18% GST applicable on Fabrication of Body on Chassis provided by Customer: AAR

The Madhya Pradesh bench of the Authority of Advance a Ruling has held that a GST at the rate of 18% will be applicable to the fabrication of the body on chassis provided by the customer. The applicant is involved in fabrication of commercial vehicles and is engaged in the various services including manufacturing of Chassis, Trucks & Buses, Engines, Bus body, and automotive components. The applicant approached the MP AAR seeking an advance ruling in a bid to confirm whether the supply towards the provision of services in respect of activity of mounting fabrication of bodies on chassis provided by the Customer should be treated as supply of bus or provision of services in respect of activity of mounting/fabrication of the bus body on the chassis wherein the act of mounting/fabrication is outsourced to the Applicant by provider of the chassis in two scenarios.

In the first scenario, the chassis is manufactured by one of the units of the applicant registered separately as a distinct person under the GST Act and sold to the provider. In the second scenario, the chassis is originally manufactured by some other Original Equipment Manufacturer and is sold to the provider of chassis before receiving the chassis for the fabrication of the body.

The AAR held that supply towards the provision of services for the act of fabrication of bodies on chassis provided by the Customer should be treated as supply of bus or provision of services for fabrication of the bus body on the chassis wherein activity is outsourced to the Applicant are both taxable scenarios and as such will attract a GST of 18%.