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2019 (7) TMI 45 - AAR - GSTClassification of supply - Job-work - supply of services or not - composite supply or not - building of body after utilizing and consuming owned materials and providing labour and further amounting the same on chassis of the principal - whether classified as supply of service under HSN. 9988? - Sec. 8(a) of the CGST Act. HELD THAT:- The applicant intends to execute a contract of fabrication of body to be mounted on the chassis by a job worker. As per the term of the contract the chassis will be delivered by the applicant(Principal) for the purpose of carrying out the body building on the chassis on delivery challan to the job worker. The job worker shall procure various goods such as metal sheets, plywood, seats, glasses, aluminium sections etc. as inputs for fabricating the bus body besides fabrication services. Once the body is built and mounted on the chassis by the job worker, the vehicle will be sent back to the Principal/the Applicant of the chassis after raising tax invoice towards body building charges on which GST will be charged separately. At no stage the ownership of the chassis will be transferred by the Principal to the job worker and body built thereon will be nature of job work - The job worker will claim the credit of GST paid on the material used as input against Output liability of GST on body building activity carried out by it. The consideration received by the job worker will be towards the manufacturing of the body on the chassis supplied by the Applicant (Principal). Whether the nature of the work falls under the purview of “Job work” or not? - HELD THAT:- Once the body is built and mounted on the chassis by the job worker, the vehicle will be sent back to the Applicant/Principal after raising tax invoice towards body building charges on which GST will be charged separately. At no stage the ownership of the chasis will be transferred by the Applicant to the job worker. The job worker will claim the credit of GST paid on the material used as input against output liability of GST on body building activity carried out by it. The consideration received by the job worker will be towards the manufacturing of the bus body on the chassis supplied by the Principal. GST Law does not distinguish between raw material, finished goods and semi-finished goods. It talks about input and Capital goods. Even Semi-finished goods or intermediate are goods and in turn ‘Input’ by the Principal or by the worker - So the argument of the applicant that the nature of the work stated in the application should be falls under “job work” is tenable under the provision of the Law. Whether mounting of Bus/ Truck [Ambulance Body by the job worker on the chassis supplied by the principle for which the job worker charged fabrication charges including cost of certain material that was consumed during the process of job work. would amount composite supply in which supply of service being principal supply therefore on the basis of provision of Sec. 8(a) of the CGST Act the same would be classified as supply of service under HSN 9988? - HELD 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 - It is clarified that the supply made is that of vehicle, and accordingly supply would attract the GST applicable to the vehicle @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. Thus on mounting of Bus/ Truck /Ambulance body on the chassis to be supplied by the Principal on delivery challan or any other owner of the chassis on which Bus/ Truck /Ambulance body will be fabricated by collecting job work charges including inputs required for such fabrication work and in no case the ownership of the chassis will be transferred by Applicant to the job worker will be taxable under SAC 998881 -“Motor vehicle and trailer manufacturing services” and under entry no. 26(ii) as -“Manufacturing services on physical inputs (goods) owned by other” it is taxable @18%(9% under CGST and 9% under SGST Act).
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