2021 (1) TMI 1097 - AAR - GST

Classification of supply of service - activity of bullet proof body building (in addition to fixing bullet proof windshield glass, bullet proofing of engine and fuel tank on the motor vehicles (2.5 Ton capacity) having Tarpaulin cover in the cargo compartment - whether classified under head 9988 (ic) or 9988 (id) of the GST tariff or not? - Since the applicant has already charged IGST @ 28% by classifying the supply as supply of goods under GST tariff for goods heading 8707, whether the customer should claim the refund from the department or the applicant should lodge the claim the refund, in the event of the above classification being upheld by the AAR? - HELD THAT - The applicant is engaged in the manufacture of Bullet proof glass, bullet proof Vehicles, Lectern etc. in their factory. Besides, applicant is also undertaking armouring by body building on the chassis of vehicles supplied by the customers mainly the army/ police etc. using bullet proof steel and glass. Vehicles of 2.5 Ton or higher capacity owned by the customer (army/police) are supplied to the applicant and these vehicles have either metal (partial or full) or partially metal and partially Tarpaulin covered cargo compartments. The applicant for the purpose of bullet proofing of these vehicles, first of all removes the existing metal/ tarpaulin cover on the rear cargo compartment making the cargo compartment completely naked so to say except the flooring part. At this stage the vehicle resembles a chassis virtually and for all practical purposes so that the body can be built on the cargo portion as per the specific requirement of the customer with bullet proof steel, glass, and other fixtures to stack the weapons, seating for the personnel to be carried, providing firing ports, turrets etc. On the driver cabin, bullet proof windshield with bullet proof steel frame is fixed, driver cabin doors are fixed with bullet proof glass and bullet proof steel sheets on existing front body. In addition, bullet proofing of the engine compartment and fuel tank are also to be done. In view of Circular bearing No. 52/26/2018-GST, dated 09.08.2018, it is concluded and clear that the activity of job work consisting of fabrication including of bullet proof work done on chassis provided by the Principal (ownership of which always remains with Principal) is a supply of Service attracting GST @ 18%. Refund claim - HELD THAT - Further it is observed that as per Section 97 (2) of CGST Act, 2017, Advance Ruling can be obtained only regarding taxability, classification, rate of tax, exemption notification, determination of time and value of supply, ITC and Registration etc. under GST for supply of goods and Services. Since, the applicant has sought ruling on issue of refund of tax which is outside the purview/scope of this Authority as defined under Section 97(2) of the act ibid.

Summary

Issues Involved:

1. Classification of the activity of bulletproof body building on vehicles.
2. Determination of the applicable GST rate for the activity.
3. Eligibility for refund of excess GST charged.

Issue-wise Detailed Analysis:

1. Classification of the Activity:

The applicant is engaged in the manufacture of bulletproof glass, bulletproof vehicles, and other related items. The primary activity under scrutiny involves armoring vehicles supplied by customers (mainly the army/police) by building bulletproof bodies on the chassis provided. The process includes removing existing covers, fitting bulletproof frames and glass, and bulletproofing various compartments and components of the vehicle.

The applicant initially classified this activity under the "goods" category, specifically under tariff heading 87079000, and charged GST at 28%. However, an audit objection was raised, suggesting that the activity should be classified as a "service" under service category 9988, attracting a GST rate of 18%.

2. Determination of Applicable GST Rate:

The applicant's activity was scrutinized under the provisions of the CGST Act, 2017. Section 2(68) defines job work as any treatment or process undertaken on goods belonging to another registered person. Schedule II of the CGST Act specifies that any treatment or process applied to another person's goods is treated as a supply of service. Additionally, the CBIC Circular No. 52/26/2018-GST clarified that fabrication of body on chassis provided by the principal is classified as a service, attracting 18% GST.

The ruling concluded that the activity of bulletproof body building on chassis supplied by the customer is a supply of service under service head SAC 9988 (ic), attracting GST at 18%.

3. Eligibility for Refund of Excess GST Charged:

The applicant had charged GST at 28% for the completed work but faced an audit objection that suggested the correct rate should be 18%. The customer sought a refund for the excess GST charged. However, the ruling clarified that the issue of refund falls outside the purview of the Authority for Advance Ruling as defined under Section 97(2) of the CGST Act, 2017.

Ruling:

1. The activity of bulletproof body building on vehicles supplied by the customer is classified as a supply of service, attracting GST at 18% (SGST 9% + CGST 9%).
2. The question related to the refund of tax is outside the scope of the Authority for Advance Ruling under Section 97(2) of the CGST Act, 2017, and no ruling is provided on this matter.