GST
TRT-2025-
AAR Kerala
Date:-01-08-22
In:-
Issue Favourable to Tax Payer ?:-
Order date – 01 August 2022
Key Pointers –
- The Appellant, M/s. Oyester Auto Body, is engaged in the business of body building of commercial vehicles used for carrying goods.
- The applicant is providing services of body building of commercial vehicles used for carrying goods on the chassis supplied by the customers. The body is built as per the requirement of the customers.
The appellant argued that they are engaged in job work as defined under Section 2(68) of SGST / CGST Act defines job work. Thus the applicant submits that activity carried on by the applicant is in the nature of a service and classifiable under Heading 9988.
- The issue involved here is whether the activity of commercial vehicle's body building on job work basis, on the chassis supplied by the customer, is supply of goods or supply of services?
- The AAR observed that as per Para 3 of Schedule II of the CGST Act, 2017 which lists out the activities or transactions to be treated as supply of goods or supply of services; any treatment or process which is applied to another person's goods is a supply of service.
- The applicant is building body of commercial vehicles for carrying of goods on the chassis supplied by the customer as per specifications of the customer. The applicant is collecting the charges for the activity which includes the cost of inputs /material used by the applicant and the labour charges for fabrication of the body. Thus it is evident that the applicant is fabricating body on the chassis belonging to the customer.
- The ownership of the chassis remains with the customer and at no stage of the process of fabrication of the body, the title of the chassis is transferred to the applicant. Therefore, the applicant is fabricating the body on the chassis belonging to another person and hence the activity is squarely covered under Para 3 of Schedule II of the CGST Act, 2017 as a treatment or process which is applied to another person's goods and accordingly is a supply of services.
- As per the Scheme of Classification of Services notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 the services included in the Heading 9988 - Manufacturing services on physical inputs owned by others - are services performed on physical inputs owned by units other than the units providing the service.
- Accordingly, the activity is liable to GST at the rate of 18% [9% CGST+ 9% SGST] as per entry at Sl No. 26 (iv)- 9988 - "Manufacturing services on physical inputs (goods) owned by others.
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