06.2017.Reference was made to Chapter 94 of the Customs Tariff covering furniture and parts thereof, with Tariff heading 9401 covering seats and parts thereof, and specifically heading 9401 20 00 covering seats of a kind used for motor vehicles.The amendments vide Notification No. 05/2024-Central Tax (Rate), dated 08-10-2024, carved out a separate entry (210A) for 'Seats of a kind used for motor vehicles' attracting 28% GST, while the earlier entry 435A was amended to exclude these seats but continue to cover their parts, attracting 18% GST.Circular No. 235/29/2024-GST dated 11.10.2024 was relied upon to clarify the classification and applicable GST rates on seats and parts thereof used for motor vehicles.The ruling aligns with the principle that classification and GST rates must follow the notified schedules and entries as amended, respecting the explicit exclusion and inclusion language in the tariff entries.