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The Activity of building and mounting of the body on the chassis provided by the principal under FOC challan will result in supply of services under HSN 9988 and hence, should be taxed @ 18% GST.

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Classification of supply — Authority for Advance Ruling — Bus Body Building – The Applicant is receiving chassis of the bus from OEMs on FOC Basis under the cover of delivery challan. They procure various inputs and services directly which are used for carrying out the body building on the chassis received. Once the Bus body is built and mounted on the chassis by the Applicant, the fully built vehicles are sent back to the OEMs/customers on payment of GST @28%. The GST is paid on the material and activity carried out by the applicant (cost of the chassis is not included). The consideration received by the Applicant is towards the manufacturing of the bus bodies using its own procured material and mounting of the body on the chassis supplied under FOC challan by the customers. The applicant sought an Advance Ruling as to whether the activity of building and mounting of the body on the chassis by the Applicant will result in supply of goods under HSN 8707 or supply of services under HSN 9988.
Held that:- The Hon’ble Authority for Advance Ruling held that the Activity of building and mounting of the body on the chassis provided by the principal under FOC challan will result in supply of services under HSN 9988 and hence, should be taxed @ 18% GST.Automobile Corporation Of Goa Limited. [2018] 3 TAXLOK.COM 61 (AAR-Goa)