AUTOMOBILE CORPORATION OF GOA LIMITED

The Applicant  is receiving chassis of the bus from OEMs on FOC Basis under the cover of delivery challan. They procure various inputs and services directly which are used for carrying out the body building on the chassis received. Once the Bus body is built and mounted on the chassis the fully built vehicles is sent back to the OEMs. The GST is paid on the material and activity carried out by the applicant (cost of the chassis is not included).

The Applicant sought Advance Ruling on "Whether the activity of building and mounting of the body on the chassis by the Applicant will result in supply of goods under HSN 8707 or supply of services under HSN 9988."

As per para 3 of the Schedule II of the CGST Act Any treatment or process which is applied to another person’s goods is a supply of service.

As per the application the chassis ownership is not transferred and hence it should be classified under job work.

Moreover, it is clarified that, the 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).

It is clarified that in case as mentioned at Para (a) above, the supply made is that of bus, and accordingly supply would attract GST @ 28%. In the case as mentioned at Para (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.

CRUX: The Activity of building and mounting of the body on the chassis provided by the principal under FOC challan will result in supply of services under HSN 9988 and hence, should be taxed @ 18% GST.