Supply of Bus body building on chassis owned by customer is supply of Service
Facts and Issue of the case
M/s. Vasant Fabricators Pvt. Ltd. (referred to as ‘VFPL’ for the sake of brevity) submits that it is engaged in building bodies of various vehicles falling under Chapter 87 of the First Schedule to the Custom Tariff Act such as mounting of tankers, tippers etc. on chassis provided by the owner of such chassis, either registered or unregistered.
On receipt of such chassis, VFPL undertakes the following activities on such chassis. First the chassis of the Principal, either registered or unregistered, is received at VFPL registered premises. Thereafter, they make the drawing for type of the job to be undertaken and ascertain the type and quantity of materials required for the job. Depending on the work to be carried out i.e. Mounting of Tanker or Tipper, they place the order for purchase of the required 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.
VFPL 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.The sub-group would be 99888 i.e. Transport equipment manufacturing services further classifiable under Service Code 998882 i.e. Other transport equipment manufacturing services.
VFPL has 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 are undertaking the activity of fabricating the tanker, tipper, etc. and mounting the same on such chassis. With regard to the activity undertaken by them, they are charging the job-charges which include the charges of fabrication of Tanker, Tipper, etc. and mounting of the same on the chassis owned by the Principal. The cost of raw materials used for fabrication of Tanker, Tipper, etc. is included in the said job charges raised under tax invoice.
Question on which Advance Ruling sought:
- 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?
- If yes, the applicable accounting code of such services as per the Scheme of Classification of Services and the applicable rate of GST thereon.
Observation of the court
Court finds that for the Question presented by VFPL, its answer had been laid threadbare in the GST Scheme of law, as follows:
- Schedule II(3) CGST Act reads as, any treatment or process which is applied to another person’s goods is a supply of service. Therefore bus body building on customer owned chassis is supply of service.
- Section 2(68) CGST Act defines Job work as any treatment or process undertaken by a person on goods belonging to another registered person. Therefore bus body building on chassis owned by GST registered customer is Job work and finds entry at Sr no 26(ic) to Notification 11/2017-CT(R).
- And bus body building on chassis owned by un-registered customer is ‘Manufacturing services on physical inputs ( goods) owned by others, other than those registered under CGST Act’ which finds entry at Sr no. 26(iv) to Notification 11/2017- CT( R).
As per the Scheme of Classification of services, Court finds 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’.
- Supply of Bus body building on the chassis owned by customer is supply of Service.
- GST rate:
|S.No||Service Description||Notification 11/2017- CT(R) dated 28-6-17.||Service Code||GST rate|
|i.||Bus body building on chassis owned by GST registered customer.||Sr. no. 26(ic)||998882||18%|
|ii.||Bus body building on chassis owned by unregistered customer||Sr. no. 26(iv)||998882||18%|