Classification of bus body activities under GST: Goods vs. Services distinction clarified

The case involved the classification of activities related to building and mounting bus bodies on chassis under GST codes. The applicant initially argued for the supply of goods but later revised to supply of services. The authority differentiated between ready-built body supply and step-by-step building on owner-provided chassis. The judgment classified ready-built body supply as goods under HSN 8707 attracting 28% GST and step-by-step building as services under SAC 9988 attracting 18% GST. The decision aligned with CGST Act provisions and relevant circulars, ensuring accurate classification and GST rate application.

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Issues Involved:
1. Classification of the activity of building and mounting of the body on the chassis – whether it results in supply of goods under HSN 8707 or supply of services under HSN 9988.

Detailed Analysis:

Issue 1: Classification of the Activity
Applicant's Contentions:
- The applicant, engaged in building and mounting bus bodies on chassis, initially contended that the activity amounted to the supply of goods under HSN 8707, attracting 28% GST.
- Later, citing Circular No. 52/26/2018-GST dated 09-08-2018, the applicant revised their stance, arguing that the activity should be classified as the supply of services under SAC 998882, attracting 18% GST.

Facts Submitted by the Applicant:
- The applicant procures various inputs and uses their own machines and manpower for the body-building activity.
- The chassis is provided by the sender (OEMs/Retail customers) on a free-of-cost basis, and the ownership of the chassis remains with the sender.
- The applicant can build the body independently of the chassis and later mount it when the chassis is provided.

Applicant's Legal Arguments:
- The activity does not constitute "Job Work" as defined in Section 2(68) of the CGST Act, 2017, because the applicant uses their own goods for the body-building process.
- The activity should be treated as a "Composite Supply" where the principal supply is the body, thus classifying it as the supply of goods.
- Alternatively, if considered a "Mixed Supply," it would attract the higher rate of GST applicable to the supply of goods.

Authority's Findings:
- The authority examined the process of building the body and mounting it on the chassis, considering both scenarios where the body is built independently and where it is built step-by-step on the chassis.
- The authority referred to Circular No. 52/26/2018-GST, which clarifies that:
- If the bus body builder builds a bus on a chassis owned by them and supplies the built-up bus, it is a supply of goods attracting 28% GST.
- If the body builder builds the body on a chassis provided by the principal and charges fabrication charges, it is a supply of services attracting 18% GST.

Judgment:
1. Supply of Ready-Built Body and Mere Mounting on Chassis:
- This activity is classified as the supply of goods under HSN 8707.
- It attracts 28% GST.

2. Step-by-Step Building of the Body on Chassis Provided by Owner:
- This activity is classified as the supply of services under SAC 9988.
- It attracts 18% GST.

Conclusion:
- The ruling clearly differentiates between the supply of goods and services based on the nature of the activity and the involvement of the chassis in the body-building process.
- The authority's decision aligns with the provisions of the CGST Act and the clarifications provided in the relevant circulars, ensuring that the classification and applicable GST rates are appropriately determined.

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