Supply of E‑Rickshaw Classified as Finished Vehicle at 5% GST Only if Motor Plus Three Essential Components Present: AAR [Read Order]
The GST classification depends entirely on whether the CKD kit carries the “essential character” of a complete e‑rickshaw.
In a recent ruling, the West Bengal Authority of Advance Ruling (AAR) has ruled that electric three‑wheeler vehicles (e‑rickshaws) supplied in Completely Knocked Down (CKD) form will qualify as finished vehicles attracting the concessional 5% Goods and Service Tax (GST) rate only when the kit includes the motor along with at least three other critical coAmponents, transmission, axles, chassis, and controller.
The appeal arises from the applicant, Navya Electric Vehicle Pvt. Ltd., which sought clarity on whether supplying e‑rickshaw kits in CKD condition should be taxed as a complete vehicle or as individual parts.
The applicant argued that its plan to supply vehicles in a Completely Knocked Down (CKD) condition should be treated as the supply of a finished vehicle rather than mere parts. Also explained that the CKD kit includes all essential components such as chassis, motor, battery, controller, body panels, and differential delivered together in a single consignment to authorized dealers or assemblers, who then assemble and sell the road‑worthy e‑rickshaw.
Also argued that a clarification is required regarding the classification of this CKD kit and the corresponding Goods and Services Tax rate (GST), as the tax rate for the finished electric vehicle (typically 5%) differs significantly from the tax rates applicable to various individual parts (which may be 18% or 28%)
The revenue has not expressed any view on the merit of the issue raised by the applicant.
After reviewing the matter, AAR observed and referred to Rule 2(a) of the General Rules for Interpretation of the Customs Tariff Act, 1975, and earlier judicial precedents, the Authority emphasized the essential character test . This test requires that even unassembled kits can be treated as finished goods if they contain the essential components that define the product.
The bench, Shafeeq S and Jayadip Kumar Chakrabarti ( Member of West Bengal Authority for Advance Ruling) ruled that CKD kits, including the motor plus at least three of the other four components, are to be treated as finished vehicles, taxed at 5% GST. Kits missing the motor or two of those components are treated as parts, taxed at 18% GST.
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