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of <h1>AAR Gujarat rules fabricating tankers, tippers, bus bodies on customer chassis constitutes supply of services under Schedule II(3) CGST Act</h1> AAR Gujarat ruled that fabricating and mounting tankers, tippers, and bus bodies on customer-owned chassis constitutes supply of services under Schedule ... Classification of supply - supply of services or not - activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner of such chassis i.e. bus body building - applicable accounting code of such services as per the Scheme of Classification of Services - applicable rate of GST - HELD THAT:- Schedule II(3) CGST Act reads as, any treatment or process which is applied to another person’s goods is a supply of service. Therefore bus body building on customer owned chassis is supply of service - Section 2(68) CGST Act defines Job work as any treatment or process undertaken by a person on goods belonging to another registered person. Therefore bus body building on chassis owned by GST registered customer is Job work and finds entry at Sr no 26(ic) to Notification 11/2017-CT(R) - And bus body building on chassis owned by un-registered customer is ‘Manufacturing services on physical inputs (goods) owned by others, other than those registered under CGST Act’ which finds entry at Sr no. 26(iv) to Notification 11/2017- CT( R). As per the Scheme of Classification of services, it is found that subject supply merits to be classified at Heading 9988 ‘Manufacturing services on physical inputs (goods) owned by others’ and precisely at Service code (Tariff) 998882 ‘other transport equipment manufacturing services’. Issues:1. Classification of activity of fabricating and mounting Tankers, Tippers, etc. on chassis as supply of services.2. Determination of applicable accounting code and GST rate for the mentioned services.Analysis:For the first issue, the applicant, M/s. Vasant Fabricators Pvt. Ltd. (VFPL), engaged in building bodies of various vehicles, argued that their activity of converting chassis into mounted Tankers, Tippers, etc. constitutes a supply of services. They based their argument on the Scheme of Classification of services under Notification No. 11/2017 Central Tax (Rate), specifically under the main head of 9988 for 'Manufacturing services on physical inputs (goods) owned by others.' VFPL differentiated the applicable rate of GST as 18% based on whether the chassis is provided by a registered or unregistered person. They supported their stance with relevant definitions and notifications, emphasizing the distinction between job work services and other manufacturing services based on the ownership of the goods.Regarding the second issue, VFPL sought clarity on the accounting code and GST rate applicable to their services. They referenced Circular No. 126/45/2019-GST and various Advance Rulings to support their claim that their activity falls under the category of supply of services. The applicant highlighted the distinction between supply of goods and services in the context of bus body building, citing relevant clarifications and FAQs issued by the CBIC. Additionally, VFPL presented multiple Advance Rulings from different states to reinforce their argument that their activity should be classified under specific service codes related to motor vehicle and trailer manufacturing services.During the personal hearing, the applicant reiterated their submissions, while the Revenue did not provide any comments or attend the hearing. The Authority for Advance Ruling examined the legal provisions, including Schedule II(3) of the CGST Act, which defines treatment or processes on another person's goods as a supply of service. The Authority concluded that bus body building on a customer-owned chassis constitutes a supply of service, with different GST rates applicable based on whether the customer is registered or unregistered under the CGST Act. The ruling specified the service description, notification, service code, and GST rate for both scenarios, affirming that the activity of fabricating and mounting Tankers, Tippers, etc. on chassis is indeed classified as a supply of services under the GST Scheme of law.
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