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of <h1>AAR denies rectification under s.102, finds no apparent error; application rejected under s.98(2) CGST/TNGST Act 2017</h1> <h3>In Re: M/s. Kailash Vahn Private Limited</h3> In Re: M/s. Kailash Vahn Private Limited - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the rectification remedy under Section 102 of the CGST/TNGST Act is available to amend the Advance Ruling on the ground of an error apparent on the face of record as sought by the applicant. 2. Whether the activity of bus/body building on a chassis constitutes 'job work' and a 'supply of service' falling under SAC 998881 ('Motor vehicle and trailer manufacturing services') when the chassis is supplied by a GST-registered person and when supplied by an un-registered person. 3. Whether the applicable GST rate for the body-building activity is 18% (9% CGST + 9% SGST) under Entry No.26(ic) or under Entry No.26(iv) of Notification No.11/2017-CT(Rate) depending on the supplier status of the chassis. 4. Whether the omission suggested by the applicant-explicitly stating that body building on chassis owned by an unregistered customer is covered by Entry No.26(iv)-constitutes an error apparent on the face of the record requiring rectification. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Availability and scope of rectification under Section 102 Legal framework: Section 102 permits the Authority/Appellate Authority to amend any order passed under relevant sections to rectify any error apparent on the face of the record within six months; proviso bars rectification that increases tax liability or reduces ITC without hearing. Precedent Treatment: No judicial precedents cited in the ruling; the Authority applied statutory test for 'error apparent on the face of record.' Interpretation and reasoning: The Authority reiterates that rectification power is limited to correcting patent, obvious errors and cannot be used to expand or restate reasoning already reflected in the order portion. The Authority examined whether the applicant's suggested insertion was necessary or redundant given the contents of the reasons (paras 7.11-7.14) and found the ruling already records the material position. Ratio vs. Obiter: Ratio - clarifies the narrow scope of Section 102 as limited to apparent errors; Obiter - commentary that full discussions need not be reproduced in the operative ruling portion. Conclusion: Rectification under Section 102 is not warranted because no error apparent on the face of record exists; the rectification application is rejected. Issue 2 - Characterisation: body building as 'job work' and 'supply of service' under SAC 998881 Legal framework: Definition of 'job work' requires (i) treatment or process undertaken, (ii) goods on which such process is undertaken belong to another person, and (iii) that person is a registered person. Classification of services under Heading 9988 and SAC 998881 and the notification entries concerning manufacturing services on physical inputs owned by others. Precedent Treatment: Authority relied on internal analysis and relevant CBIC clarificatory circulars referenced in the original ruling; no external judicial authority overruled or distinguished. Interpretation and reasoning: The Authority analysed facts as presented (chassis supplied by OEMs and independent customers; applicant was silent as to registration status in original application). It concluded that body building is a supply of service classified under Heading 9988 (manufacturing services on physical inputs owned by others) and specifically SAC 998881. However, it emphasised that the statutory definition of 'job work' is satisfied only when the owner of the goods is a registered person; therefore, body building on chassis owned by a GST-registered customer amounts to job work, while the same activity on chassis belonging to an un-registered customer does not constitute job work though it remains a service under SAC 998881. Ratio vs. Obiter: Ratio - body building on chassis is a service under SAC 998881 and qualifies as 'job work' only when the chassis owner is a registered person; Obiter - factual observations about OEMs and independent customers given the applicant's silence on registration status. Conclusion: Body building is a supply of service under SAC 998881 in all cases; it becomes 'job work' (and attracts the specific notification entry for job work) only where the chassis owner is a registered person. Issue 3 - Applicable tax rate: Entry No.26(ic) vs Entry No.26(iv) Legal framework: Notification No.11/2017-CT(Rate) entries: Entry No.26(ic) (job work activity) and Entry No.26(iv) (other manufacturing services on physical inputs owned by others), both attracting 18% (9% CGST + 9% SGST) as amended and explained by subsequent notifications/explanations. Precedent Treatment: Authority referred to the amendment inserting bus body building as item (ic) and a CBIC clarificatory circular; no conflicting precedent cited. Interpretation and reasoning: Given the characterization in Issue 2, where body building is job work (chassis owned by a registered person) it falls under Entry No.26(ic); where it is not job work (chassis owned by un-registered person) the activity falls under Entry No.26(iv). Notwithstanding the classification difference, both entries result in the same effective rate: 9% CGST + 9% SGST (total 18%). The Authority thus addressed the rate question by reference to the entries and their amended explanations. Ratio vs. Obiter: Ratio - tax rate in both scenarios (registered or un-registered chassis owner) is 9% CGST + 9% SGST (total 18%); Obiter - detailed legislative history of insertion/amendment noted for context. Conclusion: The applicable GST rate is 18% (9% CGST + 9% SGST) in either case; classification under Entry No.26(ic) applies when the chassis owner is registered, and Entry No.26(iv) applies when the chassis owner is un-registered, but the rate outcome is identical. Issue 4 - Whether the applicant's proposed amendment is an apparent error needing rectification Legal framework: Section 102 test for 'error apparent on the face of record' and proviso regarding enhancement of tax liability/reduction of ITC with hearing. Precedent Treatment: Authority relied on its own reasons in paras 7.11-7.14 and the statutory standard for rectification; no external authority cited. Interpretation and reasoning: The applicant sought a textual insertion in the operative ruling to explicitly state that body building on chassis owned by unregistered customers is covered by Entry No.26(iv). The Authority found the operative ruling and reasoning already record and discuss both scenarios; therefore the proposed insertion is redundant. Because Section 102 authorises correction only of manifest, patent mistakes, and not completion or elaboration of an already coherent ruling, the requested amendment did not qualify as an error apparent on the face of the record. Ratio vs. Obiter: Ratio - a request to add redundant clarification that does not correct a patent error is not maintainable under Section 102; Obiter - the Authority's observation that not all discussions in reasons must be mirrored verbatim in the operative part. Conclusion: The suggested amendment is redundant and does not constitute an error apparent on the face of the record; rectification is refused and the application for rectification is rejected under the statutory test.
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