TaxTMI 
TaxTMI 
2026 (1) TMI 1452
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....018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is engaged in the supply of electric three-wheeler passengers and goods transport vehicles (e-rickshaws). To optimize logistics and facilitate sales through authorized dealers/assemblers, the applicant intends to supply these vehicles in a Completely Knocked Down (CKD) condition. 1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01: Whether the supply of a compl....
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....hed electric vehicle is 5% (2.5% CGST + 2.5% SGST) while the individual parts are taxable @ 18% (9% CGST + 9% SGST). 4.3 In this context the applicant has placed before us the following two questions: A) Whether the supply of a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in a Completely Knocked Down (CKD) form, necessary and sufficient for the assembly of the finished vehicle, should be classified as the finished vehicle itself? B) Whether the supply of a complete set of components of an electric three-wheeler vehicle (e-rickshaw) in a Completely Knocked Down (CKD) form, necessary and sufficient for the assembly of the finished vehicle, should be classified as a set of parts and what is the applicable rate of GST? 4.4 Before going into the discussion, we must look at the definition of vehicles both from common parlance and with reference to the Motor Vehicles Act, 1988. The Cambridge dictionary defines vehicle as a machine, usually with wheels and an engine, used for transporting people or goods, especially on land. The Merriam-Webster dictionary defines vehicle as a means of carrying or transporting something e.g. planes, tr....
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....tion No. 09/2025-Central Tax (Rate) Dated 17.09.2025 e-rickshaw finds entry in Schedule I vide entry no. 441. The description reads: 'Electrically operated vehicles, including two or three wheeled vehicles'. This entry has an explanation which reads like 'For the purposes of this entry, "Electrically operated vehicles" means vehicles which are run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include E-bicycles. Under the Customs Tariff Act, 1975 e-rickshaw is covered by HSN code 870380 ('other vehicles, with only electric motor for propulsion') and the specific tariff item no. is 87038040, the description being 'Three-wheeled vehicles'. It is taxable @ 2.5% CGST+ 2.5% SGST vide serial no. 441 of Schedule I. The parts and accessories of e-rickshaw are covered by the following entries of the CGST Act, 2017 and the Customs Tariff Act, 1975: Description Serial no. with schedule of CGST Act HSN code under the Customs Act Electrical transformers 477 (Schedule II) 8504 Electrical lighting or signalling equipment 485 (Schedule II) 8512 Chassis fitted w....
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....t, 1975. This rule is reproduced here: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled. (emphasis added) It is evident from the above rule that in order to include an incomplete and unfinished article to a complete and finished article in a particular heading, the said incomplete or unfinished article should have the essential character of the complete or finished article. In other words, if this condition of 'essential character' is satisfied, even an unassembled or disassembled article can be considered as complete or finished article. 4.7 In the year 2013 the Commissioner of Customs, ICD, TKD, New Delhi constituted a committee to decide as to what percentage of components/assemblies combine together make E-rickshaw in CKD SKD as per Rule 2(a) of the Interpretati....
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.... 1. Transmissions 2. Motor 3. Axles 4. Chassis 5. Controller The order also provides if along with motor any two of the essential components mentioned above are missing then it may be considered as parts of e-rickshaw. It alternately suggests that presence of motor and any three of the other essential components should be considered as complete e-rickshaw in CKD or SKD condition. 4.8 The above noted office order has got judicial sanctity when the Hon'ble Delhi High Court mentioned and accepted this office order in the judgement pronounced by the Hon'ble High Court in Rama Krishna Sales Pvt. Ltd. Versus Union of India case reported as 2019 (366) E.L.T. 273 (Del.) [31-01-2019]. The relevant portion of the order is reproduced here: "16. It is apparent that the scope of Rule 2(a) of the Interpretative Rules is only to interpret Customs duties as applicable to an article imported by any importer. Import of the said Rule is that even an incomplete or unfinished article, which has an essential character of a complete article, would bear the same duties as applicable to the complete article. Rule 2(a) of the Interpretative Rules creates ....
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....ts/assembles combined together should be considered as an E-rickshaw for the purposes of Rule 2(a) of the Interpretative Rules. 19. The aforesaid Office Order indicates the combination of essential components and assemblies of E-Rickshaws that are required to be considered as the finished article (a complete E-Rickshaw). The aforementioned Office Order has to be read in the context of Rule 2(a) of Interpretative Rules. It is, at once, clear that the import of the Office Order is that the duties as applicable to import of E-Rickshaws would also be applicable to the components which are determined as representing the essential character of the complete E-Rickshaw. The Committee had identified five major components/assemblies, namely, (i) transmission, (ii) Motor, (iii) axel, (iv) Chassis and (v) Controller which would essentially constitute an E-rickshaw in CKD/SKD (Complete Knock Down/Semi-Knock Down) condition. The Committee had further opined that if any two of the essential components along with the motor are missing then the remaining components could be considered as parts of the motor vehicle (E-Rickshaw). In other....
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....engine. It was also held that the complexity of the assembly method is not required to be taken into account for the purpose of application of rule 2(a). 4.10 From the foregoing discussion and references we can note down the vital points relevant for our case as under: 1) CKD vehicle means collection of vehicle parts to be assembled to bring into existence the finished vehicle. 2) It is usually done for convenience of transportation. 3) This phenomenon is popular in automobiles, electronics and furniture industries. 4) The accepted legal position in respect of CKD vehicle is that the issue is to be understood and interpreted in terms of the provisions of Rule 2(a) of the General Rules for the Interpretation of the Harmonised System (in short GIRs) to the First Schedule of the Customs Tariff Act, 1975. 5) The spirit of Rule 2(a) supra is that the incomplete or unfinished article can be considered as complete or finished article under a particular heading if the incomplete or unfinished article has the essential character of the said complete or finished article. 6) In the context of e-rickshaw any CKD e-rickshaw must pass the ....