Tipper body fabrication on own chassis classified as goods under HSN 8707 at 28% GST, on customer chassis as services under SAC 9988 at 18% GST

AAR Punjab ruled on GST classification for tipper body fabrication and mounting services. When the applicant owns the chassis and uses own inputs/capital goods, it constitutes supply of goods under HSN 8707 attracting 28% GST. However, when fabrication and mounting is performed on customer-owned chassis using customer's inputs/capital goods, it qualifies as supply of services under SAC 9988 attracting 18% GST, following CBIC Circular dated 09.08.2018.

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Issues Involved:
1. Classification of the activity of building and fabricating Tipper Body and mounting it on the chassis supplied by the customer.
2. Applicable rate of GST if the activity is classified as a supply of goods.
3. Applicable rate of GST if the activity is classified as a supply of services.

Issue-wise Detailed Analysis:

1. Classification of the Activity:
The applicant, engaged in Tipper Body Building and Fabrication, mounts the fabricated body on the chassis supplied by customers. The primary question is whether this activity constitutes a supply of goods or services. The applicant argued that it should be classified as a supply of goods under Tariff item No. 8707, attracting 28% GST. However, Circular No. 52/26/18-GST dated 9th August 2018, clarifies that such activities, when performed on a chassis supplied by the customer, should be classified as a supply of services, attracting 18% GST. The circular distinguishes between building a bus body on a chassis owned by the builder (supply of goods) and building on a chassis provided by the customer (supply of services).

2. Applicable Rate of GST if Classified as Supply of Goods:
If the activity involves building and fabricating the Tipper Body and mounting it on a chassis owned by the applicant, it is classified as a supply of goods under HSN 8707. This classification attracts a GST rate of 28%. This scenario occurs when the applicant uses their own inputs and capital goods for the fabrication process.

3. Applicable Rate of GST if Classified as Supply of Services:
If the activity involves building and fabricating the Tipper Body and mounting it on a chassis supplied by the customer, it is classified as a supply of services under SAC 9988. This classification attracts a GST rate of 18%. This scenario occurs when the applicant uses their own inputs for the fabrication process but the chassis remains the property of the customer.

Judgment Summary:
The Advance Ruling Authority concluded that:
- When the applicant builds and fabricates the Tipper Body and mounts it on a chassis supplied by the customer, and charges fabrication fees including the cost of inputs, the activity is classified as a supply of services under SAC 9988, attracting 18% GST.
- When the applicant builds and fabricates the Tipper Body and mounts it on a chassis owned by the applicant, using their own inputs and capital goods, the activity is classified as a supply of goods under HSN 8707, attracting 28% GST.

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