AAR Karnataka: GST on Motor Vehicle Seat Parts Taxable at 18%, Not 28%

AAR Karnataka: GST on Motor Vehicle Seat Parts Taxable at 18%, Not 28%

The applicant operates as M/s. Macho Engineering Industries is a manufacturer and supplier of “parts of seats of a kind used for motor vehicles (motor cars)”. The products supplied are sub-assemblies consisting of various components like springs, fasteners, and metal stampings. These parts are custom-made according to the customer’s specifications and have no other use or market.

Issue Raised: Whether the “parts of seats of a kind used for motor vehicles” are subject to the same GST rate as the complete seats themselves.

AAR’s Ruling: AAR ruled that the parts of the seats are distinct from the finished product and are subject to a different GST rate. The AAR’s decision is based on the proper classification of the goods under the Customs Tariff Act, 1975, and the relevant GST notifications.

The AAR found that the “parts of seats of a kind used for motor vehicles” are correctly classified under Tariff Heading 9401, specifically under subheading 9401 90 00. The AAR noted that while a new entry (Entry No. 210A of Schedule IV) was introduced to tax complete seats of motor vehicles at a higher 28% GST rate, the wording of this notification specifically excludes “parts thereof”. The AAR concluded that the parts of the seats remain covered under Entry No. 435A of Schedule III to Notification No. 1/2017-Central Tax (Rate), as amended, which attracts an 18% GST rate. The reasoning is that the intent of the law was to tax the final product (the seat) differently from its individual components, and the exclusion of parts in the new entry confirms this.

To Read Full Judgment, Download PDF Given Below