Classification of service— In the instant case, the applicant submits that it is engaged in building bodies of various vehicles falling under Chapter 87 of the First Schedule to the Custom Tariff Act such as mounting of tankers, tippers etc. on chassis provided by the owner of such chassis, either registered or unregistered.

The applicant has submitted that the activity undertaken by them is in the nature of working upon the goods i.e. chassis supplied by the Principal and converting the same into a Mounted Tanker, Tipper, etc. Therefore, the activity, as per their understanding, would be in the nature of supply of services.

The applicant has submitted that the activity undertaken by them is in the nature of working upon the goods i.e. chassis supplied by the Principal and converting the same into a Mounted Tanker, Tipper, etc. Therefore, the activity, as per their understanding, would be in the nature of supply of services.

Question on which Advance Ruling sought:

(1) Whether the activity of fabricating and mounting Tankers, Tippers, etc. on the chassis provided by the owner of such chassis i.e. bus body building would be covered under the category of Supply of Services?

(2) If yes, the applicable accounting code of such services as per the Scheme of Classification of Services and the applicable rate of GST thereon.

The prime facie issue before us is to determine the classification of the activity of bus body building on chasis owned by the principal undertaken by the applicant and subsequently HSN and Tax rate on the such supply.

In the instant case, the applicant procures various goods such as raw steel etc. as inputs for fabricating the bus body on the chasis supplied by the principal on delivery challan. The applicant uses the said material for mounting/fabricating the body and once the body is built and mounted on the chassis, the vehicle is sent back to principal. The applicant charged the lump sum charges of fabrication including cost of certain material that was consumed during the process of mounting of Bus Body on the chassis. The applicant supply of complete built vehicle to the principal i.e. owner of chasis would amount to composite supply and the taxability would depend upon the “principal supply”. The issue for consideration in the instant case is “what is principal supply”.

Held that— (i) Activity of fabrication and mounting of Tanker and Tripper on the chasis supplied and owned by the principal is supply of Service

(ii) Supply of Service merits classification 998882 'Other transport equipment manufacturing services' and Tax Rate is 18% in both the cases— 

(i) Chasis supplied by GST Registered person 

(ii) Chasis supplied by un-registered person i.e. not having GSTIN.