TMI Blog2019 (7) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... he Circular dated 09.08.2018. Therefore in the instant case two situations arise - In the first scenario the body is built without the physical presence of the chassis. The dimensions of the chassis and the required design of the body are known and the body is fabricated accordingly. Such ready built body is thereafter mounted on the chassis as and when provided by the owner - In the second scenario the chassis is provided by the owner and the applicant carries out the building and mounting of the body on the chassis in different steps as enumerated by the applicant. Activity of step by step building of the body on the chassis supplied by the owner using their own inputs capital goods - HELD THAT:- It is evident from Para 12.2(b) of Circular No. 52/26/2018 GST dated 09-08-2018 that if the body is built on the chassis provided by the principal and the fabrication charges, including certain material consumed during the process of job work, have been charged then the activity amounts to Supply of Service and attracts 18% GST - In the instant case in terms of the process explained by the applicant the body is built on the chassis provided by the owner. Therefore the instant q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following facts relevant to the stated activity: 3.1 The Applicant is engaged in the business of building and mounting of body on the chassis of different models of buses. 3.2 The Applicant, for building and mounting of the body, procures various inputs such as steel sheets, square tubes, seats, glasses, wiring harness, fittings inside body, paints, FRP (Fibre-reinforced plastic), Air conditioner, Automobile parts on payment of appropriate GST and claims input tax credit on the same. They undertake the body building activity and fabrication works using aforesaid inputs and their own machines, manpower and other facilities. 3.3 The applicant receives the chassis of the bus/es from OEMs / Retail customers (Sender) on free of cost basis, under the delivery challan. Hence ownership of the chassis always remains with sender (Principal). 3.4 The Applicant submits that many of the processes / activities are common for building the body for different types of vehicles and there would be some customization based on the need of the sender and the type of the vehicle. They further submit that they can perform fabrication, welding, painting and fitment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of the title in goods is a supply of goods . In this case, the purchase order issued by the sender is for supply of body, which is mounted on the chassis. The title and ownership of all the inputs used for building the body remains with the Applicant and the sender will not be liable for any loss that may happen to the inputs till the body built is mounted on the chassis. Therefore the contractual agreement between the sender and the Applicant is for supply of body but not the services of building the body and hence the instant activity becomes supply of goods and not the supply of services. 4. The Applicant furnished additional submissions vide their letter dated 14.02.2019, received on 21.02.2019, inter alia stating as under: 4.1 The Applicant provides the body building process, which is commonly followed by all the bus body builders depending on magnitude of their operations, to carry out the activity of building and mounting of body on the chassis and follows the procedure in various stages, described as under: a) Chassis preparation: The applicant receives the chassis and works on it to make ready to carry out body fabrication and work. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him and supplies the built-up bus to the customer, and charges the customer for the value of the bus. 12.2(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). The first situation being the supply of goods attracts GST @28% and the second situation being the supply of service attracts GST @18%. Hence the Applicant, in terms of the said circular, started following the second situation and started discharging GST @ 18% thereafter with effect from September 2018. 4.4 The applicant, to substantiate the stand that the activity of body building is a supply of service, relied upon relevant legal provisions of the CGST Act 2017, i.e. Section 2(68) Para 3 of the Schedule II of the CGST Act 2017, apart from the aforesaid circular. In terms of Section 2(68) of CGST Act 2017, Job Work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. Further, Para 3 of the Schedule II of the CGST Act, specifies c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and capital goods, merits classification as Supply of Services under SAC 998882 and also under the job work provisions read with para 3 of Schedule II of CGST Act, which attracts GST @ 18% and not as supply of goods under HSN 8707, which attracts GST @ 28%. PERSONAL HEARING: / PROCEEDINGS HELD ON 26.02.2019. 5. Sri. Rajesh Shukla, Cost Accountant and duly authorised representative of the company appeared and made submissions reiterating the issue involved and contended that the activity of bus body building, on the chassis provided by the sender by using their own inputs and capital goods, merits classification as Supply of Services under SAC 998882 and also under the job work provisions read with para 3 of Schedule II of CGST Act, which attracts GST @ 18% and not as supply of goods under HSN 8707, which attracts GST @ 28%. 6. FINDINGS DISCUSSION: 6.1 We have considered the submissions made by the Applicant in their application for advance ruling, the additional submissions vide their letter date 14.02.2019, received in this office on 21.02.2019 as well as the submissions made by Sri Rajesh Shukla, the authorised representative, during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular dated 09.08.2018. 6.6 Therefore in the instant case two situations arise. In the first scenario the body is built without the physical presence of the chassis. The dimensions of the chassis and the required design of the body are known and the body is fabricated accordingly. Such ready built body is thereafter mounted on the chassis as and when provided by the owner. In the second scenario the chassis is provided by the owner and the applicant carries out the building and mounting of the body on the chassis in different steps as enumerated by the applicant and discussed in para 4.1 above. In both the situations the applicant use their own inputs and capital goods. 6.7 The question raised by the applicant had been raised by several other body builders and after examination of the various issues, the CBIC issued a clarificatory Circular in the matter. The Circular, No. 52/26/2018 GST dated 09-08-2018, clarifies the applicable GST rate for bus body building activity based on the following two situations. 12.2(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e body is also generally called upon to affix the same on the chassis. Therefore the fabrication of the body and then its mounting on the chassis appear to be two naturally bundled supplies, supplied in conjunction with each other. Therefore the applicant appears to be engaged in a composite supply where the principal supply is that of the body, i.e. supply of goods. Accordingly the activity shall attract classification under HSN 8707 and the activity would be liable to GST @ 28 % in terms of Serial number 169 of Schedule IV of Notn. No 1/2017-Central Tax (Rate) dated 28.06.2017, effective from 01.07.2017. 7. In view of the above, we pass the following RULING i. The supply of ready built body and the activity of mere mounting the body on chassis supplied by the owner amounts to supply of goods and merits classification under HSN 8707, attracting 28% of GST. ii. The activity of step by step building of the body on the chassis supplied by the owner using their own inputs capital goods amounts to supply of service, in terms of Circular dated 9.8.2018 and merits classification under SAC 9988, attracting 18% of GST. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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