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TMI BlogTAXABILITY OF JOB WORKS OF TANKER BODY BUILDINGX X X X Extracts X X X X X X X X Extracts X X X X ..... TAXABILITY OF JOB WORKS OF TANKER BODY BUILDING - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 25-11-2021 - - Suppliers of specialized vehicle bodies are engaged specialized body fabricating (say tankers etc) and body building on job work basis on the chassis given by the customer. In such cases, on receipt of chassis, a work order with the specifications of the tanker body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be raised and on acceptance of the same by customer, the materials used for structural fabrication of tanker is procured and tanker body built on the chassis. The processes involved in such type of manufacturing activities may, inter alia include: (a) receiving chassis at workshop; (b) purchase of raw steel; (c) cutting and bending of raw materials; (d) welding of all cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and bend parts; (e) assembly of all fabricated parts and statutory parts; and (f) final product on chassis and delivery of the tanker with license. There is a lot of doubt or confusion on how to determine whether the activity of such body building / fabrication on job work basis, on the chassis supplied by the customer would be treated as supply of goods or supply of service, how to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the rate of GST and proper accounting / HSN / SAC Code etc. In one of the recent rulings by Authority for Advance Rulings, In re: Kerala CC Fabs 2021 (7) TMI 481 - AUTHORITY FOR ADVANCE RULING, KERALA , the Authority for Advance Ruling, Kerala observed that as per Para 3 of Schedule II of the CGST Act, 2017 , any treatment or process which is applied to another person' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s goods is a supply of service. In the instant case, the applicant was to fabricating body on the chassis belonging to the customer. The ownership of the chassis would remain with the customer and at no stage of the process of fabrication of the body; the title in the chassis would be transferred to the supplier. The dealer sought advance ruling from the Authority for Advance Ruling on the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing questions: Whether the activity of tanker body building on job work basis, on the chassis supplied by the customer, is supply of goods or supply of service? If it is supply of goods, what is the applicable rate of GST? If it is supply of services, what is the applicable rate of GST? What will be the service code (tariff) for above stated activity of tanker body building carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out on chassis of motor vehicle owned by customer? What is job work ? As per Section 2(68) of the CGST Act , the term job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression 'job worker' shall be construed accordingly. As per Para 3 of Schedule II to the CGST Act, 2017 any treatment or process wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is applied to another person's goods is a supply of service. Therefore, the service code (tariff) for the above activity of body building carried out on another person's chassis of motor vehicle should be 9988 that covers manufacturing services on physical inputs (goods) owned by others and attracts total 18% GST. Considering this, the activity of building and mounting of the body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the chassis provided by the principal will result in supply of services under HSN code 9988 and hence should be taxed at total rate of 18% GST in terms of clear description of services provided in the scheme of classification of services as Annexure to Notification No.11/2017-CT (Rate) dated 28.06.2017 . Further, in Kondody Autocraft (India) Pvt. Ltd. (2019) 4 TMI 110 (AAR, Kerala) , it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the activity of Bus Body Building on job work basis, on the chassis supplied by the customer, is supply of service. ( Advance Ruling No. KER/39/2019 dated 02.03.2019 ) Therefore, it was opined that the activity would be squarely covered under Para 3 of Schedule II of the CGST Act, 2017 as a treatment or process which would be applied to another person's goods and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly would be treated as supply of services classifiable under Service Accounting Code 998881 and taxable at rate of 18% under GST. The activity of specialized body building on the chassis owned by the customer is classifiable under Service Accounting Code 998881 . The Authority for Advance Ruling, therefore, ruled as follows: The activity of tanker body building on the chassis sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied by the customer is a supply of service. Not relevant in view of the answer to Q.No.1 above. The activity is liable to GST at the rate of 18% [9% CGST + 9% SGST] as per entry at SI No. 26 (iv) - 9988 - Manufacturing services on physical inputs (goods) owned by others - Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and (iii) above of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 . The activity of tanker body building on the chassis owned by the customer is classifiable under Service Accounting Code 998881 . This ruling comes at an appropriate time clarifying one of the most controversial issue being faced by suppliers of specialized vehicle bodies. Chassis building is now a days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very common and as such, suppliers may be well guided by this pronouncement. Though advance rulings are not binding on all, yet it has a persuasive value. ************** - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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