E-rickshaw tyres to attract 28% GST under Motor Vehicle Act, rules AAR

E-rickshaw tyres will attract GST at the highest slab of 28 per cent 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 attract a peak rate of 14 per cent GST instead of 2.5 per cent 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 bi-cycles, cycle rickshaws and three-wheeled powered cycle rickshaws attract a GST (Central GST + State GST) of 5 per cent, while 'new pneumatic tyres' are taxed at 28 per cent.

"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 then the electric rickshaws," the AAR said.

AMRG & Associates Partner Rajat Mohan said charging 28 per cent 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 per cent, today we have only 51 items, one of which still remains is e-rickshaw tyres, Mohan said.