AAR rules 28% GST applicable on accessory to motor vehicle
- Jun 29, 2021 | Divita S Gupta
- Track assembly, an accessory to motor vehicles, is eligible for a GST of 28%.
- Tamil Nadu AAR clarifies correct classification of product as per Customs Tariff Act
The Tamil Nadu bench of the Authority of Advance Ruling has issued a ruling that applies a tax rate of 28% on ‘track assembly’, an accessory to motor vehicles.
The applicant is a private limited company in India and is involved in the manufacture of seat components and accessories. These components are later added to the manufacturing of full seats of four wheeled vehicles. These parts are manufactured for a South Korea based parent company engaged in the manufacture of automobile seats.
The applicant approached the Tamil Nadu bench of the AAR seeking clarity for determining the classification of only the finished goods i.e. the track assembly is meant for just the front seat. Its various sub assemblies are used to make their product. This means that track assembly parts are essentially required to complete a track assembly. The applicant wished to clarify whether the manufactured goods fell under the classification that attracted a GST rate of 18% of 28%.
The Tamil Nadu bench of the Authority for Advance Ruling observed that the product ‘track assembly’ that is manufactured and supplied by the applicant is classifiable under CTH CTH 8708 of the First Schedule to the Customs Tariff Act, 1975 as applicable to GST as per Explanation (iii) to Notification 1/2017-Central Tax (Rate) dated 28.06.2017 and G.O. Ms No. 59, Commercial Taxes and Registration (B1) dated 29th June 2017.
Accordingly, a CGST at the rate of 14% is applicable as per entry Sl.No.170 of Schedule -IV of the Notification 1/2017-Central Tax (Rate) dated 28.06.2017 as amended. Additionally, 14% SGST will be applicable as per entry sl. No. 170 of Schedule-IV of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended.