TaxTMI 
TaxTMI 
2022 (9) TMI 201
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....ired materials such as steel sheets, nuts and bolts, etc. The steel sheets are then cut and bent as per the required dimensions and the bended edges are joined through the process of welding. In this manner, all the required parts are independently fabricated and then assembled to obtain the Tanker, Tipper, etc. Such tankers, tippers, etc. are then mounted on the chassis owned by the Principal. 3. The applicant has submitted that the activity undertaken by them is in the nature of working upon the goods i.e. chassis supplied by the Principal and converting the same into a Mounted Tanker, Tipper, etc. Therefore, the activity, as per their understanding, would be in the nature of supply of services. As per the Scheme of Classification of services in the Annexure to Notification No. 11/2017 Central Tax (Rate) and corresponding SGST/ IGST Notifications, their services would be covered under the main head of 9988 which reads as under: "Manufacturing services on physical inputs (goods) owned by others" The sub-group would be 99888 i.e. Transport equipment manufacturing services further classifiable under Service Code 998882 i.e. Other transport equipment manufacturing serv....
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.... description "Manufacturing services on physical inputs (goods) owned by others" as appearing at Sr. No. 26(iv) of Notification No. 11/2017 Central Tax (Rate) as amended vide Notification No. 20/2019 Central Tax (Rate) and the applicable rate would be 18%. 3.2 The applicant submitted that the above position has also been clarified under Circular No. 126/45/2019-GST dated 22.11.2019 and the relevant text of the clarification is as follows: In view of the above, it may be seen that there is a clear demarcation between scope of the entries at item (id) and item (iv) under heading 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017. Entry at item (id) covers only job work services as defined in section 2 (68) of CGST Act, 2017, that is, services by way of treatment or processing undertaken by a person on goods belonging to another registered person. On the other hand, the entry at item (iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act. (i) It is submitted by the applicant ....
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....us body fabrication on job work basis attracts 18% GST on such service. Thus, fabrication of buses may involve the following two situations : (a) Bus body builder builds a bus, working on the chassis owned by him and supplies the built-up bus to the customer, and charges the customer for the value of the bus. (b) Bus body builder builds body on chassis provided by the principal for body building, and charges fabrication charges (including certain material that was consumed during the process of job-work). 12.3 In the above context, it is hereby clarified that in case as mentioned at Para 12.2 (a) above, the supply made is that of bus, and accordingly supply would attract GST @ 28%. In the case as mentioned at Para 12.2(b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly. b) Answer to Question No. 27 in the sectoral FAQs published by the CBIC https://www.cbic .gov.in/resources//htdocs-cbec/gst/Final-G ST-FAQ-31218 is read as under: Q27. Whether activity of bus body building, is a supply o....
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....8882 18% ii. Bus Body building on chasis owned by un registered customer Sr. No. 26 (iv) 998882 18% 6. Question on which Advance Ruling sought: (1) Whether the activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner of such chassis i.e. bus body building would be covered under the category of Supply of Services? (2) If yes, the applicable accounting code of such services as per the Scheme of Classification of Services and the applicable rate of GST thereon. Personal Hearing: 7. Personal hearing (virtual) granted on 8-7-22 and 2-8-22 was attended by Shri Hem Chhajed, CA and he reiterated the submission. Revenue's Submission: 8. Revenue has neither submitted its comments nor appeared for hearing. FINDINGS: 9. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by authorised signatory, during the personal hearing proceedings on 2-8-22 before this authority. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. 10.. At the ....
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....ue for consideration in the instant case is "what is principal supply". 13.1 Composite supply is defined under Section 2 (30) of CGST Act, 2017 which is as follows : As per Sec. 2(30) "composite supply" means "supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply". 13.2 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.' 13.3. In the instant case we find that the applicant is carrying out the activity of mounting/fabrication of body on the chasis supplied by the principal. Accordingly, such activity would be supply of service as principal supply. 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 supp....
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....e instant question is answered by the provisions of Para 12.2(b) of the said circular and the activity merits classification as supply of service attracting GST @ 18%. 15. 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, "if the company builds the body on the chassis belonging to some else, it would be supply of services". The extract of the same is as under Q27. Whether activity of bus body building, is a supply of goods or services? Ans. The classification would depend on which supply is the principal supply. 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. On the other hand, if the company builds the body on the chassis belonging to some else, it would be supply of services. 16. Now, for classification of the supply of service by the applicant, we refer to the Annexure attached to the Not. No. 11/2017-CT (Rate) dated 28.06.2017. As stated above, the applicant is engaged in the manufacturing of body building i.e. mounting of tanker, tripper on the ch....
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....s of any vehicle falling under chapter 87 by virtue of Explanation which was inserted vide Notification No. 26/2019 CT(Rate) and the same reads as under: Explanation - For the purposes of this entry, the term "bus body building" shall include building of body on chassis of any vehicle falling under chapter 87 in the First Schedule to the Customs Tariff Act, 1975." 17.2 We find that in cases where the chassis is provided/supplied by an unregistered principal to the applicant for carrying out the fabrication and mounting work on the chasis owned by them, such activity is covered under the description "Manufacturing services on physical inputs (goods) owned by others" as appearing at Sr. No. 26(iv) of Notification No. 11/2017 Central Tax (Rate) as amended vide Notification No. 20/2019- Central Tax (Rate) and the applicable rate would be 18%. 17.3 We find that the above position has also been clarified under Circular No. 126/45/2019-GST dated 22.11.2019 and the relevant text of the clarification is as follows: In view of the above, it may be seen that there is a clear demarcation between scope of the entries at item (id) and item (iv) under heading 9988 of Notif....
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....hassis and built the body and thereafter supply as complete body built motor vehicle to the customer by raising invoice of value of motor vehicle, it would amount to supply of goods. (B) If the above stated activity of body building is considered as supply of service in terms of description given at paragraph 3 of Schedule-II of the CGST Act, 2017 what will be the rate of GST applicable on such service? Ans. A : We hold that in case of supply of service, rate of GST will be 18%[CGST 9% + SGST 9%1 In case supply of goods i.e. motor vehicle GST rate will be 28% [CGST-14% + SGST-14%1 (C) What will be the Service Code (Tariff) for above stated activity of body building carried out on another person's chassis of motor vehicle? Ans: The activity of body building carried out on another person's chasis of motor vehicle is classifiable under SAC 9988. In case of supply of complete built-up motor vehicle on owns chasis is classifiable under CTH 87 (depends upon type of vehicle supplied (ii) Advance Ruling in the case of M/s SLN Tech-Fabs (Bengaluru) Pvt. Ltd. reported at 2020 (34) GSTL 290 (AAR-GST-Kar) The case under consideration in the abo....