28% GST to be levied on e-rickshaw tyres: AAR

Eco friendly electricity passanger E rickshaw seen, at D D Urs Road in Mysuru on Friday July 21, 2017. DH file photo for representation.

E-rickshaw tyres will attract GST at the highest slab of 28 percent as they are registered as 'motor vehicles' under the Motor Vehicle Act, according to the order of the Authority for Advance Rulings (AAR).

The Maharastra-bench of the AAR passed the order on an application filed by tyre-maker Ceat Ltd, seeking to clarify whether e-rickshaw can be classified under the head "three-wheeled powered cycle rickshaw", which attracts a 5 per cent GST.

While giving its ruling, the AAR said that e-rickshaws do not have pedal which is the pre-requisite for being classified as a 'powered cycle rickshaw'.

It further said that e-rickshaws are motor vehicles under the Motor Vehicle Act and are registered as such with the local transport authorities.

"Therefore, it is very clear that e-rickshaw and powered cycle rickshaw are not one and the same but two different items. As on day and with the present GST law... it is apparent that tyres used in e-rickshaw are not tyres of powered cycle rickshaw and hence attracts a peak rate of 14 percent GST instead of 2.5 percent as charged/paid by some manufacturers/ traders/ importers," it said.

Under the Goods and Services Tax (GST) regime, the tax is shared equally between the Centre and the states. Hence, pneumatic tyres or inner tubes used in bicycles, cycle rickshaws and three-wheeled powered cycle rickshaws attract a GST (Central GST + State GST) of 5 percent, while 'new pneumatic tyres' are taxed at 28 percent.

"The dealer's (Ceat Ltd) contention to consider three-wheeled powered cycle rickshaws as three-wheeled electric rickshaws based on the principle of Ejusdem Generis (means - of or as the same kind) cannot be accepted because three-wheeled powered cycle rickshaws are different than the electric rickshaws," the AAR said.

AMRG & Associates Partner Rajat Mohan said charging 28 percent on e-rickshaw tyres "seems to be unfair treatment, as they have put a poor man's livelihood in the category of demerit items like digital cameras, motor vehicles, pan masala, tobacco, cigar, lottery, betting, gambling, or horse racing in race club".

Initially, 229 broad categories were notified to be taxed at 28 percent, today we have only 51 items, one of which still remains is e-rickshaw tyres, Mohan said. 

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28% GST to be levied on e-rickshaw tyres: AAR

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