2019 (4) TMI 110 - AAR - GST

Classification of supply - supply of goods or supply of services - activity of Bus Body Building on job work basis, on the chassis supplied by the customer - rate of GST - Held that - Chassis is a semi-finished goods and any treatment done by any other party on the chassis of principal is the activity of the job work. The ownership of the chassis is not transferred to the job worker. The job worker can use his own goods for providing the service of job work. In this case fabrication of body is a structure which is applied on the chassis supplied by the customer and hence the activity of fabrication of body with material is also a service covered under SAC Code 9988 - Manufacturing services on physical inputs (goods) owned by others and thereby attract 18% GST.

Summary

Issues:
- Determination of whether the activity of Bus Body Building on job work basis, on the chassis supplied by the customer, constitutes supply of goods or supply of service.
- Identification of the applicable rate of GST if the activity is classified as supply of goods.
- Identification of the applicable rate of GST if the activity is classified as supply of services.

Analysis:
1. Nature of Activity - Supply of Goods or Supply of Service:
The Authority reviewed the nature of the activity of Bus Body Building on job work basis using chassis provided by customers. It was established that as per Circular No.52/26/2018-GST, two scenarios exist: a) where the builder owns the chassis and supplies the completed bus, and b) where the builder fabricates the body on the customer's chassis. The latter scenario is deemed a supply of service attracting 18% GST. The treatment of the chassis as semi-finished goods and the application of fabrication on the customer's chassis were key factors in determining the activity as a service under SAC Code 9988.

2. Applicable Rate of GST for Supply of Goods:
Given the ruling that the activity falls under the category of supply of service, the determination of the applicable rate of GST for supply of goods was deemed irrelevant. This decision was based on the classification of the activity as a service under the provisions of the CGST & SGST Act.

3. Applicable Rate of GST for Supply of Services:
As the Authority concluded that the Bus Body Building activity on job work basis is a service covered under SAC Code 9988, it attracts 18% GST. This determination was in line with the definition of job work under Section 2(68) of the CGST & SGST Act and Schedule II of the same Act, which considers any treatment or process applied to another person's goods as a supply of service.

In conclusion, the Authority ruled that the activity of Bus Body Building on job work basis, using chassis provided by customers, is classified as a supply of service attracting 18% GST under SAC Code 9988. The decision was based on the legal definitions and provisions outlined in the CGST & SGST Act, as well as relevant circulars clarifying the distinction between supply of goods and supply of services in such scenarios.