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2020 (10) TMI 768 - AAR - GSTClassification of supply - supply of goods or supply of services - activity of building and mounting of the body on the chassis made available by the customers - HELD THAT - In the instant case the applicant is entrusted with the work of building the load body using own material for fabricating the bus body besides fabrication services - Once the bus body is built and mounted on the chassis, the vehicle is sent back to the Customers after raising tax invoice towards body building charges on which GST is charged separately. At no stage the ownership of the chassis is transferred to the applicant. The consideration received by the applicant is towards the manufacturing of the bus body on the chassis supplied by the principal. Thus, it is evident that the activity undertaken by the applicant for body building on the chassis provided by customer is to be classified as Job work under CGST/TNGST Act 2017 and as per Schedule II of CGST Act 2017, the said activity of building body on the chassis of the customer by the applicant is supply of services. The activity of body building undertaken on a truck chassis made available by a customer to the applicant amounts to supply of services as per Schedule II clause 3 of CGST Act 2017.
Issues Involved:
1. Whether the activity of building and mounting of the body on the chassis made available by the customers will result in supply of goods or supply of services. Issue-wise Detailed Analysis: 1. Nature of Supply: - Applicant's Business Activity: The applicant, a registered GST entity, engages in manufacturing cycles, metal forming products, tube products, chains, and body building for trucks. Customers, mainly fleet owners, provide chassis for body erection, which the applicant completes by subcontracting to third-party vendors. - Process Description: The process involves welding and fabricating cabins and load bodies directly on the chassis. The cabins are built step-by-step and painted, while load bodies are erected on sub-frames, painted, and mounted on the chassis. - Applicant's Argument: The applicant contends that their activity qualifies as job work under Section 7(1A) read with clause 3 of Schedule II of the CGST Act, 2017, thereby constituting a supply of services. They argue that the treatment or process on goods (chassis) belonging to the customer meets the job work definition under Section 2(68) of the CGST Act, 2017. The applicant cites various legal precedents and dictionary definitions to support their claim. - Supporting Judgments and Circulars: The applicant references multiple judgments, including those from the Supreme Court and High Courts, which define "process" and "treatment." They also cite Circular No. 52/26/2018-GST, clarifying that body building on a chassis provided by the principal qualifies as a supply of service, attracting 18% GST. 2. Verification and Comments by Authorities: - State Jurisdictional Officer's Verification: The officer confirmed that the chassis is owned by the customer, who approaches the applicant for body works. The applicant subcontracts the entire activity, and the inputs are procured by third-party vendors. The officer's report aligns with the applicant's claims. 3. Legal Provisions and Definitions: - Relevant Provisions: - Section 2(68) of CGST Act, 2017: Defines job work. - Section 2(52) of CGST Act, 2017: Defines goods. - Section 143 of CGST Act, 2017: Pertains to job work inputs. - Para 3 of Schedule II of CGST Act, 2017: Specifies that any treatment or process applied to another person's goods is a supply of services. 4. Conclusion by the Authority: - Classification as Job Work: The authority concluded that the applicant’s activity of body building on the chassis provided by the customer qualifies as job work. Since the ownership of the chassis remains with the customer, and the applicant only charges for the body building, it is deemed a supply of services. - Circular Clarification: The authority referred to Circular No. 52/26/2018-GST, which clarifies that body building on a customer-provided chassis is a supply of service, attracting 18% GST under SAC 998881. Ruling: - Final Decision: The activity of body building undertaken on a truck chassis made available by a customer to the applicant amounts to supply of services as per Schedule II clause 3 of CGST Act, 2017.
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