Appellant is engaged in vehicle body building and mounting it on chassis provided by the principal- tax rate under GST @ 18%.
Classification Issue: Appellant is engaged in body building and mounting of body on chassis of different models of Tippers, Tankers, Trucks and Trailers provided by principal – Authority for Advance Ruling held that body building activity on chassis provided by principal would not amount to manufacturing services .Chassis delivered to appellant remains in its temporary possession only for certain time to carry out process of job work as per direction of principal – Ownership of chassis always remains with principal. It is just job work .services by way of job work in relation to bus body building would be 18 % .
Tax rate: Body building and mounting of body by appellant on chassis to be supplied by principal by collecting job work charges for such fabrication work is taxable at rate of 18 % subject to fulfilment of all conditions prescribed in section 143 .As per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. it has been clarified that tax rate for services described in clause (ic) of Sl. No. 26, i.e., services by way of job work in relation to bus body building would be 18%.
Relevant Circulars and Notifications : Sl. No. 26 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017; Circular No. 52/26/2018-GST, dated 9-8-2018 and Circular No. 38/12/2018, dated 26-3-2018.
Relevant section : section 143 of CSGT/SGST Act.
case name: Adithya Automotive Applications (P.) Ltd., AAAR -UP- 2022- [2022] 136 taxmann.com 336 (AAAR-UTTAR PRADESH)
Comments: advance ruling order reversed by AAAR, earlier authority for Advance Ruling, vide Order No. 82/2021 dated 30-6-2021 ruled that :
Against this appeal preferred BEFORE AAAR.
Important arguments taken in ground:
1.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. Ownership has been defined as state or fact of exclusive rights and control over property which maybe any intellectual property etc. or object/land or real state. 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, hence the activity of the Appellant will be treated as job work not as manufacture.
2. “As per section (72) “Manufacture” means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly.”
3.As per Schedule-II of section 7 of the CGST Act 2017, there is no scope to treat the activity of job work as manufacturing activity. The job work i.e. treatment of process has been defined as supply of service in the above provision of Schedule-II.
4.section 19 of the CGST Act also explains the definition of the principal as a ‘person supplying goods to the job worker’ and certain responsibility has been also cast upon the principal in this regard. The chassis of Tippers, Tankers and Trucks etc. after the job work remains the same and there is no change in name, character or address. In other words body mounted tippers, tankers, or trucks do not emerge as new product and are known as tippers, tankers or trucks only in common trade parlance.
5. RULING OF AAAR-UP
