Name of Applicant:

Anjali Enterprises

Appeal No.:

Order No. 1/ODISHA-AAR/2021-22

Ruling pronounced by:

GST AAR Odisha

Date of Ruling:

15-04-2021

• The applicant deals in battery powered electric two wheelers as a dealer. The applicant purchases vehicles under a brand name ‘EEVE’. During transportation, the batteries are not fitted with the vehicle though they are transported together.

• The applicant is having a plan to manufacture similar battery powered electric vehicles so they want clarification whether fitting of battery is mandatory in battery powered electric vehicles while selling the same to the dealers for getting the benefit of 5% GST rate applicable for electrically operated vehicles.

• The applicant referred to the judgement passed by the Department of Revenue Revisionary Authority in the case of Reva Electric Car Company Pvt. Ltd. [2012 (275) E.L.T. 488 (G.O.I.) which holds that even if cars are not fitted with batteries, the same is classifiable as battery powered road vehicles.

• The applicant submitted that fitting of batteries cannot be considered as a concomitant factor to define a vehicle as a battery powered/ operated vehicle. Pre-fitment of battery in the vehicle before selling it to the dealers has never been the intention of law. The only requirement that needs to be fulfilled is that the vehicle must be one that depends upon batteries for traction energy. Accordingly, the same must be classified as an electrically operated vehicle irrespective of the fact that battery is installed in the vehicle by the dealers while selling it to ultimate customers.

• Explanation to Entry No. 242 A of schedule-1 to Notification No. 01/2017- Central Tax (Rate), dated 28.06.2017 defines the term ‘electrically operated vehicle” to mean “vehicles which run solely on electrical energy derived from an external source or from batteries fitted to such road vehicles and shall include e-bicycles”.

• That means it is a type of electric vehicle (EV) that exclusively uses chemical energy stored in rechargeable battery packs, with no secondary source of propulsion (e.g. hydrogen fuel cell, internal combustion engine etc.). As such, they will run on battery as and when put to use. Hence, for vehicles to be classified as electrically operated vehicles, it must be such that it would run solely on electrically energy derived from one or more electrical batteries, as and when put to use.

• The Authority also referred the decision in Reva Electric Car Company Pvt. Ltd. (supra) which holds that if electrically battery-operated cars exported though not fitted with batteries at the time of export, the same is still classifiable as ‘battery-powered road vehicles’.

• Hence, we hold that fitting of battery in the vehicle, at or before the time of supply, is not a pre-condition for the same to be classified as electrically operated vehicle.