TaxTMI 
TaxTMI 
2019 (9) TMI 1483
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.....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, request is received from the customer for fabrication of the bus body on the chassis purchased by h....
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....he 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 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, wherein the Applicant is appointed as an agent of customer for undertaking....
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.... 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 basis of facts and circumstances of the present case, we need to observe the definition of composite supply and principal supply as defined under the CGST/HGST Act, 2017. 3.3 Composite supply has been defined under Section 2(30) of the CGST/SGST Act, 2017, as under: "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplie....
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....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. 52/26/2018-GST dated 9th August, 2018, has provided a clarification in respect of applicable GST rate on bus body building activity. The relevant extract of the same has been reproduced below: "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 have arisen on account of the fact that while GST applicable on job work services....
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....omer 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 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. 3.13 Further, as mentioned above, activity of mounting of bus body on chassis (not owned by body builder) shall be classified as supply of services in terms of Circular No. 52/26/2018-GST dated 9th August, 2018, accordingly, it is submitted that the body builder can raise invoice, charging tax at the rate of 18% as prescribed under th....
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....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: The applicant gives third situation where the 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 recovery of the bus body building charges incurred by the applicant on behalf of customer in capacity of an agent, should be covered in the ambit of Schedu....