Ruling: Bus body fabrication on OEM chassis deemed service under GST SAC 998881. Taxable at 18%.

The ruling determined that the fabrication of bus bodies on chassis supplied by OEMs, where ownership of the chassis remains with the OEMs, constitutes a supply of services under SAC 998881. The activity is classified as "Motor vehicle and trailer manufacturing services" and is taxable at 18% GST (9% CGST and 9% SGST).

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Issues Involved:
1. Classification of the activity of building and mounting bus bodies on supplied chassis.
2. Determination of whether the activity constitutes a supply of goods or services.
3. Applicable GST rate for the activity.

Issue-wise Detailed Analysis:

1. Classification of the Activity:
The applicant, M/s. Rohan Coach Builders, intends to fabricate bus bodies on chassis supplied by OEMs (Original Equipment Manufacturers). The chassis will be delivered to the applicant for body building on a delivery challan, and the applicant will procure various inputs such as metal sheets, plywood, seats, glasses, and aluminum sections for the fabrication. The applicant will then send the completed bus back to the OEMs/customers after raising a tax invoice for the body building charges, on which GST will be charged separately. The ownership of the chassis remains with the OEMs throughout the process, making the activity a "job work."

2. Supply of Goods or Services:
The applicant sought an advance ruling to determine whether the activity of building and mounting bus bodies on the chassis provided by the OEMs constitutes a supply of goods under HSN 8707 or a supply of services under HSN 9988, taxable at 18%. The applicant argued that since the chassis ownership is not transferred and the body building involves using their inputs, the activity should be classified as "job work" under SAC 998881 - "Motor vehicle and trailer manufacturing services" and taxed at 18%.

The applicant referred to Section 2(68) of the CGST and SGST Acts, which defines job work as any treatment or process undertaken by a person on goods belonging to another registered person. Additionally, Para 3 of Schedule II of the CGST Act specifies that any treatment or process applied to another person's goods is a supply of service. The applicant also cited previous rulings and circulars, including Circular No. 52/26/2018-GST, which clarifies that the fabrication of bus bodies on chassis provided by the principal is a supply of services, taxable at 18%.

3. Applicable GST Rate:
The concerned officer and the applicant agreed that the nature of work undertaken by the applicant attracts 18% GST as per Circular No. 52/26/2018-GST. The circular outlines two scenarios: (a) when the bus body builder builds a bus on a chassis owned by them and supplies the complete bus, attracting 28% GST; and (b) when the bus body builder fabricates the body on a chassis provided by the principal, which is classified as a service and attracts 18% GST.

The authority examined the submissions and found that the applicant's activity falls under scenario (b) of the circular. The fabrication of the bus body on the chassis provided by the principal is classified as a service under HSN 9988, and the applicable GST rate is 18%.

Ruling:
The authority ruled that the fabrication of bus bodies on chassis supplied by the OEMs or any other owner, where the ownership of the chassis is not transferred to the applicant, constitutes a supply of services under SAC 998881 - "Motor vehicle and trailer manufacturing services." This activity is taxable at 18% GST (9% CGST and 9% SGST). The ruling is valid subject to the provisions under Section 103(2) until declared void under Section 104(1) of the GST Act.

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