TMI Blog2020 (9) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ownership of the chassis is transferred by the principal to the applicant. The applicant charged the lump sum charges of fabrication including cost of certain material that was consumed during the process of mounting of Bus Body on the chassis. The applicant supply of complete built vehicle to the principal i.e. owner of chasis would amount to composite supply and the taxability would depend upon the predominated element - Accordingly, the activity of mounting/fabrication of body on the chasis supplied by the principal would be supply of service as principal supply and Section 8(a) of CGST Act, 2017 determines tax liability on composite supply The question raised 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 where it is 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% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t tenable as such Service Accounting Code 998714 defines the maintenance and repairing service of motor vehicles like cars, trucks, vans and buses. Therefore, the repairing service carried out by the applicant on damaged vehicle supplied by the owner is classifiable under SAC 9987 and GST is leviable @ 18 % in terms of Sr. No. 25 of Not. No. 11/2017-CT (Rate) dated 28.06.2017. - ADVANCE RULING NO. GUJ/GAAR/R/30/2020 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2019/AR/11) - - - Dated:- 2-7-2020 - SANJAY SAXENA AND MOHIT AGRAWAL, MEMBER Present for the applicant : Shri Nilesh V Shuchak M/s. Ab N Dhruv Autocraft (India) Pvt. Ltd., C-13, GIDC Electronics Estate, Sector-25, Gandhinagar having a GSTIN: 24AAGCA0966N1ZG, is a company filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of ₹ 5,000/- each under the CGST Act and the SGST Act. 2. M/s. AB N DHRUV AUTOCRAFT (INDIA) Pvt. Ltd. an applicant is providing service of body building on motor vehicles by fabrication and charged fabrication charges on lump sum basis. They are providing manufacturing service or body buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by fabrication and collecting lump sum fabrication charges should be treated as supply of service in terms of Paragraph 3 of Schedule II of the CGST Act, 2017. As per clause 3 of Schedule-II, any treatment or process which is applied to another person s goods is supply of services . Further submitted that they merely provide services of fabricating and body building on motor vehicles chasis belonging to another person as per the requirements of their customers on goods (inputs) provide by them. There is no transfer of ownership for providing such services and thus it appears supply of service. The relevant extract of clause 3 of Schedule-II of the CGST Act, 2017 is as under : Schedule II ACTIVITIES OR TRANSACTION TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 3. Treatment of Process Any treatment or process which is applied to another person s goods is a supply of services. 7. The applicant further submitted that activity of body building on chasis provided by the owner is in nature of service and in this regard CBIC has issued clarification vide Circular No. 52/26/2018-GST dated 09.08.2018. In the circular it is categorically clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, they are of the bonafide belief that this activity should be treated as service even though it includes cost of material and labour in view of the clear provisions of clause 3 of Schedule-II of the CGST Act, 2017, that categorically states that any treatment or process which is applied to another person s goods is supply of services. Further it is submitted that the classification of this activity should be under Service Code (tariff) 998729 that includes, Maintenance and repair services of other goods nowhere else classified and should attract total rate of 18% GST on value of supply of such service. 12. The applicant has submitted the additional submission vide letter dated 10.06.2020 wherein they re-iterated the submission already made in their application. Further submitted that they confirm that for carrying out the activity of building and mounting of the body, their customer (the principal) provides or delivers the chasis under delivery challan and ownership of such chasis is not transferred to them in any case; they never purchase such chasis on their own account; they procure various inputs and services directly which are used for carrying out body building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehicle and trailer manufacturing services and taxable under Serial No. 26(ii) as Manufacturing services on physical inputs (goods) owned by other @ 18% (9% under CGST and 9% under SGST) . (iv) Order No. 06/2019, dated 3-5-2019 in Case No. 3/2019 IN RE : SANGHI BROTHERS (INDORE) PRIVATE LIMITED = 2019 (7) TMI 45 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH wherein it is held that, Mounting or fabrication of bus/truck/ ambulance body on chassis supplied by OEMs/Principal on delivery challan or any other owner of chassis by collecting job work charges including inputs required for such fabrication work without transfer ownership of chassis to job worker - Activity amounted to job work - Service classifiable under SAC 9988 81 motor vehicle and trailer manufacturing services and taxable under Serial No. 26(ii) as Manufacturing services on physical inputs (goods) owned by other @ 18% (9% under CGST and 9% under SGST) (v) Advance Ruling No. KAR ADRG 12/2019, dated 25-6-2019 IN RE : TATA MARCOPOLO MOTORS LTD = 2019 (7) TMI 618 - AUTHORITY FOR ADVANCE RULING, KARNATAKA wherein it is held that, The activity of step by step building of the body on the chassis sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of service. Above referred advance ruling also refer to provision of Section 143 of GST Act, 2017 according to which For purpose of Job work, input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or job worker . In their case, we procure various goods such a metal sheets, plywood, Seats, glasses, aluminium sections etc. as input for fabricating the body of vehicle besides fabrication service. It has been held in the case of Prestige Engineering (India) Ltd. v. CCE, Merut [ 1994 (73) ELT 497 (SC)] = 1994 (9) TMI 66 - SUPREME COURT that addition or application of items by job worker would not detract from the nature and character of his work. In some of the rulings referred above, it is also observed that the Motor Vehicle is not complete is not complete without a body. A chasis is semi-finished goods and any treatment done by any other party on the chasis is the activity of Job work. 17. The applicant further submitted that in view of the above facts, Service Code (Tariff) for the above stated activity of body building carried out on another person s chasis of motor vehicle should be 9988 that covers Manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be established that the Chasis is received from the customer on Job work basis also requested to submit the documents on which the body built vehicle is cleared after mounting body on the chasis to the customer. Further, requested to submit the document by which consideration is fixed for the work of body building done on chasis like quotation or work order or invoice. Findings and Discussion 21. We have considered the submissions made by the Applicant in their application for advance ruling as well as the additional submissions made by authorised signatory, during the personal hearing proceedings on 11-06-2020 before this authority and we have also considered the additional submissions made on 15.06.2020. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts the applicant s interpretation of law. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s built and mounted on the chasis, the fully built vehicle is sent back to principal and raise the bill to their customer only for job charges including material used by them; the consideration received by them is towards the building of body by using their own procured material and mounting of the body on the chasis supplied under challan by the principal; the body requirement differ from party to party and the body is fabricated on chasis itself; they carry out the activity of step by step as enumerated for building of the body on the chasis supplied by the owner using their own inputs and capital goods ; they do not supply any ready built body to any party but provide only service of fabrication. 26. In the instant case, the applicant procures various goods such as raw steel etc. as inputs for fabricating the bus body on the chasis supplied by the principal on delivery challan. The applicant uses the said material for mounting/fabricating the body and once the body is built and mounted on the chassis, the vehicle is sent back to principal. At no stage, the ownership of the chassis is transferred by the principal to the applicant. The applicant charged the lump sum charges of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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. 28.1 It is evident from Para 12.2(b) of the said circular that if the body is built on the chassis provided by the principal/customer and the fabrication charges, has been charged then the activity amounts to Supply of Service and attracts 18% GST. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the chassis belonging to some else, it would be supply of services. In case, the applicant builds a body on the chasis owned by themselves and supply completely body built vehicle, such supply would be treated as supply of vehicle i.e. goods as principal supply. Further, CBIC vide Circular No. 52/26/2018-GST, dated 9-8-2018 has issued the following clarification, 12.2 Buses [motor vehicles for the transport of ten or more persons, including the driver] fall under headings 8702 and attract 28% GST. Further, chassis fitted with engines [8705] and whole bodies (including cabs) for buses [8707] also attract 28% GST. In this context, it is mentioned that the services of bus 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. 30.1 It is evident from Para 12.2(a) of the said circular that if the the applicant builds body on the chassis owned by him and supplies the complete built-up vehicle, and charges the customer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply of complete body built motor vehicle merits classification HSN 8707 and it is taxable @28%. 33. The applicant has referred to numbers of Advance Ruling which are summarized in Para 14 above in favour of their case. As per Section 103 of the CGST Act, 2017 any Advance Ruling is binding on the Applicant who has sought it and on the concerned officer or the jurisdictional officer in respect of the Applicant. Accordingly, AARs Ruling as cited above can t be relied upon in the present case of the Appellant. 34. The applicant also submitted that in addition to the said activity of manufacturing of body building on the chasis owned by the others , they carry out accident repairing work on vehicle supplied by its owner for repairing job for a lump sum price that includes cost of material and labour. Accordingly, the applicant sought the classification and applicable rate of GST of the said repairing service carried out on the damaged vehicle supplied by their owner. 35. The applicant in his submission has stated that they are receiving the vehicles, which were damaged in the accident for repairing work. These vehicles are supplied by their owner and applicant carries out rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and adjustment, steering gear repair and adjustment, suspension repair, brake repair and adjustment, transmission repair and adjustment, exhaust system repair, cooling system repair including water hose replacement and other maintenance and repair; ii. scheduled factory-recommended and preventative maintenance inspection services; iii. electrical system repair and battery charging services for motor cars; iv. puncture repair services, wheel adjustment and balancing for motor cars; v. repair of inner tubes for car, truck and bus tyres; body repair and similar services for motor vehicles, involving door and lock repair, bumper straightening and repair, repainting, collision repair, window screen and window replacement and other automobile body repair; vi. cleaning and routine maintenance services, such as vehicle laundry and car-wash services, undersealing, polishing and waxing services, etc.; automobile emergency road services; motorcycle maintenance and repair and motorcycle body repair services including specialized breakdown services for motorcycle; maintenance and repair services for trailers, semi-trailers and other motor vehicles n.e.c. including motor homes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the principal on Job work challan/ delivery challan and build body on it and thereafter clear to the principal by raising the Invoice of Job work charges, it would amount to supply of service. In cases applicant owned the chasis 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%}. In case supply of goods i.e. motor vehicle GST rate will be 28% {CGST -14% + SGST-14%} C What will be the service Code (tariff) for above stated activity of body building carried out on another person s chasis 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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