In M/s Navbharat lmports [ORDER No.35/ARA/2021 dated September 30, 2021], M/s Navbharat lmports (“the Applicant”) has sought an advance ruling on the issue that when Physical force is the primary action of a toy and if the light and the music are ancillary to it, then whether it is to be classified under Electronic Toys or other than Electronic Toys.
Factually, the Applicant is regular importers and traders of toys from various countries, and they sell these goods in India in retail as well as through E-Commerce platforms. They also intend to manufacture these toys in India in future. The toys imported include both electronically operated toys as well as manually operated toys in which electronic parts were fitted for providing light, music and horn etc.
The Applicant has stated that Toys like tricycles, scooters. pedal cars etc. including parts and accessories thereof other than electronic toys are chargeable to applicable GST rate of 12% under Sl.No.228 of Schedule II of Notification 01/2017 CT (rate) (“Goods Rate Notification”) and 18% under Sl. No. 440 of Schedule III for Electronic toys.
The Hon’ble Tamil Nadu Authority for Advance Ruling (“the TN AAR”) ruled that Children Scooter, Activity Ride-on, Smart Tri-cycle and Kick Scooter in which physical force is the primary action and contains an in built electronic circuit are Electronic Toys are chargeable to the applicable GST Rate of CGST @ 9% & SGST 9% as per Sl. No. 440 of Schedule-III of Goods Rate CGST & SGST Notification.
Further, the TN AAR find that the products are designed to develop gross motor skills in as much as they are designed to use the physical force and can be enjoyed by either pedaling or by pushing with the leg and also fine motor skills like blinking, discrete tasks of switching on/off the music/light etc., provided through the inbuilt electronic circuit, powered with the electrical energy (battery)/ induction force. Both the functions of the toys are targeted to develop a certain skill while amusing the child playing with it. Therefore, the TN AAR hold that the products in hand are Electronic Toys and the applicable GST Rate is 18% as per Sl. No. 440 of Schedule III of the Goods Rate Notification.
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