TaxTMI 
TaxTMI 
2019 (9) TMI 1483
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.... by the Applicant with its customer: 1.3 Type 1:- Contract for sale of chassis mounted with bus body • Applicant enters into an arrangement with a chassis manufacturer for purchasing chassis for bus. Subsequently, the Applicant enters into an independent contract/arrangement with a bus body builder for mounting the bus body on the chassis. • In this regard, the Applicant sends the chassis to the body builder under the cover of a challan. • Once the body building activity gets completed, the built up bus i.e. chassis mounted with the bus body are being removed by body builder and sent to the Applicant. For carrying out such activity of mounting the bus body on the chassis, body builder recovers service charges from the Applicant. • Pursuant to the above, the Applicant enters into a contract with a customer for supply of the said built up bus. 1.4 Type 2:- Separate contract for sale of chassis and provision of services in respect of activity of mounting/fabricating of bus body on the chassis Type 2; Model A: • The Applicant will enter into a contract with its customer for the sale of chassis. Pursuant to which,....
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....ty gets completed, the built up bus i.e. chassis mounted with the bus body will be removed by the bus body builder and sent to the customer directly. For carrying out such activity of mounting the bus body on the chassis, the body builder will recover service charges from the Applicant. • Subsequently, the Applicant will raise another invoice on the customer for recovering its charges in respect the activity of mounting/fabricating of bus body on the chassis. • In respect of the above transaction, separate consideration will be charged by the Applicant from the customer in respect of the supply of chassis and provision of services in respect of fabrication/mounting of bus body on chassis to its customer. 1.5 Type 3: Applicant enters into a contract for sale of chassis of bus to the customer and subsequently, enters into a separate arrangement with the said customer, wherein the Applicant is appointed as an agent by the customer for undertaking the activity of mounting of bus body on the chassis on behalf of the customer • The Applicant will enter into a contract with its customer for the sale of chassis. Pursuant to which, request is receiv....
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....adverse, whether the recovery of the bus body building charges incurred by the Applicant on behalf of the customer in capacity of an agent, will be leviable at the rate of 18% as supply of services. 3. Discussion and findings:- 3.1 Now, before the above questions are to be decided in the instant case, it is pertinent to know whether the activity of the bus body builder, in which fabrication/mounting of bus body on the chassis supplied by the applicant amounts to supply of goods or supply of services. In this regard, CBIC vide Circular No. 34/8/2018-GST, dated 1-3-2018, has clarified the matter. The relevant portion of the circular is as under: S.N. 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. 3.2 In view of the aforesaid clarification issued by the CBIC, to find out the supply of goods and supply of services in the present case, on the basi....
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....re supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. It means, in the present case, there is composite supply of goods and services. One of which is a principal supply. And the tax liability of such principal supply will be the tax liability of the composite supply. 3.7 Now, it is pertinent to identify the principal supply and tax liability thereon for all the three types of description of the transactions/ arrangements entered or proposed to be entered by the Applicant with its customer. All these types have been described in detail in brief facts. 3.8 Now, discuss Type 1:- Contract for sale of chassis mounted with bus body: In this situation, the Applicant sends the chassis to the bus body builder under the cover of a delivery challan. Once the body building activity gets completed, the built up bus i.e. chassis mounted with the bus body are being removed by body builder and sent to the Applicant. 3.9 In this regard, the Government vide Circular No. 52/26/201....
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....s type 2; in which a separate contract for sale of chassis and provision of services in respect of activity of mounting/fabricating of bus body on the chassis is done. 3.11 In this situation, the Applicant will enter into a contract with its customer for the sale of chassis. Pursuant to which, request is received from the customer for fabrication of the bus body on the chassis purchased by him. In this regard, a subsequent contract will be entered between the Applicant and the customer for the provision of services in respect of activity of mounting/fabricating of bus body on the chassis. In respect of the above, the Applicant will further enter into an arrangement with body builder for mounting the bus body (as per customer specifications). For executing supplies as per the above arrangement, the Applicant sends the chassis to the bus body builder under the cover of a challan. 3.12 Accordingly, while issuing invoice on the customer for sale of chassis will charge GST at the rate of 28% as prescribed under the HSN 8706. Accordingly, it is submitted by the applicant that they can raise a deliver challan sending chassis to bus body builder for body building process. Once the bo....
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....illary activity to the principal activity of supply of bus-body. Hence, in terms of the clarification issued by the CBIC vide Circular No. 34/8/2018-GST, dated 1-3-2018; the impugned activity is a composite supply, with principal supply being supply of bus-body. 3.17 From the contents of the Tax Invoice No. 10461/1920 dated 20.05.2019 issued by the bus body builder i.e. M/s. Audi Automobiles, Pithampur, District-Dhar (M.P.) to the applicant as supplied by the applicant, it is observed that the description of supplies made/work done, is as under: "Bus body building on your chassis with materials (Motor Vehicle and Trailer Manufacturing Services) on 10.90 L School Bus BS IV Legacy (3*2)". It is clear from the above invoice that the bus body builder is supplying bus body to the applicant as principal supply. 3.18 The supply of chassis and the provision of services in respect of activity of mounting/ fabrication under two separate contracts to the same customer should be treated as supply of chassis and composite supply of goods i.e., bus-bodies, being principal supply (HSN Code 8707); classifiable under chapter heading 8707; taxable at the rate 28%. 3.19 Type 3: T....