Activity of building and mounting of the body on the chassis provided by principal is a Job-work

Activity of building and mounting of the body on the chassis provided by principal is a Job-work i.e. supply of services under HSN 9988 and notsupply of goods under HSN 8707. As ruled out by Goa AAR in case ofAutomobile Corporation of Goa Ltd 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 HSN 9988.

Activity of building and mounting of the body on the chassis provided by principal is a Job-work

Below is the relevant extract of ruling. GST law does not distinguish between raw material, finished goods and semi-finished goods. It talks about input and Capital goods. Even, semi-finished goods or intermediates are goods and in turn Input by the principal or the job worker. So, the argument of the applicant that they use their own material, hence, they should not be treated as job worker is not tenable under the provision of law. Moreover, it is clarified that, the fabrication of buses may involve the following two situations:

1. Bus body builder builds a bl!s, working on the chassis owned by him and supplies the built-up bus to the customer, and charges the customer for the value of the bus.
2. Bus body builder builds body on chassis provided by the principal for body building, and charges fabrication charges (including certain material that was consumed during the process of job-work).

It is clarified that in case as mentioned at Para (a) above, the supply made is that of bus, and accordingly supply would attract GST@ 28%. In the case as mentioned at Para (b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly. ADVANCE RULING UNDER SECTION 98 OF THE CGST/SGST ACT, 2017 The Activity of building and mounting of the body on the chassis provided by the principal under FOC challan will result in supply of services under HSN 9988 and hence, should be taxed@ 18% GST.