Name of the Applicant:

Tvl Anamallais Engineering (P) Limited

Appeal No.:

Order No. 27/AAR/2021

Ruling pronounced by:

GST AAR Tamilnadu

Date of Ruling:

30-07-2021

The applicant is a private limited company who is engaged in the business of bus body building. They are building bus body on the chassis belonging to customers on job-work basis. The customer hands over the chassis purchased by them at the applicant’s yard for fabricating the bus body. On the basis of work order of the customer, the applicant prepares drawings and Bill of material required to fabricate the bus body. Thereafter required materials is procured from stores for execution of the work.

Bus body is mounted on the chassis and then undergoes testing for any possible water ingress from the roof of the bus. After testing & suitable correction, if any, bus body is painted as per customer’s colour choice and pattern. All fitments such as windows, front & rear windshield glass, handles, railings are then fixed. Passenger seats are fixed as per the layout prescribed by the customer. After quality control inspection by the applicant, bus body undergoes customer inspection and road trial. After all checks, the bus body with chassis is delivered to the customer.

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?

• In the instant case, the bus body fabricated and mounted on the chassis supplied by the customer is delivered back to the customer charging a lumpsum amount as job work charges. It is to be noted that ownership of the chassis remains with their customers and will not be transferred to the applicant at any point of time. The consideration is received only towards fabrication services besides own materials involved in the fabrication.

• The clarification in Circular No. 52/26/2018 dated 09.08.2018 is relied upon by us for arriving at the above conclusion wherein applicable GST on the bus body building activity is clarified as under:

“Buses/ motor vehicles for the transport of 10 or more persons, including the driver fall under headings 8702 and attract 28% GST. Further, chassis fitted with engines [8705] and whole bodies (including cabs) for buses [8707] also attract 28% GST. In this context, it is mentioned that the services of bus body fabrication on job work basis attracts 18% GST on such service.

There are two situations in this context:

(a) Bus body builder builds a bus, working on the chassis owned by himself 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.

In the above context, it is hereby clarified that in the case as mentioned in (a) above, the supply made is that of bus, and accordingly supply would attract GST @ 28%. In the case mentioned in (b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply will be classified as service and 18% GST shall apply.”

In view of the above, 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 of the CGST Act, 2017 and the said activity of bus body building on the chassis supplied by the customer by the applicant is ‘Supply of service’.