In re AB N Dhruv Autocraft (India) Pvt. Ltd (GST AAR Gujarat)
A. Whether the treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others is supply of services?
Ans. In case the applicant received the chasis from the principal on Job work challan/ delivery challan and build body on it and thereafter clear to the principal by raising the Invoice of Job work charges, it would amount to supply of service. In cases applicant owned the chasis and built the body and thereafter supply as complete body built motor vehicle to the customer by raising invoice of value of motor vehicle, it would amount to supply of goods.
B. If the above stated activity of body building is considered as supply of service in terms of description given at paragraph 3 of Schedule II of the CGST Act, 2017 what will be the rate of GST applicable on such service?
Ans A : We hold that in case of supply of service, rate of GST will be 18% { CGST 9% + SGST 9%}. In case supply of goods i.e. motor vehicle GST rate will be 28% {CGST -14% + SGST-14%}
C. What will be the service Code (tariff) for above stated activity of body building carried out on another person’s chasis of motor vehicle?
Ans: The activity of body building carried out on another person’s chasis of motor vehicle is classifiable under SAC 9988. In case of supply of complete built-up motor vehicle on owns chasis is classifiable under CTH 87 (depends upon type of vehicle supplied).
D. What would be the classification and applicable rate of tax for the activity of accident repairing job on the vehicle supplied by the owner for such job if a lump sum price is charged that includes cost of material and labour?
Ans : The classification and applicable rate of tax for the activity of accident repairing job on the vehicle supplied by the owner for such job if a lump sum price is charged that includes cost of material and labour is classifiable under SAC 9987 and GST is leviable @ 18 % [ 9% CGST + 9% SGST}.
E . If the above stated activity of body building is not considered as supply of services, what will be the nature of this supply, tariff code and rate of GST for such supply?
Ans: The nature of supply would be goods i.e. motor vehicle, classification HSN would be 87 (depends upon type of vehicle supplied) and GST rate would be 28 % {CGST -14% + SGST-14%} .
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,GUJARAT
M/s. Ab N Dhruv Autocraft (India) Pvt. Ltd., C-13, GIDC Electronics Estate, Sector-25, Gandhinagar having a GSTIN: 24AAGCA0966N1ZG, is a company filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the SGST Act.
2. M/s. AB N DHRUV AUTOCRAFT (INDIA) Pvt. Ltd. an applicant is providing service of body building on motor vehicles by fabrication and charged fabrication charges on lump sum basis. They are providing manufacturing service or body building services on physical inputs (goods) or chasis owned by others and provided by owner for body building and applicant charges lump-sum fabrication charges (including certain material that would be consumed during the process of body building). The applicant is carrying out this activity for manufacturing of tipper, tanker, trailer etc. on chasis provided by the owners of such vehicles. The process of said manufacturing activity is as under:
i. Received chasis at workshop
ii. Purchase raw steel and receive it at workshop
iii Prepare cutting plan and drawing
iv . Cutting and bending of raw material
v. Welding of all cutting and bending part
vi. Assembly of all fabricated parts
vii Final product on chasis.
3. The applicant further submitted that sometimes they charge separately for parts and for repairing job charges and are paying due GST as applicable on goods or repairing service separately.
4. The applicant submitted that in addition to the said activity they carry out accident repairing job on vehicle supplied by its owner for repairing job for a lump sum price that includes cost of material and labour.
5. Accordingly, the applicant sought Advance Ruling on the following question:
A. Whether the treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others is supply of services ?
B. If the above stated activity of body building is considered as supply of service in terms of description given at paragraph 3 of Schedule II of the CGST Act, 2017 what will be the rate of GST applicable on such service?
C. What will be the service Code (tariff) for above stated activity of body building carried out on another person’s chasis of motor vehicle?
D. What would be the classification and applicable rate of tax for the activity of accident repairing job on the vehicle supplied by the owner for such job if a lump sum price is charged that includes cost of material and labour?
E. If the above stated activity of body building is not considered as supply of services, what will be the nature of this supply, tariff code and rate of GST for such supply?
Applicant’s Interpretation of Law/Taxation under GST Regime
6. The applicant submitted that activity of providing service of body building on motor vehicles/ chasis owned by others by fabrication and collecting lump sum fabrication charges should be treated as supply of service in terms of Paragraph 3 of Schedule II of the CGST Act, 2017. As per clause 3 of Schedule-II, “any treatment or process which is applied to another person’s goods is supply of services”. Further submitted that they merely provide services of fabricating and body building on motor vehicles chasis belonging to another person as per the requirements of their customers on goods (inputs) provide by them. There is no transfer of ownership for providing such services and thus it appears supply of service.
The relevant extract of clause 3 of Schedule-II of the CGST Act, 2017 is as under :
Schedule II
ACTIVITIES OR TRANSACTION TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES
3. Treatment of Process
Any treatment or process which is applied to another person’s goods is a supply of services.
7. The applicant further submitted that activity of body building on chasis provided by the owner is in nature of service and in this regard CBIC has issued clarification vide Circular No. 52/26/2018-GST dated 09.08.2018. In the circular it is categorically clarified that fabrication of body on chasis provided by the principal (not on account of body builder), supply would merit classification as service and 18% GST as applicable will be charged accordingly.
8. The applicant has relied upon the Order dated 21.08.2018 of Advance Ruling Authority of Goa in the case of Automobile Corporation of Goa Limited wherein it is ruled that, “the activity of building and mounting of the body on the chasis provided by the principal under FOC challan will result in supply of services under HSN 9988 and hence, should be taxed at 18% GST”.
9. The applicant submitted that Service Accounting Code 9988 covers “Manufacturing Service on Physical Inputs (Goods) owned by others”. Thus it appears that the nature of activity of body building and mounting of the body on the chasis provided by the principal will result in supply of service under HSN Code 9988 and hence should be taxed at 18% of GST even in terms of clear description of services provided at Annexure relating to scheme of classification of services as given along with Notification No. 11/2017-CT (Rate) dated 28.06.2017 and the relevant extract there from is given below for ready reference:
