Activity of Bus Body Building undertaken on the chassis supplied by the customers is a ‘Supply’, attracts 18% GST: AAR

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that Activity of Bus Body Building undertaken on the chassis supplied by the customers is a ‘Supply’ and it attracts 18% GST.

The applicant,Tvl Anamallais Engineering is engaged in bus body building activity. They get enquiries from the customers for building a bus body on the chassis belonging to them on a job work basis. On receipt of enquiry from customers, they will provide the quote according to the specification given by the customer. The customers will hand over the chassis (Ashok Leyland, TATA, EICHER etc.) purchased by them at the applicants’ yard for fabricating the bus body. Upon receipt of chassis, a work order with the specifications of the Bus Body will be raised on the customers, which will be signed by the Customer as a token of acceptance.

The applicant has sought the advance ruling on the issues 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 and if it is supply of Service, what is the applicable rate of GST and its SAC code.

The coram of members T.Padmavathi and B.Senthilvelan ruled that the bus body fabricated and mounted on the chassis supplied by the customer is delivered back to the customer charging a lump sum 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. In view of the above discussion 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, the said activity of bus body building on the chassis supplied by the customer by the applicant is supply of services.

The AAR further held that the service rendered is classified under SAC 998881 and the applicable rate will be 18% GST.

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