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2020 (9) TMI 689 - AAR - GSTClassification of supply - supply of services or not - treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others - rate of GST - service Code (tariff) for above stated activity of body building carried out on another person s chasis of motor vehicle - If not supply of services, what will be the nature of this supply, tariff code and rate of GST for such supply? Whether the applicant s activity amounts to supply of goods (motor vehicle) that merits classification under HSN 87 (depends upon the type of vehicle supplied) or amounts to Supply of Services classifiable under SAC 9988? - HELD THAT - In the instant case, the applicant procures various goods such as raw steel etc. as inputs for fabricating the bus body on the chasis supplied by the principal on delivery challan. The applicant uses the said material for mounting/fabricating the body and once the body is built and mounted on the chassis, the vehicle is sent back to principal. At no stage, the ownership of the chassis is transferred by the principal to the applicant. The applicant charged the lump sum charges of fabrication including cost of certain material that was consumed during the process of mounting of Bus Body on the chassis. The applicant supply of complete built vehicle to the principal i.e. owner of chasis would amount to composite supply and the taxability would depend upon the predominated element - Accordingly, the activity of mounting/fabrication of body on the chasis supplied by the principal would be supply of service as principal supply and Section 8(a) of CGST Act, 2017 determines tax liability on composite supply The question raised has been suitably clarified and dealt with Circular No. 52/26/2018-GST issued by Government of India, Ministry of Finance, Department of Revenue dated 9th August, 2018 where it is clarified that in case as mentioned at Para 12.2(a) above, the supply made is that of bus, and accordingly supply would attract GST @ 28%. In the case as mentioned at Para 12.2(b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly. It is evident from Para 12.2(b) of the said circular that if the body is built on the chassis provided by the principal/customer and the fabrication charges, has 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 fabrication of body is built on the chassis provided by the owner and as stated fabrication charges are charged from the owner of the chasis. 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%. Classification of the said Service provided by the applicant - HELD THAT - The classification of Service is provided in Annexure attached to the Not. No. 11/2017-CT (Rate) dated 28.06.2017. The applicant is engaged in the manufacturing of body building on the chasis supplied by the owner of the chasis. Therefore, the said service would be classified under Service Accounting Code 9988 Manufacturing Service on Physical Inputs (Goods) owned by others - on fabrication of bus body on the chassis supplied by the owner of chasis i.e. Principal on delivery challan, on which body is fabricated on chasis by collecting job work charges including inputs required for such fabrication work and in no case the ownership of the chassis is transferred by principal to the applicant merits classification under SAC 998881 - Motor vehicle and trailer manufacturing services and under Entry No. 26(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as Manufacturing services on physical inputs (goods) owned by other and it is taxable @ 18% 9% under CGST and 9% under SGST Act . Whereas, in other situation, supply of complete body built motor vehicle merits classification HSN 8707 and it is taxable @28%. The nature of service received by the application is covered under the Service Accounting Code 998714. Accordingly, Sr. No. 25 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 prescribing tax rate of 18% on Maintenance, repair and installation (except construction) services. The contention of the applicant that the said service would be covered under Service Code (Tariff) 998729 that includes Maintenance and repair service of other goods nowhere else classified is not tenable as such Service Accounting Code 998714 defines the maintenance and repairing service of motor vehicles like cars, trucks, vans and buses. Therefore, the repairing service carried out by the applicant on damaged vehicle supplied by the owner is classifiable under SAC 9987 and GST is leviable @ 18 % in terms of Sr. No. 25 of Not. No. 11/2017-CT (Rate) dated 28.06.2017.
Issues Involved:
1. Classification of body building by fabrication on chassis owned by others. 2. Applicable GST rate for body building services. 3. Service Code (tariff) for body building on another person’s chassis. 4. Classification and GST rate for accident repairing jobs. 5. Nature of supply if body building is not considered a service. Detailed Analysis: Issue 1: Classification of Body Building by Fabrication on Chassis Owned by Others The applicant is engaged in body building on chassis provided by others, charging lump-sum fabrication charges including materials consumed during the process. The applicant argues that this activity should be treated as a supply of service under Paragraph 3 of Schedule II of the CGST Act, 2017, which states, "any treatment or process which is applied to another person’s goods is supply of services." The applicant relies on CBIC Circular No. 52/26/2018-GST dated 09.08.2018, which clarifies that fabrication on chassis provided by the principal is a service, attracting 18% GST. Issue 2: Applicable GST Rate for Body Building Services The ruling confirms that the activity of body building on the chassis provided by the principal is a supply of service and is subject to 18% GST. This conclusion is based on the CBIC Circular No. 52/26/2018-GST, which differentiates between bus body building on a chassis owned by the builder (taxable at 28%) and on a chassis provided by the principal (taxable at 18%). Issue 3: Service Code (Tariff) for Body Building on Another Person’s Chassis The service of body building on another person’s chassis is classified under SAC 9988, specifically under "Manufacturing services on physical inputs (goods) owned by others," attracting 18% GST. This classification is supported by references to various Advance Rulings and the CBIC Circular. Issue 4: Classification and GST Rate for Accident Repairing Jobs For accident repairing jobs on vehicles supplied by the owner, the applicant charges a lump sum that includes the cost of material and labor. This activity is classified as a service under SAC 9987, specifically "Maintenance, repair and installation (except construction) services," attracting 18% GST. The ruling clarifies that the repair work constitutes a composite supply, with the principal supply being the repair service. Issue 5: Nature of Supply if Body Building is Not Considered a Service If the body building activity is not considered a service, it would be treated as a supply of goods. The complete body-built motor vehicle would be classified under HSN 87 (depending on the type of vehicle) and would attract 28% GST. This scenario applies when the applicant owns the chassis and supplies the complete built-up vehicle. Ruling Summary: A. Body building on the chassis provided by the principal is a supply of service. If the applicant owns the chassis and supplies the complete vehicle, it is a supply of goods. B. The GST rate for body building services is 18%. For the supply of motor vehicles, the rate is 28%. C. The service code for body building on another person’s chassis is SAC 9988. For complete built-up vehicles on the applicant’s own chassis, it is classified under HSN 87. D. Accident repairing jobs on vehicles supplied by the owner are classified under SAC 9987, attracting 18% GST. E. If body building is not considered a service, it is classified as a supply of goods under HSN 87, with a GST rate of 28%.
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