Correct GST Rate Determination for Bus Body Building Services: Clarification on SAC Classification and Applicable GST Rate

The Authority determined that the correct GST rate for the applicant's services was 28%, in line with the classification of "bus body building" under a government notification. The applicant's services were classified under SAC 998881 for "Motor vehicle and trailer manufacturing services." Post-amendment, the appropriate GST rate for the applicant's services was clarified to be 18% (9% CGST & 9% SGST).

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Issues:
1. Correct GST rate for the applicant's services.
2. Applicability of SAC 998881 for classification of services.
3. Appropriate GST rate for the applicant's services post-amendment.

Issue 1: Correct GST rate for the applicant's services

The applicant sought clarification on whether charging GST at 28% (CGST @ 14% + SGST @ 14%) as per Sl.No. 169 of Schedule-IV to the Notification No.1/2017-CT (R) dated 28.06.2017 was correct. The Authority analyzed the activity of the applicant, which involved body building on chassis provided by the principal for Tippers, Trailers, etc. The Authority noted that the applicant's activity was similar to bus body building as per Circular No. 52/26/2018-GST dated 09.08.2018. The Authority referred to a government notification that clarified "bus body building" to include building bodies on chassis of vehicles under Chapter 87. Consequently, the applicant's activity qualified as a service, subject to meeting specific conditions. Therefore, the correct GST rate for the applicant's services was determined to be 28%.

Issue 2: Applicability of SAC 998881 for classification of services

The second issue pertained to the classification of the applicant's services under SAC 998881, titled "Motor vehicle and trailer manufacturing services." The Authority examined the explanatory notes to the Scheme of Classification of Services, which indicated that service code 998881 encompassed motor vehicle manufacturing services, trailers, semitrailer manufacturing services, and motor vehicle parts manufacturing services. Since the applicant was engaged in the manufacturing/fabrication of trailers, their services were deemed to fall under Service Code 998881, aligning with the classification provided in the explanatory notes.

Issue 3: Appropriate GST rate post-amendment for the applicant's services

Lastly, the applicant inquired about the correct GST rate post-amendment for their services. The Authority clarified that the applicant's services were initially covered under SI.No.26(ii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and subsequently under SI.No.26(iii)/(iv) after an amendment. The services were taxed at 9% CGST and 9% SGST from 01.07.2017. However, due to an inadvertent error in claiming the applicable entry under the notification, the applicant mistakenly believed their services were taxed at 12% GST. The Authority confirmed that the correct GST rate for the applicant's services was 18% (9% CGST & 9% SGST) as per the amended notification.

In conclusion, the Authority ruled that the applicant should charge GST at 28% for their services, classify their services under SAC 998881, and apply an 18% GST rate post-amendment.

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