CKD Supply of E-Rickshaw Can Be Treated as Finished Vehicle If Essential Components Are Present: WB AAR

Navya Electric Vehicle Private Limited is engaged in supplying electric three-wheeler passenger and goods transport vehicles (e-rickshaws). To reduce logistics costs and enable sales through authorised dealers and assemblers, the applicant proposed to supply e-rickshaws in a Completely Knocked Down (CKD) condition.

Under this model, all required components would be supplied together in a single consolidated consignment, enabling the dealer to assemble a road-worthy electric vehicle. The applicant sought clarity on whether such CKD supplies should be treated as supply of a finished e-rickshaw (taxed at 5%) or as supply of individual parts (taxed at 18%).

Issue Before Authority: Whether the supply of an electric three-wheeler (e-rickshaw) in CKD form constitutes supply of a finished vehicle or merely a supply of parts, and what is the applicable GST rate.

AAR’s Order; The West Bengal Authority for Advance Ruling held that classification of CKD e-rickshaws depends on whether the consignment satisfies the “essential character” test laid down in Rule 2(a) of the General Rules for Interpretation of the Customs Tariff.

If the CKD kit includes the motor along with any three of the four essential components in proportionate numbers capable of assembling complete e-rickshaws, the supply shall be treated as supply of a finished electric three-wheeler. In such cases, GST is applicable at 5% (2.5% CGST + 2.5% SGST) under HSN 87038040.

However, if the supply excludes the motor or excludes any two of the other four essential components, the CKD supply will be treated as supply of parts. Such supplies will attract GST at 18% (9% CGST + 9% SGST), applicable to individual components under their respective tariff entries.

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