Bus Body Building On Chassis Owned By GST Registered Customer Attracts 18% GST: Gujarat AAR

The applicant, M/s. Vasant Fabricators Pvt. Ltd. (VFPL), is in the business of building the bodies of various vehicles falling under Chapter 87 of the First Schedule to the Customs Tariff Act, such as mounting of tankers, tippers, etc., on chassis provided by the owner of such chassis, either registered or unregistered.

The applicant submitted that they are physically receiving the goods, i.e., chassis owned by the principal, which are registered in some cases and not registered in some cases. Thereafter, they will undertake the activity of fabricating the tanker, tipper, etc. With regard to the activity undertaken by them, they are charging the job-charges, which include the charges for fabrication of tanks, tippers, etc., and the mounting of the same on the chassis owned by the Principal. The cost of raw materials used for fabrication of tanks, tippers, etc., is included in the said job charges raised under the tax invoice.

The issue raised was 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.

The AAR observed that Section 2(68) CGST Act defines "job work" as any treatment or process undertaken by a person on goods belonging to another registered person. As a result, building a bus body on a chassis owned by a GST registered customer is considered work and is referenced in Sr No 26(ic) of Notification 11/2017-CT(R).

The AAR also noted that building a bus body on a chassis owned by an unregistered customer constitutes manufacturing services on physical inputs (goods) owned by others other than those registered under the CGST Act, as stated in Sr no. 26(iv) of Notification 11/2017-CT(R).

"As per the Scheme of Classification of Services, we find subject supply merits to be classified at Heading 9988 'Manufacturing services on physical inputs (goods) owned by others' and precisely at Service code (Tariff) 998882 'other transport equipment manufacturing services'," the AAR said.

Applicant's Name: Vasant Fabricators Pvt. Ltd.

Citation: Advance Ruling No. GUJ/GAAR/R/2022/ 23

Dated: 12.04.2022

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