In re Kamal Coachworks Pvt Ltd. (GST AAR Rajasthan)
A recent ruling by the Authority for Advance Ruling (AAR), Rajasthan, in the case of In re Kamal Coachworks Pvt Ltd, has highlighted a difference in interpretation regarding the Goods and Services Tax (GST) classification of fabricating and mounting tipper bodies on chassis provided by a customer. The split decision by the two-member bench means the matter will now be referred to the Appellate Authority for clarity.
Kamal Coachworks Pvt Ltd, the applicant in this case, is engaged in the business of building bodies for commercial vehicles, including tipper trucks. Their operational model involves receiving a chassis from their customer, such as Tata Motors Ltd., on a Free of Cost (FOC) basis. The ownership of this chassis remains with the customer throughout the process. Kamal Coachworks’ role is to fabricate and attach a tipper body, along with a hydraulic cylinder, onto the supplied chassis. The company procures all the necessary raw materials, such as steel sheets, pipes, and angles, from approved vendors to build the tipper body according to the customer’s drawings and specifications.
The applicant contended that their activity constitutes ‘job work’ as defined under Section 2 (68) of the CGST Act, 2017, since they are undertaking a process on goods (the chassis) belonging to another registered person. They argued that this activity qualifies as a ‘supply of service’ under Section 7 (1A) read with Para 3 of Schedule II of the CGST Act, which specifies that any treatment or process applied to another person’s goods is a supply of services. Consequently, they believed their service should be classified under SAC 9988 (Manufacturing services on physical inputs owned by others) attracting an 18% GST rate.
To resolve the ambiguity, Kamal Coachworks Pvt Ltd sought an advance ruling on three specific questions:
