The West Bengal Appellate Authority for Advance Rulings (AAAR) issued an order concerning the classification of e-rickshaw components supplied in Completely Knocked Down (CKD) form. The case involved M/s Navya Electric Vehicle Private Limited, which supplies electric three-wheelers in CKD form, and the petitioner, Mr. Zahid Hossain, an Assistant Commissioner of Revenue. M/s Navya sought an advance ruling on whether supplying a complete set of e-rickshaw components in CKD form should be classified as a finished vehicle, attracting a 5% GST, or as individual parts with different GST rates.
The West Bengal Authority for Advance Ruling (WBAAR) initially ruled that if the CKD kit included the motor and any three other essential components, it would be treated as a complete e-rickshaw taxable at 5%. The Revenue appealed, arguing that Rule 2(a) of the General Rules for Interpretation does not allow classification as a complete vehicle based on the supply of only certain major components.
Read More: Haryana AAAR - Business support services performed in India for a foreign company, while facilitating services to an Indian client, qualify as intermediary services and not export of services [Order attached]
The Appellate Authority agreed that Rule 2(a) could apply to CKD/SKD supplies but clarified that the supplied goods must possess the essential character of a complete vehicle. It rejected the "motor plus any three essential components" test, noting it lacked statutory basis. The classification should depend on whether all components needed for assembly are supplied as a complete CKD/SKD kit. The Authority found that M/s Navya's business model involved procuring components from different suppliers and selling them individually, not as complete kits. Therefore, the supplies could not be classified as complete vehicles eligible for 5% GST.
Order Date - 02 July 2026
Facts -
- Petitioner, Mr. Zahid Hossain, Assistant Commissioner of Revenue, challenged the Advance Ruling issued in favour of M/s Navya Electric Vehicle Private Limited, which supplies electric three-wheelers (e-rickshaws) in Completely Knocked Down (CKD) form.
- M/s Navya sought an advance ruling on whether supplying a complete set of e-rickshaw components in CKD form should be classified as a finished electric vehicle or merely as individual parts attracting different GST rates.
- The West Bengal Authority for Advance Ruling (WBAAR) ruled that if the CKD kit contained the motor along with any three other identified essential components, it would be treated as a complete e-rickshaw taxable at 5%; otherwise, it would be treated as supply of parts.
- Aggrieved by this interpretation, the Revenue filed an appeal contending that Rule 2(a) of the General Rules for Interpretation does not permit classification of an incomplete collection of components as a complete vehicle merely because certain major components are supplied together.
Issue -
- Whether the supply of e-rickshaw components in CKD form can be classified as a complete electrically operated vehicle attracting 5% GST.
Order -
- The Appellate Authority agreed that Rule 2(a) of the General Rules for Interpretation can apply to CKD/SKD supplies. However, it clarified that the rule requires the supplied goods to possess the essential character of a complete vehicle and does not support a classification merely because a few major components are supplied together.
- The Authority observed that the "motor plus any three essential components" test adopted by the WBAAR has no statutory basis under Rule 2(a), the Customs Tariff, or the GST notifications. Instead, classification should depend on whether all components required to assemble a complete e-rickshaw are supplied as one identifiable CKD/SKD kit.
- The Authority further held that commercial documents such as purchase orders, invoices, packing lists and the actual contents of the consignment must consistently establish that the transaction is for supply of a complete CKD/SKD e-rickshaw. If any essential component is missing, the supply remains one of individual parts.
- Examining the respondent's business model, the Authority found that it procured components from different suppliers and sold them individually to retailers rather than supplying complete CKD kits. Consequently, the supplies retained their identity as parts and components and could not be classified as complete electrically operated vehicles eligible for 5% GST.
