Bus body fabrication on supplied chassis deemed composite supply with bus bodies as principal supply

The Authority ruled that fabricating and fitting bus bodies on supplied chassis constitutes a composite supply, with the principal supply being bus bodies. The activity was not classified as a supply of service, and the specific tax rate for service supply was not addressed. The ruling was based on the applicant using their materials for fabrication and an agreement with Uttarakhand Transportation Corporation, supporting the conclusion that the activity involves the supply of bus bodies.

---

---

Issues involved:
1. Determination of whether the activity of fabricating, fitting, and mounting bus bodies on chassis supplied by another party constitutes job work or a contract of sale of bus bodies.
2. Clarification on the applicable tax rate if the activity is considered job work.

Analysis:

Issue 1:
The applicant argued that the activity should be considered job work based on the definition provided in Section 2(68) of the CGST Act 2017. They referenced judgments such as 'M/S Kailash Engineering Co. Vs. State of Gujarat' and a High Court ruling to support their stance. Additionally, a clarification from the Asst. Commissioner CGST Jaipur was presented, stating that the activity falls under the definition of job work and is subject to an 18% GST rate. The state government also clarified that the activity is a work contract, not a sale of bus bodies.

Issue 2:
The Deputy Excise and Taxation Commissioner Faridabad (West) opined that the applicant's business involves the supply of bus bodies along with fitting and fabrication services, with the supply of bus bodies being the major part of the process. During the personal hearing, the applicant reiterated their stance, and no new information was provided. The Authority considered the CBEC Circular No. 34/8/2018-GST, which clarified that bus body building involves a supply of goods and services, and the classification depends on the principal supply in each case.

Discussion and Findings:
The Authority determined that the activity of fabricating, fitting, and mounting bus bodies on supplied chassis constitutes a composite supply, with the principal supply being the bus bodies. The chassis is provided by the customer, and the applicant uses their own materials for fabrication, indicating a supply of bus bodies rather than mere job work. The agreement with Uttarakhand Transportation Corporation further supported this conclusion. Therefore, the activity was deemed a composite supply with the principal supply being the supply of bus bodies.

Conclusion:
The Authority ruled that the activity of fabricating and fitting bus bodies on supplied chassis is a composite supply with the principal supply being bus bodies. As the activity was not classified as a supply of service, the specific tax rate for service supply was not addressed in the ruling.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by the applicant, the relevant legal interpretations, and the final ruling by the Authority for Advance Rulings Haryana.

---