M/s Tata marcopolo Motors Ltd.,the applicant having GSTIN number 29AACCT5547J1ZW have filed an application for advance ruling under section 97 of CGST Act,2017 read with rule 104 of CGST Rules,2017 and under section 97 of KGST Act,2017 read with Rule 104 of KGST Rules,2017.

The Company has sought advance ruling on following issue:

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 SAC 9988?

The above question is related to Section 97 (2) (a) of CGST Act,2017 as it is with regard to Classification & hence permitted under the said act.


The Applicant is engaged in the business of building and mounting of body on the chassis of different models of buses.

The Applicant, for building and mounting of the body, procures various inputs such as steel sheets, square tubes, seats, glasses, wiring harness, fittings inside body, paints, FRP (Fibre-reinforced plastic), Air conditioner, Automobile parts on payment of appropriate GST and claims input tax credit on the same. They undertake the body building activity and fabrication works using aforesaid inputs and their own machines, manpower and other facilities.

The applicant receives the chassis of the bus/es from OEMs / Retail customers (Sender) on free of cost basis, under the delivery challan. Hence ownership of the chassis always remains with sender (Principal).

The Applicant submits that many of the processes / activities are common for building the body for different types of vehicles and there would be some customization based on the need of the sender and the type of the vehicle. They further submit that they can perform fabrication, welding, painting and fitment process / activities independently and can start the building activity even before the chassis is made available by the sender. In fact, for some standard type of vehicles the body can completely be built and kept ready by the Applicant and once the chassis is made available by the sender, the body needs to be mounted and fitment of seat and minor items required thereafter on it. In such a case the whole process of body building and mounting can be completed within 6 days. Then the fully built vehicle will be returned under the tax invoice to the sender, charging 28% GST, on treating of the activity of building and mounting of the body on the chassis as supply of goods i.e. body, under HSN Code 8707. The cost of the goods components is approximately 65% of the cost of full body.


The Applicant, quoting the definition of “Job Work” in terms of Section 2(68) of CGST Act 2017 and also the activities to be treated as supply of services in terms of para 3 of schedule II of the said Act, submits that their activity of building and mounting of a body is independent one and cannot be construed as treatment / process applied to another person’s goods, as they perform the said activity on their own goods and not on the chassis provided by the sender and hence would not be covered under heading 9988 as “Job Work” and thereby notification no. 11/2017 central tax dated 28.06.2017 does not apply to the instant case.

The Applicant, further quoting the provisions of “Composite Supply” given under section 2(30) of the CGST Act, submits that in their case, the principal supply would be of building the body and the activity of mounting the body would be incidental to it and thereby the whole transaction would be treated as Supply of goods (i.e. body). If the activity of mounting the body on chassis is not “naturally bundled” with the activity of building of the body, it can’t fall under the ambit of “Composite Supply”.

The Applicant, further quoting the meaning of “Mixed Supply” in terms of section 2(74)of the CGST Act 2017, submits that if the activity of building the body and mounting the body is considered as “Mixed Supply”, then the supply attracts the higher rate of GST i.e. supply of body (goods) attracting 28% of GST.

The Applicant further submits that in terms of para 1 (a) of Schedule II of the CGST Act “any transfer of the title in goods is a supply of goods”. In this case, the purchase order issued by the sender is for supply of body, which is mounted on the chassis. The title and ownership of all the inputs used for building the body remains with the Applicant and the sender will not be liable for any loss that may happen to the inputs till the body built is mounted on the chassis. Therefore the contractual agreement between the sender and the Applicant is for supply of body but not the services of building the body and hence the instant activity becomes supply of goods and not the supply of services.

The Applicant furnished additional submissions vide their letter dated 14.02.2019, received on 21.02.2019, inter alia stating the process of body building of bus.Along with  process some customization may be required on chassis owned by others (sender). Once the body mounting process on chassis is over, fully built vehicle is handed over to the owner of the chassis (sender) by raising the invoice to the extent of body building activities performed by the applicant on the chassis.

There are mainly two situations as per circular no.52/26/2018 GST dated 09/08/2018 (a) the body building of bus and chassis is owned by bus builder & supplies the same to customer along with charges for both body building  chassis.(b)bus body builder receives the chassis from customer & builds body & charges fabrication charges for the same.The first case is supply of goods @28% & second case is supply of services @18% and the applicant after september 2018 started charging GST @18% following the circular.


As the company stated in the application that they can build the body of the bus before the chassis is given to them by the receipient it is simply mounting of the body on the chassis provided by receipient hence classifiable under HSN 8707  attracting GST @28%.

Whereas when the chassis is firstly provided by the customer & step by step building of bus by using own inputs and capital goods amounts to supply of service classifiable under SAC 9988 attracting GST @18%.


As the company charged 18% GST after September 2018,they will have to classify cases where they were liable to pay 28% gst and paid 18% Vice versa the effect needs to be checked before September 2018.

Hence,after this advance ruling one needs to carefully see for all the bus body builders whether they are supplying goods or services.The basic feature of dividation is whether some standardized procedure is followed for bus making before chassis is provided or they are building the body of bus after chassis is provided to them using their own inputs and capital goods.

Source- In re M/s Tata Marcopolo Motors Ltd. (GST AAR Karnataka); Advance Ruling No. KAR ADRG 12/2019; 25/06/2019

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