Taxable Supply: Mounting Bus Bodies on Customer Chassis - 18% GST

The Authority for Advance Ruling determined that the activity of mounting/fabricating bus bodies on customer-supplied chassis constitutes a supply of services under SAC 998881, taxable at 18% GST. Ownership of the chassis by the customer throughout the fabrication process was crucial in classifying the activity as job work, falling under the definition of services rather than goods. This ruling is valid until declared void under the GST Act.

---

---

Issues Involved:
1. Determination of GST rate applicable for the activity of mounting/fabrication of bus bodies on chassis provided by customers.
2. Classification of the supply as either a supply of goods or a supply of services.
3. Impact of ownership of chassis on the taxability of the fabrication activity.

Detailed Analysis:

1. Determination of GST Rate Applicable for Mounting/Fabrication of Bus Bodies on Chassis Provided by Customers:
The applicant, engaged in manufacturing chassis and fabricating bus bodies, sought clarity on the GST rate applicable when customers provide the chassis for body fabrication. The applicant argued that the activity should be classified as a service, attracting 18% GST as per Circular No. 52/26/2018-GST dated 9th August 2018, which distinguishes between complete vehicle supply (28% GST) and job work services (18% GST).

2. Classification of the Supply as Either a Supply of Goods or a Supply of Services:
The judgment clarified that the activity of fabricating bus bodies on customer-supplied chassis constitutes a supply of services. The relevant legal provisions cited include Section 2(68) of the CGST Act, defining job work, and Schedule II, para 3 of the CGST Act, which states that any treatment or process applied to another person’s goods is a supply of services. The fabrication work on the chassis is thus classified under HSN 9988, attracting 18% GST.

3. Impact of Ownership of Chassis on the Taxability of the Fabrication Activity:
The ruling emphasized that the ownership of the chassis remains with the customer throughout the fabrication process. This ownership factor is crucial in determining the nature of the supply. Since the chassis is owned by the customer, the fabrication activity performed by the applicant is considered job work, a service, rather than a supply of goods. The ruling referenced Circular No. 52/26/2018-GST, which supports this interpretation, stating that fabrication on a customer-owned chassis is a service taxed at 18%.

Conclusion:
The Authority for Advance Ruling concluded that the activity of mounting/fabricating bus bodies on customer-supplied chassis should be treated as a supply of services under SAC 998881 - "Motor vehicle and trailer manufacturing services," taxable at 18% GST (9% CGST and 9% SGST). This classification applies regardless of whether the chassis is originally manufactured by one of the applicant's units or by another OEM. The ruling is valid under Section 103(2) of the GST Act until declared void under Section 104(1).

---