Activity of Commercial Vehicle Body Building on chasis supplied by Customer is Supply of Service, attracts 18% GST: AAR [Read Order]

The Kerala Authority for Advance Ruling (AAR), ruled that activity of Commercial Vehicle Body Building on chasis supplied by customer attracts 18% GST.

M/s. Oyester Auto Body (the applicant) is an assessee registered under the GST Act. The applicant is engaged in the business of body building of commercial vehicles used for carrying goods. The applicant has sought advance ruling on whether the activity of commercial vehicles bodybuilding on a job-work basis, on the chassis supplied by the customer, is a supply of goods or a supply of services and to determine the rate of GST.

It is submitted by the applicant that motor vehicles for the transport of goods (other than refrigerated motor vehicles) fall under heading 8704, chassis fitted with engines fall under heading 8706, bodies including cabs for motor vehicles used for transport of goods falls under heading 8707; and all of it attracts 28% tax. However, manufacturing services on physical inputs (goods) owned by others falls under SAC 9988 and attract 18% GST.

A Division Bench consisting of Dr S.L. Sreeparvathy, IRS and Abraham Renn S, IRS observed that “The value of the services in this Heading is based on the service fee paid, not the value of the goods manufactured, SAC - 99888 under Heading 9988 pertains to Transport equipment manufacturing services and Sub - Heading 998881 pertains to Motor vehicle and trailer manufacturing services. Therefore, the activity of the applicant as discussed above is appropriately classifiable under Service Accounting Code 998881.”

“The activity of commercial vehicle body building on the chassis supplied by the customer is a supply of service and the activity is liable to GST at the rate of 18%” the Authority ruled.

To Read the full text of the Order CLICK HERE

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