The Kerala Authority of Advance Ruling (AAR) has ruled that 18% GST on service of commercial vehicle body building on chassis supplied by customers.
Whether the activity of commercial vehicle’s body building on a job work basis, on the chassis supplied by the customer, is supply of goods or supply of services?
If it is a supply of goods, what is the applicable rate of GST?
If it is a supply of services, what is the applicable rate of GST?
The applicant is carrying on the business of body building of commercial vehicles. In the normal course of trade, the customer purchases the chassis and hands it over to the applicant for fabricating the vehicle body. The applicant on receipt of the chassis, fabricates the body of the vehicle as per the needs of the customer. The applicants are engaged in job work as defined under Section 2(68) of SGST / CGST Act.
Section 2(68) defines job work as “any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly”.
The applicant submitted that activity carried on by the applicant is in the nature of a service. Schedule II lists certain activities that are to be treated as supply of goods and supply of services. Paragraph 3 of Schedule II deems “treatment or process which is applied to another person’s goods as a supply of service.
The applicant’s activity is of the nature that treatment or processes is applied to the chassis provided by another person and therefore, squarely fall under Paragraph 3 of Schedule II. The business activity will fall within SAC 9988, is manufacturing services on physical inputs (goods) owned by others. In support of their contentions, the applicant also places reliance on the Circular No.52/2018, wherein applicable GST rate for bus body building is classified.
The bench of Sreeparvathi and Abraham Renn has held that the activity of tanker body building on the chassis supplied by the customer is a supply of service. The activity is liable to GST at the rate of 18%.
Applicant Name: M/s. New Grand Auto Body Works
Citation: Advance ruling No.KER/145/2021 Dtd.Ol/08/2022