2025 (8) TMI 479 - AAR - GST

GST Rates Clarified: Motor Vehicle Seats at 28%, Seat Parts at 18% Under Notification 1/2017 Sections 210A & 435A

In Re: M/s. Fine Tools (India) Pvt. Ltd.

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 classification of 'parts of seats of a kind used for motor vehicles' falls under Tariff heading 9401 and the applicable GST rate thereon.Interpretation of the amended Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, particularly entries 435A of Schedule III and 210A of Schedule IV, with respect to seats and parts thereof used in motor vehicles.Determination of the GST rate applicable on parts of seats of a kind used for motor vehicles following 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, and attract GST at the rate of 18%, in terms of entry number 435A of Schedule III to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended.The amended entry number 210A of Schedule IV covers 'Seats of a kind used for motor vehicles' but does not include 'parts thereof,' which remain covered under entry number 435A of Schedule III.The GST rate of 28% applies to seats of a kind used for motor vehicles under entry 210A of Schedule IV, effective from 10-10-2024, whereas parts of such seats continue to attract GST at 18% under entry 435A of Schedule III. RATIONALE: The determination relied on the provisions of the CGST Act, 2017 and KGST Act, 2017, which are in pari materia, and the relevant notifications amending GST rates and classifications.Reference was made to Explanations (iii) and (iv) of Notification No. 01/2017-Central Tax (Rate), which incorporate the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975, including Section and Chapter Notes and WCO Explanatory Notes.Section XX and Chapter 94 of the Customs Tariff Act, 1975, along with tariff headings 9401 and 9401 20 00, were analyzed to determine classification.Amendments via Notification No. 05/2024-Central Tax (Rate) dated 08-10-2024 and Circular No. 235/29/2024-GST dated 11.10.2024 clarified that seats of a kind used for motor vehicles are separately classified under entry 210A with 28% GST, while parts thereof remain under entry 435A with 18% GST.The court applied the principle that the amended entries' explicit exclusion of 'seats of a kind used for motor vehicles' from entry 435A, without exclusion of parts thereof, implies parts remain taxable at the earlier rate under 435A.