Classification of service— In the instant case, the applicant is engaged in the business of body building of commercial vehicles used for carrying goods.

The applicant requested an advance ruling on the following:

1. Whether the activity of commercial vehicles body-building on a job-work basis, on the chassis supplied by the customer, is a supply of goods or a supply of services?

2. If it is a supply of goods, what is the applicable rate of GST?

3. If it is a supply of services, what is the applicable rate of GST?

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 main issue to be determined is whether the activity constitutes a supply of services or supply of goods.

In the instant case, the applicant is building a body of commercial vehicle for carrying goods on the chassis supplied by the customer as per the specifications of the customer. The applicant is collecting the charges for the activity which include the cost of inputs / material used by the applicant and the labour charges for the fabrication of the body. Thus it is evident that the applicant is fabricating the 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 in 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.

Held that— The activity of commercial vehicle body building on the chassis supplied by the customer is a supply of service.

The activity is liable to GST at the rate of 18% [9% CGST + 9% SGST] as per entry at Si No. 26 (iv) - 9988 - "Manufacturing services on physical inputs (goods) owned by others - Manufacturing services on physical inputs (goods) owned by others, other than (i), (ia), (ib), (ic), (id), (ii), (iia) and (iii) above" of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.