The Tamil Nadu bench of the Authority for Advance Rulings (AAR) has held that 18% GST on toys consists of electronic components irrespective of its usage.
The appellants, M/s Navabharat Importers are regular importers and traders of toys from various countries and sell these goods in retail and through e-commerce platforms. They stated that they also intend to manufacture these toys in India in the future.
The question before the AAR bench was that when physical force is the primary action of a Toy and if the light and the music are ancillary to it then whether it is to be classified under “Electronic Toys” or “other than Electronic Toys”?
The bench observed that a toy that is primarily operated by use of manual force or is required to be manually pushed is considered as a ‘non-electronic toys and the toys operated by use of electricity or power generated from the batteries whether chargeable or replaceable are considered as an electronic toy.
A bench comprising K PhanindraReddy and M V S Chaudhary noted that the common parlance alone has to be applied in the absence of the definition of ” Electronic toy” in the said notification or in the Act.
The bench noted the decision of the Madras High Court in the case of Southern Refractories & Minerals Vs. The state of Tamil Nadu held that in interpreting entries in taxing schedules, the popular meaning should be given to such terms and the classifications made by the Indian Standard Institution regarding the goods in question could be made use of in determining the said popular or commercial meaning. Hence the reference of standard applicable to the toys relied on by the Tamil Nadu Advance Ruling Authority is a part of common parlance to ascertain the term ” Electronic Toys”.
“As seen from the above entries, both entries are the same except for the term `electronic’. Had the Parliament thought that electronic toys are altogether different from that toys, it would not add the same list of tricycles, scooters, pedal cars, etc. (including parts and accessories thereof) and the difference between them is that any component of electronic added to the toys like tricycles, scooters, pedal cars, etc. would disentitle them to fall under serial number 228 of schedule II to the Notification No.1/2017 Central Tax Rate dated 28-6-2017. In the case of appellants, it is apparently clear that all the four products contain electronic components irrespective of its usage, the said goods would fail to fall under serial number 228 of schedule II to the Notification No.1/2017 Central Tax Rate dated 28-6-2017,” the Tribunal said.
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