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2021 (8) TMI 732 - AAR - GSTClassification of supply - supply of goods or supply of services - activity of Bus Body Building on the chassis supplied by the customer on job work basis - applicable rate of GST - SAC/HSN code - HELD THAT - In the instant case, the bus body fabricated and mounted on the chassis supplied by the customer is delivered back to the customer charging a lump sum amount as job work charges. It is to be noted that ownership of the chassis remains with their customers and will not be transferred to the applicant at any point of time. The consideration is received only towards fabrication services besides own materials involved in the fabrication - Thus, it is evident that the activity undertaken by the applicant for Bus Body Building on the chassis supplied by the customer is to be classified as Job Work as per Schedule II of the CGST Act 2017, the said activity of bus body building on the chassis supplied by the customer by the applicant is supply of services. The bus body building on the chassis supplied by the customer is a supply under SAC 998881-motor Vehicle and trailer manufacturing services - applicable rate will be GST will be 18% as per entry no.26 of N/N. 11/2017-Central Tax (Rate) dt. 28.06.2017 (as amended) and SI.No.26 of Notification No.II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017(as amended) respectively.
Issues Involved:
1. Whether the activity of Bus Body Building on the chassis supplied by the customer on a job work basis is a supply of service or supply of goods. 2. If it is a supply of service, what is the applicable rate of GST and its SAC code? 3. If it is a supply of goods, what is the applicable rate of GST and its HSN? Issue-Wise Detailed Analysis: 1. Nature of Supply: The primary issue is to determine whether the activity of bus body building on the chassis supplied by the customer constitutes a supply of service or supply of goods. The applicant, a private limited company engaged in bus body building, receives chassis from customers and fabricates bus bodies according to customer specifications. The ownership of the chassis remains with the customer throughout the process. The applicant referred to Sl.No.3 of Schedule II to the CGST Act, 2017, which specifies that any treatment or process applied to another person's goods is a supply of service. The applicant also cited various rulings and circulars, including Circular No.52/26/2018-GST dated 09.08.2018, which clarified that bus body building on a chassis supplied by the customer is considered a service and attracts GST at 18%. The jurisdictional authority verified the facts and confirmed that the applicant is engaged in job work, with the chassis owned by the customers. Based on the definition of job work under Section 2(68) of the CGST Act 2017 and the relevant provisions, it was concluded that the activity qualifies as job work and is a supply of service. 2. Applicable Rate of GST and SAC Code: Having determined that the activity is a supply of service, the applicable rate of GST and the SAC code needed to be identified. The service of bus body building falls under SAC 998881 - "Motor vehicle and trailer manufacturing services." As per entry no. 26(ii) of Notification No. 11/2017-CT (R) dated 28.06.2017, the service is taxable at 18% (9% CGST and 9% SGST). The ruling also relied on Circular No.52/26/2018-GST, which clarified that the services of bus body fabrication on a job work basis attract 18% GST. The situation described in Para 12.2(b) of the circular, where the bus body builder builds the body on a chassis provided by the principal and charges fabrication charges, was found applicable to the applicant's case. 3. Applicable Rate of GST if Supply of Goods: Since the activity was determined to be a supply of service, the issue of the applicable rate of GST and HSN code for supply of goods was not addressed in detail. However, it was noted that if the activity were considered a supply of goods, it would attract GST at 28% under headings 8702, 8705, and 8707. Ruling: 1. The activity of bus body building undertaken on the chassis supplied by the customers to the applicant amounts to a supply of service as per Schedule II clause 3 of CGST Act 2017. 2. The service rendered is classified under SAC 998881. 3. The applicable rate will be CGST @ 9% and SGST @ 9% as per entry no.26 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended).
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