TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 689
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....rtain material that would be consumed during the process of body building). The applicant is carrying out this activity for manufacturing of tipper, tanker, trailer etc. on chasis provided by the owners of such vehicles. The process of said manufacturing activity is as under: i. Received chasis at workshop ii. Purchase raw steel and receive it at workshop iii Prepare cutting plan and drawing iv Cutting and bending of raw material v Welding of all cutting and bending part vi. Assembly of all fabricated parts vii Final product on chasis. 3. The applicant further submitted that sometimes they charge separately for parts and for repairing job charges and are paying due GST as applicable on goods or repairing service separately. 4. The applicant submitted that in addition to the said activity they carry out accident repairing job on vehicle supplied by its owner for repairing job for a lump sum price that includes cost of material and labour. 5. Accordingly, the applicant sought Advance Ruling on the following question: A. Whether the treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others is....
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....1.08.2018 of Advance Ruling Authority of Goa in the case of Automobile Corporation of Goa Limited wherein it is ruled that, "the activity of building and mounting of the body on the chasis provided by the principal under FOC challan will result in supply of services under HSN 9988 and hence, should be taxed at 18% GST". 9. The applicant submitted that Service Accounting Code 9988 covers "Manufacturing Service on Physical Inputs (Goods) owned by others". Thus it appears that the nature of activity of body building and mounting of the body on the chasis provided by the principal will result in supply of service under HSN Code 9988 and hence should be taxed at 18% of GST even in terms of clear description of services provided at Annexure relating to scheme of classification of services as given along with Notification No. 11/2017-CT (Rate) dated 28.06.2017 and the relevant extract there from is given below for ready reference: Sl.No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description 498 Heading 9988 Manufacturing services on physical inputs (goods) owned by others 534 Group 99888 Transport Equipment Manufacturing Service  ....
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....e owner using their own inputs and capital goods ; they do not supply any ready buit body to any party but provide only service of fabrication. 13. The applicant further submitted that issue involved in their application for advance ruling is no more re integra and the same is already clarified by the CBIC Circular No. 52/26/2018-GST dated 09.08.2018. 14. The applicant has relied upon the Advance Ruling given by the various State authorities. All the such Ruling are summarized as below for ready reference: (i) Advance Ruling No. GOA/GAAR/1 of 2017-18/2018-19/1929, dated 21-8-2018 in RE : AUTOMOBILE CORPORATION OF GOA LIMITED = 2018 (10) TMI 1044 - AUTHORITY FOR ADVANCE RULING, GOA, wherein it is held that, "Activity of building and mounting of the body on chassis provided by the principal under FOC challan results in supply of services under HSN 9988 and hence, taxable @ 18% GST". (ii) Advance Ruling No. KER/39/2019, dated 2-3-2019 in RE : KONDODY AUTOCRAFT (INDIA) PVT. LTD = 2019 (4) TMI 110 - AUTHORITY FOR ADVANCE RULINGS, KERALA, wherein it is held that, "Activity of Bus Body Building on job work basis, on the chassis supplied by the customer, is supply of service covered....
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....ged accordingly. 16. The applicant further submitted that in view of the facts it appears clear that the process of body building by fabrication and other process carried out on chasis of motor vehicles owned by other is supply of service considering the following facts : (i) Activity carried out by them should be treated as supply of service because in terms of Paragraph 3 of Schedule-II of the CGST Act, 2017, any treatment or process which is applied to another person's goods is a supply of service. As they provide service of fabricating and body building on motor vehicles chasis belonging to another person as per the requirements of their customers on goods (input)/ chasis provided by them. There is no transfer of ownership for providing such services and thus it appears clear that it is supply of service. (ii) The activity of body building shall not be treated as supply of goods or motor vehicle as the activity carried out by them is not the supply of motor vehicle as they do not own the chasis. (iv) Chasis is a semi finished goods and any treatment done by any other party on the chasis of principal is the activity of the Job work as held in above referred rulings. The o....
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....the activity of accident repairing job on the vehicles supplied by the owner for such job for a lump sum price is concerned, they are of the bonafide belief that this activity should be treated as service even though it includes cost of material and labour in view of the provision of Paragraph 3 of the Schedule-II of the CGST Act, 2017 that categorically states that "any treatment or process which is applied to another person's goods is supply of services". Further stated that it appears that the classification of this activity should be under Service Code (Tariff) 998729 that includes "Maintenance and repair service of other goods nowhere else classified" and should attract total rate of 18% GST on value of supply of such service. 19. The applicant submitted that since the activity of body building is considered as supply of services and not that of goods, the fifth issue raised by us should become irrelevant. Further, stated that Hon'ble Supreme Court has in case of Kailash Engineering Co. V. State of Gujarat (1964) 15 STC 574, held that the contract for building, erecting and furnishing of coach bodies on under frames supplied by the railway was not contract for ale of goods. ....
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....g of raw material v Welding of all cutting and bending part vi. Assembly of all fabricated parts vii Final product on chasis 23. The applicant has contended that the activity of body building and fabrication on the chassis provided by the principal (not on account of body builder), supply would merit classification as service and 18% GST as applicable will be charged. The activity of body building shall not be treated as supply of goods or motor vehicle as the activity carried out by them is not the supply of motor vehicle as they do not own the chasis. The applicant submitted that there is no transfer of ownership for providing such services and thus it appears supply of service. 24. In view of the above, the question before us to decide is whether the applicant's activity amounts to supply of goods (motor vehicle) that merits classification under HSN 87 (depends upon the type of vehicle supplied) or amounts to Supply of Services classifiable under SAC 9988. Therefore, in order to answer the instant question, it is essential to examine the process/activity of building the body and mounting the same on the chassis of the bus, owned by the supplier (Principal/sender). 25.....
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....ncipal supply". As per Section 2(68) of the CGST Act, 2017 and as per para 3 of the Schedule II of the CGST Act "any treatment or process which is applied to goods of another person's is a supply of service." 27. Accordingly, the activity of mounting/fabrication of body on the chasis supplied by the principal would be supply of service as principal supply and Section 8(a) of CGST Act, 2017 determines tax liability on composite supply, which reads as under :- "The Tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and" 28. Now, We find that the activity and question raised before us has been suitably clarified and dealt with Circular No. 52/26/2018-GST issued by Government of India, Ministry of Finance, Department of Revenue dated 9th August, 2018. The relevant Para 12 of the said circular is read as under: 12.1 Applicable GST rate for bus body building activity : Representations have been received seeking clarifications on GST rates on the activity of bus body building. The doubts h....
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....cant receives the chasis on his own and manufactures the body building on the chasis and thereafter supplies the complete body built vehicle to the customer charging the value of motor vehicle, he is supplying goods and service both. Accordingly, supply would amount to composite supply. In this regard, CBIC vide Circular No. 34/8/2018-GST, dated 1-3-2018 has issued the clarification. The clarification is read as under : S.No. Issue Clarification 1. Whether activity of bus body building, is a supply of goods or services? In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case. 30. The Sectoral FAQ published by the C.B.E. & C. https://www.cbic.gov.in/resources//htdocs-cbec/gst/Final-GST-FAQ-31218 in reply of Q. No. 27 it is categorically state that, "in case, a bus body building company builds on the chassis owned by it and sells the completely built buses, it would be supply of goods". The extract of the same is as under Q27. Whether activity of bus body building, i....
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..... Chapter, Section, Heading or Group Service Code (Tariff) Service Description 498 Heading 9988 Manufacturing services on physical inputs (goods) owned by others 534 Group 99888 Transport Equipment Manufacturing Service 998881 Motor vehicle and trailer manufacturing services 998882 Other transport equipment manufacturing services 32. In respect of the question raised by the applicant, we hold that on fabrication of bus body on the chassis supplied by the owner of chasis i.e. Principal on delivery challan, on which body is fabricated on chasis by collecting job work charges including inputs required for such fabrication work and in no case the ownership of the chassis is transferred by principal to the applicant merits classification under SAC 998881 - "Motor vehicle and trailer manufacturing services" and under Entry No. 26(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as "Manufacturing services on physical inputs (goods) owned by other" and it is taxable @ 18% [9% under CGST and 9% under SGST Act]. Whereas, in other situation as discussed above, supply of complete body built motor vehicle m....
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....ads as under :- "The Tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;" 35.2 In view of the above legal provisions, the applicant's activity of repairing work carry out on the damaged vehicle is a principle supply. In order to determine the Service Accounting Code (SAC), we refer to the Annexure to the Notification No. 11/2017-CT (Rate) dated 28.06.2017, which prescribes the Service Accounting Code for each type of services. We also refer to the explanatory Notes on Classification of Service and details of the following services, which are relevant to the transaction of the applicant, as under: 9987 Maintenance, repair and installation (except construction) services 998714 Maintenance and repair of transport machinery and equipment This service code includes i maintenance and repair services of motor vehicles like cars, trucks, vans and buses, involving engine overhaul, motor tune-up, fuel system repair and adjustment, steering gear repair and adjustment, suspension repair, ....
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....T (Rate) dated 28.06.2017 is as under: 25 Heading 9987 Maintenance, repair and installation (except construction) services. 9 - 35.4 The contention of the applicant that the said service would be covered under Service Code (Tariff) 998729 that includes " Maintenance and repair service of other goods nowhere else classified" is not tenable as such Service Accounting Code 998714 defines the maintenance and repairing service of motor vehicles like cars, trucks, vans and buses. Therefore, we hold that repairing service carried out by the applicant on damaged vehicle supplied by the owner is classifiable under SAC 9987 and GST is leviable @ 18 % {9% CGST +9% SGST} in terms of Sr. No. 25 of Not. No. 11/2017-CT (Rate) dated 28.06.2017 36. In view of the foregoing, we rule as follows: RULING A. Whether the treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others is supply of services? Ans. In case the applicant received the chasis from the principal on Job work challan/ delivery challan and build body on it and thereafter clear to the principal by raising the Invoice of Job work charges, it would amount t....