Ruling: Bus/Truck/Ambulance Body Mounting on Chassis Subject to 18% GST

The ruling determined that the activity of mounting bus/truck/ambulance bodies on chassis provided by the principal, involving fabrication and material costs, falls under SAC 998881 and is subject to 18% GST (9% CGST and 9% SGST). This classification as a composite supply is based on the predominant service of body building, with the tax liability determined by the principal supply. The decision aligns with relevant GST provisions and clarifications, establishing the applicable GST rate for such activities.

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Issues Involved:
1. Classification of the activity of mounting bus/truck/ambulance bodies on chassis supplied by the principal.
2. Determination of whether the activity constitutes a composite supply.
3. Applicable GST rate for the activity.

Issue-wise Detailed Analysis:

1. Classification of the Activity:
The applicant, engaged in trading motor vehicles, provides chassis to a job worker for body building. The job worker procures materials and fabricates the body on the chassis, returning the completed vehicle to the applicant. The ownership of the chassis remains with the applicant throughout the process. This activity was examined to determine whether it falls under the definition of "job work" as per Section 2(68) of the CGST Act. The relevant explanation under Section 143 of the GST Act and the precedent set by the Supreme Court in Prestige Engineering (India) Ltd. vs. CCE confirmed that the addition of materials by the job worker does not change the nature of the work, thus classifying it as job work.

2. Composite Supply Determination:
The applicant contended that the job work involving the use of materials constitutes a composite supply, with the principal supply being the service of body building. This argument is supported by Section 2(30) and Section 2(90) of the CGST Act, defining composite supply and principal supply respectively. The job worker's activity of fabricating and mounting the body on the chassis was considered a composite supply, where the predominant element is the service of body building. As per Section 8(a) of the CGST Act, the tax liability on composite supply is determined by the principal supply, which in this case is the service of body building.

3. Applicable GST Rate:
The concerned officer and the applicant referred to Circular No. 52/26/2018-GST, which clarifies that the fabrication of a body on a chassis provided by the principal is classified as a service and attracts 18% GST. This classification is under SAC 998881 - "Motor vehicle and trailer manufacturing services" and entry no. 26(ii) - "Manufacturing services on physical inputs (goods) owned by others." The ruling confirmed that the activity of mounting bus/truck/ambulance bodies on the chassis supplied by the principal is taxable at 18% GST (9% under CGST and 9% under SGST).

Ruling:
The authority ruled that the activity of mounting bus/truck/ambulance bodies on the chassis supplied by the principal, where the job worker charges for fabrication including the cost of materials used, is classified under SAC 998881 and is taxable at 18% GST. This ruling is valid subject to the provisions under section 103(2) and unless declared void under Section 104(1) of the GST Act.

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