Building bus bodies on customer-supplied chassis constitutes providing a service
Fact and issue of the case
M/s Royal Coach Builders, No. 136, Dindigul Road, Thanthonimalai, Karur-639005. (hereinafter called as the ‘Applicant’) is registered under the GST Acts with GSTIN 33AAEPV2861Q1Z3. The Applicant has sought Advance Ruling on the following questions:-
Whether the activity of Bus Body Building on the chassis supplied by the customer on Job work basis is a supply of service or supply of goods?
If it is supply of Service, what is the applicable rate of GST and its SAC code?
If it is supply of goods, what is the applicable rate of GST and its HSN?
Personal hearing was held in digital platform on 17.08.2022 wherein Shri. M. Saravanan, (Authorised Representative – AR) appeared for the Applicant and reiterated the submissions made in the application. On being queried about the reason for filling an application despite the CBIC Circular issued in 2018, clarifying that bus body built on the chassis supplied by customer, is a service attracting 18% GST, the Authorised representative stated that there is doubt in the market. To the query whether the customer who supplied chassis are registered under GST or unregistered for which the Authorised representative stated that the customers are individuals I passenger bus operators both registered and unregistered. AR was asked to furnish document accompanying Chassis, copy of invoice issued by Chassis manufacturer and copy of invoice issued by Applicant to the Customer.
Observation of the court
Hence, the instant case falls in the situation spelt in Para 12.2 (b) of the Circular cited supra, and therefore Bus body building on the chassis supplied by the customer is a service under SAC 998881 – Motor Vehicle and trailer manufacturing services and 18% GST as applicable will be charged accordingly.
In view of the above discussions, it is evident that the activity undertaken by the Applicant for bus body building on the chassis supplied by the customer is to be classified as job work. As per Schedule II (3) of the CGST Act 2017, the said activity bus body building on the chassis belonging to the customer by the applicant is supply of services.
Having decided the type of supply and the relevant SAC, the rate of supply is to be determined. The rate as per Entry No. 26 of Notification no.11/2017-Central Tax (Rate) dt.28.06.2017 (as amended) is
| S.No. | Chapter, Section or Heading | Description of Service | Rate (Percent) | Condition |
| 26 | 9988 (Manufacturing services on physical inputs (goods) owned by others) | (iv) Manufacturing services on physical owned by others, other than inputs (goods) (i), (ia), (ii), (iia) and (iii) above | 9 |
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order from here
Royal-Coach-Builders-AAR-GST-Tamilnadu-1
