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2019 (7) TMI 618 - AAR - GSTClassification of supply - supply of goods or supply of services - activity of building and mounting of the body on the chassis by the Applicant - whether supply of goods under HSN 8707 or supply of services under HSN 9988? - Circular No. 52/26/2018 GST dated 09-08-2018 - HELD THAT - It is an admitted fact that the chassis is not inevitable for carrying out the activity of body building. The Applicant in their application at para 2.3(e) admits that for some standard type of vehicles the body can be completely built and kept ready well in advance to the receipt of the chassis and once the chassis is made available the said ready-built body would be mounted on the chassis and the process can be completed within 6 days. On the other hand vide their letter dated 14.02.2019, in their additional submissions, the applicant states that the chassis is made available to them and then they carry out the aforesaid activity on the chassis using their own inputs and capital goods. Hence the said activity amounts to supply of services in terms the Circular dated 09.08.2018. Therefore in the instant case two situations arise - In the first scenario the body is built without the physical presence of the chassis. The dimensions of the chassis and the required design of the body are known and the body is fabricated accordingly. Such ready built body is thereafter mounted on the chassis as and when provided by the owner - In the second scenario the chassis is provided by the owner and the applicant carries out the building and mounting of the body on the chassis in different steps as enumerated by the applicant. Activity of step by step building of the body on the chassis supplied by the owner using their own inputs capital goods - HELD THAT - It is evident from Para 12.2(b) of Circular No. 52/26/2018 GST dated 09-08-2018 that if the body is built on the chassis provided by the principal and the fabrication charges, including certain material consumed during the process of job work, have been charged then the activity amounts to Supply of Service and attracts 18% GST - In the instant case in terms of the process explained by the applicant the body is built on the chassis provided by the owner. Therefore the instant question is answered by the provisions of Para 12.2(b) of the said Circular and the activity merits classification as supply of service attracting GST@ 18%. Supply of ready built body and the activity of mere mounting the body on chassis supplied by the owner - HELD THAT - The fabrication of the body and then its mounting on the chassis appear to be two naturally bundled supplies, supplied in conjunction with each other. Therefore the applicant appears to be engaged in a composite supply where the principal supply is that of the body, i.e. supply of goods. Accordingly the activity shall attract classification under HSN 8707 and the activity would be liable to GST @ 28 % in terms of Serial number 169 of Schedule IV of Notn. No 1/2017-Central Tax (Rate) dated 28.06.2017, effective from 01.07.2017.
Issues Involved:
1. Classification of the activity of building and mounting of the body on the chassis – whether it results in supply of goods under HSN 8707 or supply of services under HSN 9988. Detailed Analysis: Issue 1: Classification of the Activity Applicant's Contentions: - The applicant, engaged in building and mounting bus bodies on chassis, initially contended that the activity amounted to the supply of goods under HSN 8707, attracting 28% GST. - Later, citing Circular No. 52/26/2018-GST dated 09-08-2018, the applicant revised their stance, arguing that the activity should be classified as the supply of services under SAC 998882, attracting 18% GST. Facts Submitted by the Applicant: - The applicant procures various inputs and uses their own machines and manpower for the body-building activity. - The chassis is provided by the sender (OEMs/Retail customers) on a free-of-cost basis, and the ownership of the chassis remains with the sender. - The applicant can build the body independently of the chassis and later mount it when the chassis is provided. Applicant's Legal Arguments: - The activity does not constitute "Job Work" as defined in Section 2(68) of the CGST Act, 2017, because the applicant uses their own goods for the body-building process. - The activity should be treated as a "Composite Supply" where the principal supply is the body, thus classifying it as the supply of goods. - Alternatively, if considered a "Mixed Supply," it would attract the higher rate of GST applicable to the supply of goods. Authority's Findings: - The authority examined the process of building the body and mounting it on the chassis, considering both scenarios where the body is built independently and where it is built step-by-step on the chassis. - The authority referred to Circular No. 52/26/2018-GST, which clarifies that: - If the bus body builder builds a bus on a chassis owned by them and supplies the built-up bus, it is a supply of goods attracting 28% GST. - If the body builder builds the body on a chassis provided by the principal and charges fabrication charges, it is a supply of services attracting 18% GST. Judgment: 1. Supply of Ready-Built Body and Mere Mounting on Chassis: - This activity is classified as the supply of goods under HSN 8707. - It attracts 28% GST. 2. Step-by-Step Building of the Body on Chassis Provided by Owner: - This activity is classified as the supply of services under SAC 9988. - It attracts 18% GST. Conclusion: - The ruling clearly differentiates between the supply of goods and services based on the nature of the activity and the involvement of the chassis in the body-building process. - The authority's decision aligns with the provisions of the CGST Act and the clarifications provided in the relevant circulars, ensuring that the classification and applicable GST rates are appropriately determined.
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