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2022 (9) TMI 201 - AAR - GSTClassification of supply of services - Composite supply or not - applicable accounting code of such services - rate of GST - activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner of such chassis i.e. bus body building - what is principal supply? - Circular No. 52/26/2018-GST dated 9-8-18 issued by Government of India - HELD THAT - 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, 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%. The applicant is engaged in the manufacturing of body building i.e. mounting of tanker, tripper 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 . -Manufacturing services on physical inputs (goods) owned by others . The sub-group would be 99888 i.e. Transport equipment manufacturing services further classifiable under Service Code 998882 i.e. Other transport equipment manufacturing services - the activity of fabrication and mounting of bus body on the chassis supplied by the owner of chasis i.e. Principal on delivery challan and collecting job work charges including inputs required for such fabrication work merits classification under SAC 998882 - Other transport equipment manufacturing services . Thus, the applicant activity of fabrication and mounting of Tanker and Tripper on the chasis supplied and owned by the principal is supply of Service. The rate of tax in both the cases if chasis is supplied by the registered person (principal) i.e. having GSTIN and un-registered person (principal) i.e. not having GSTIN would be 18% as per Entry No. 26 (ic) and 18% as per Entry No. 26(iv) respectively. This activity merits classification SAC 998882 'Other transport equipment manufacturing services' as per Annexure attached to Notification No. 11/2017-CT (Rate) dated 28-6-17.
Issues Involved:
1. Classification of the activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner. 2. Determination of whether the activity is a supply of services. 3. Applicable accounting code for the services. 4. Applicable rate of GST for the services. Detailed Analysis: Issue 1: Classification of the Activity The applicant is engaged in building bodies of various vehicles falling under Chapter 87 of the First Schedule to the Custom Tariff Act, such as mounting of tankers, tippers, etc., on chassis provided by the owner. The activity involves receiving the chassis, making drawings, purchasing materials, fabricating parts, and assembling them on the chassis. Issue 2: Nature of the Activity as Supply of Services The applicant contends that their activity is in the nature of working upon the goods (chassis) supplied by the Principal and converting them into Mounted Tankers, Tippers, etc. As per the Scheme of Classification of Services in the Annexure to Notification No. 11/2017 Central Tax (Rate), this activity falls under the main head of 9988, specifically under Service Code 998882, which pertains to "Other transport equipment manufacturing services." The applicable rate of GST is 18%. The applicant cited Circular No. 52/26/2018-GST dated 09.08.2018, which clarifies that the activity of bus body building on the chassis provided by the principal is considered a supply of services and attracts 18% GST. This position is supported by various Advance Rulings across India. Issue 3: Applicable Accounting Code The activity of fabricating and mounting Tankers, Tippers, etc., on the chassis provided by the owner is classified under Service Accounting Code 998882, which pertains to "Other transport equipment manufacturing services." Issue 4: Applicable Rate of GST The applicable rate of GST is 18% in both scenarios: - When the chassis is provided by a registered person, the activity is classified as job work under Entry No. 26(ic) of Notification No. 11/2017 Central Tax (Rate) as amended by Notification No. 20/2019 Central Tax (Rate). - When the chassis is provided by an unregistered person, the activity is classified under "Manufacturing services on physical inputs (goods) owned by others" as per Entry No. 26(iv) of Notification No. 11/2017 Central Tax (Rate). Findings: The Authority for Advance Ruling considered the submissions, relevant facts, and the applicant's interpretation of the law. It was determined that the activity of bus body building on the chassis owned by the principal is a composite supply where the principal supply is the service of body building. As per Section 2(68) of the CGST Act and para 3 of Schedule II, this activity is a supply of service. The ruling aligns with Circular No. 52/26/2018-GST, which clarifies that the fabrication of body on chassis provided by the principal is a supply of service and attracts 18% GST. The classification of the service falls under SAC 998882. Ruling: 1. The activity of fabricating and mounting Tankers, Tippers, etc., on the chassis provided and owned by the principal is a supply of service. 2. The supply of service merits classification under SAC 998882 "Other transport equipment manufacturing services." 3. The applicable rate of GST is 18% for both registered and unregistered persons providing the chassis. This ruling is consistent with various Advance Rulings cited by the applicant, which have persuasive value in identical matters.
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