The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) ruled 18% GST on body building, mounting of body on chassis of Tippers, Tankers, Trucks, Trailers.
The appellant, M/s Adithya Automotive Applications Pvt Ltd has been engaged in the body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers. They receive chassis of these items from TATA Motors and other customers on the basis of returnable challan. They undertake body building as per contract / purchase order issued by M/s TATA Motors.
The applicant has sought advance ruling on the issue whether the body building activity on the chassis provided by the principal would amount to manufacturing services attracting 18%.
The AAR ruled that the body building activity on the chassis provided by the principal would not amount to manufacturing services attracting 18% of GST.
The applicant has challenged the ruling on the ground that The cost of the mounted body is always less than 20% of the cost of the chassis and as such it can be seen that there is no apparent dominant nature of the work of the body building when compared to the chassis. Section 2(68) of the GST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as’ job worker’. The ownership of the goods does not transfer to the job worker but it rests with the principal. The job worker is required to carry out the process specified by the principal, on the goods. This is submitted that the Appellant was carrying on body building process on physical inputs i.e. chassis owned by the principal i.e. TATA Motors, hence the activity of the Appellant will be treated as job work not as manufacture as held by the Authority of Advance Ruling. Further, the issue stands clarified by the CBIC under its Circular No. 38/12/2018 Dated 26.03.2018 The coram of Ajay Dixit and Minishy S. held that body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers, on the chassis to be supplied by the Principal, on delivery challans, by collecting job work charges for such fabrication work is taxable at the rate of 18%, in accordance with Circular No. 52/ 26/ 2018-GST date 09.08.2018, subject to fulfilment of all the conditions prescribed in the Section 141 and 143 of the CGST Act, 2017 read with relevant Rules/Notifications.
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