9911796707
TMI Blog2019 (7) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the chassis by the Applicant will result in supply of goods under HSN 8707 or supply of services under HSN 9988? 2(b). The Applicant sought for the advance ruling in respect of their activity as to whether it amounts to supply of goods or supply of services and also the respective classifications. The question of the applicant is covered under Section 97 (2) (a) of CGST Act 2017, as it is with regard to classification and hence the application is admissible under the CGST Act 2017. 3. The applicant company furnishes the following facts relevant to the stated activity: 3.1 The Applicant is engaged in the business of building and mounting of body on the chassis of different models of buses. 3.2 The Applicant, for building and mounting of the body, procures various inputs such as steel sheets, square tubes, seats, glasses, wiring harness, fittings inside body, paints, FRP (Fibre-reinforced plastic), Air conditioner, Automobile parts on payment of appropriate GST and claims input tax credit on the same. They undertake the body building activity and fabrication works using aforesaid inputs and their own machines, manpower and other facilities. 3.3 The applicant receives the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can't fall under the ambit of "Composite Supply". 3.7 The Applicant, further quoting the meaning of "Mixed Supply" in terms of Section 2(74) of the CGST Act 2017, submits that if the activity of building the body and mounting the body is considered as "Mixed Supply", then the supply attracts the higher rate of GST i.e. supply of body (goods) attracting 28% of GST. 3.8 The Applicant further submits that in terms of para 1 (a) of Schedule II of the CGST Act "any transfer of the title in goods is a supply of goods". In this case, the purchase order issued by the sender is for supply of body, which is mounted on the chassis. The title and ownership of all the inputs used for building the body remains with the Applicant and the sender will not be liable for any loss that may happen to the inputs till the body built is mounted on the chassis. Therefore the contractual agreement between the sender and the Applicant is for supply of body but not the services of building the body and hence the instant activity becomes supply of goods and not the supply of services. 4. The Applicant furnished additional submissions vide their letter dated 14.02.2019, received on 21.02.2019, inter alia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on the body building activity. 4.3 The Applicant, further, draws the attention to the Circular bearing No. 52/26/2018 - GST dated 09-08-2018, where in the applicable GST rate for bus body building activity has been clarified based on the following two situations. "12.2(a) Bus body builder builds a bus, working on the chassis owned by him and supplies the built-up bus to the customer, and charges the customer for the value of the bus. 12.2(b) Bus body builder builds body on chassis provided by the principal for body building and charges fabrication charges (including certain material that was consumed during the process of job work)." The first situation being the supply of goods attracts GST @28% and the second situation being the supply of service attracts GST @18%. Hence the Applicant, in terms of the said circular, started following the second situation and started discharging GST @ 18% thereafter with effect from September 2018. 4.4 The applicant, to substantiate the stand that the activity of body building is a supply of service, relied upon relevant legal provisions of the CGST Act 2017, i.e. Section 2(68) & Para 3 of the Schedule II of the CGST Act 2017, apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r FOC challan will result in supply of services under HSC 9988 and hence, should be taxed @ 18% GST" 4.9 In view of the above, the Applicant contends that the activity of bus body building, on the chassis provided by the sender by using their own inputs and capital goods, merits classification as Supply of Services under SAC 998882 and also under the job work provisions read with para 3 of Schedule II of CGST Act, which attracts GST @ 18% and not as supply of goods under HSN 8707, which attracts GST @ 28%. PERSONAL HEARING: / PROCEEDINGS HELD ON 26.02.2019. 5. Sri. Rajesh Shukla, Cost Accountant and duly authorised representative of the company appeared and made submissions reiterating the issue involved and contended that the activity of bus body building, on the chassis provided by the sender by using their own inputs and capital goods, merits classification as Supply of Services under SAC 998882 and also under the job work provisions read with para 3 of Schedule II of CGST Act, which attracts GST @ 18% and not as supply of goods under HSN 8707, which attracts GST @ 28%. 6. FINDINGS & DISCUSSION: 6.1 We have considered the submissions made by the Applicant in their applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd then they carry out the aforesaid activity on the chassis using their own inputs and capital goods. Hence the said activity amounts to supply of services in terms the Circular dated 09.08.2018. 6.6 Therefore in the instant case two situations arise. In the first scenario the body is built without the physical presence of the chassis. The dimensions of the chassis and the required design of the body are known and the body is fabricated accordingly. Such ready built body is thereafter mounted on the chassis as and when provided by the owner. In the second scenario the chassis is provided by the owner and the applicant carries out the building and mounting of the body on the chassis in different steps as enumerated by the applicant and discussed in para 4.1 above. In both the situations the applicant use their own inputs and capital goods. 6.7 The question raised by the applicant had been raised by several other body builders and after examination of the various issues, the CBIC issued a clarificatory Circular in the matter. The Circular, No. 52/26/2018 - GST dated 09-08-2018, clarifies the applicable GST rate for bus body building activity based on the following two situations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e body on the chassis and also minor activities like fixing seats etc. It is seen that the fabricator of the body is also generally called upon to affix the same on the chassis. Therefore the fabrication of the body and then its mounting on the chassis appear to be two naturally bundled supplies, supplied in conjunction with each other. Therefore the applicant appears to be engaged in a composite supply where the principal supply is that of the body, i.e. supply of goods. Accordingly the activity shall attract classification under HSN 8707 and the activity would be liable to GST @ 28 % in terms of Serial number 169 of Schedule IV of Notn. No 1/2017-Central Tax (Rate) dated 28.06.2017, effective from 01.07.2017. 7. In view of the above, we pass the following RULING i. The supply of ready built body and the activity of mere mounting the body on chassis supplied by the owner amounts to supply of goods and merits classification under HSN 8707, attracting 28% of GST. ii. The activity of step by step building of the body on the chassis supplied by the owner using their own inputs & capital goods amounts to supply of service, in terms of Circular dated 9.8.2018 and merits classific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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