What is the rate of GST to be charged in case the applicant provides fabrication services of truck body.

PJ/Case Law/2019-2020/3548

CASE: In M/s SLN Tech-Fabs(Bengaluru) Pvt. Ltd. (GST AAR Karnataka)

CITATION: AAR no.KAR ADRG 02/2020, Dated 7th January, 2020

ISSUE: What is the rate of GST to be charged in case the applicant provides fabrication services of truck body.

BRIEF FACTS: The applicant is engaged in providing services in the area of Transport Solutions, in the field of fabrication and truck body building area, with the trademark MSLN DIAMOND", for transport equipments such as Tippers, Trailers, Containers and Tankers. The applicant seeks ruling in case of the following questions

whether the GST @ 28% is correct or not; whether they can charge GST @ 18% in terms of ircular No. 52/26/2018-GST dated 09.08.2018 Para No. 12.1,12.2(b) and 12.3
whether they can use the SAC 998881 in terms of SI.No.535 of Annexure to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
Can they start charging GST 12% (CGST @ 6% + SGST @ 6%) as per Sl.No.(i)(a)(vi)(n)(id) of Notification No.20/2019-Central Tax (Rate) dated 30.09.2019.

REASONING OF JUDGEMENT:
1. Answering the first question, the authority has examined that the activity of the applicant is akin to that of the one mentioned in the circular and the benefit of classification of the activity as service be extended to them. The Circular referred to above stipulates the following conditions so as to classify the activity of bus body building as "Service".
a. The Bus body builder builds body on chassis provided by the principal for body building.
b. The Bus body builder charges fabrication charges (including certain material that was consumed during the process of job-work)
The applicant, in the instant case, is also involved in the same activity of body building but not on the chassis of bus. They fabricate the body on the chassis provided by the principal for Tippers, Trailers etc.. Therefore the activity of the applicant is akin to that of the one mentioned in the Circular.
Further vide Notification No.26/2019-Central Tax (Rate) dated 22.11.2019, under Section 11(3) of the CGST Act 2017, inserted the following explanation against serial number 26, in column (3), in item (ic).
“Explanation - For the purpose of this entry, the term bus body building" shall include building of body on chassis of any vehicle falling under Chapter 87 in the First Schedule to the Customs Tariff Act, 1975"
2. With regard to the second question attention is drawn to the Scheme of Classification of Services which is based on the explanatory notes. As per the said explanatory notes the service code 998881 includes motor vehicle manufacturing services, trailers and semitrailer manufacturing services and motor vehicle parts and accessories manufacturing services. The applicant is involved in manufacturing / fabrication of trailers etc. and hence their activity merits classification under service Code 998881.
3. The third question is with regard to the rate of tax on the services. The impugned services of the applicant are covered under heading 9985 as manufacturing services on physical inputs (goods) owned by others in terms of Sl.No.26(ii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The services had been taxed at 18% GST (9% CGST & 9% SGST) right from the appointed date i.e. 01.07.2017. It is clearly evident from the above that the applicant inadvertently claimed that their services are covered under entry Sl.No.26(i)(id) of the Notification No.11/2017-CT ( R ) which attract 12% GST (6% CGST & 6% SGST), whereas actually they are covered under Sl.No.26(i)(ic) of the said Notification and attract 18% GST (9% CGST & 9% SGST).

PREPARED BY: Akanksha Bohra

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PJ/Case Law/2019-2020/3548

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