GST Rate for Bus Body Building and Chassis Mounting Services
Building a bus body on a chassis provided by a principal is a job work service taxable at 18% GST.
- Ruling
- Appeal Order No. 19/AAAR/25/11/2021 dated 25.11.2021
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked if body building on a principal's chassis is job work.
- The Appellate Authority confirmed this activity is classified as job work.
- The applicable GST rate for this service is 18%.
In short
The company asked the Appellate Authority for Advance Ruling (AAAR) whether building a bus body on a chassis provided by a client counts as a job work service. They wanted to know if they should charge 18% GST, as suggested by a government circular. The authority confirmed that this process is indeed job work, even when the builder uses their own materials to complete the fabrication.
What has changed
How it worked before
Businesses were uncertain if using their own materials during the fabrication process would disqualify the work from being classified as job work, potentially leading to different tax treatments.
What has changed
The authority ruled that as long as the chassis remains the property of the principal and is handled via a delivery challan, the activity is job work. This confirms that an 18% GST rate applies to these services, providing clarity for businesses that perform fabrication on client-supplied chassis.
Who this affects
Businesses that build bus bodies or mount structures on chassis provided by other companies.
An example
A local fabrication shop receives a truck chassis from a large manufacturer to build a cargo body. The shop uses its own steel and paint to finish the job. Based on this ruling, the shop should classify this as a job work service and charge 18% GST, provided they follow the documentation rules for job work.
What you should do
If you perform similar work, you may use this ruling as a reference for your tax position. However, remember that an advance ruling is only legally binding on the company that requested it and its specific tax office. You should consult with your tax advisor to ensure your specific contracts meet the requirements of Sections 141 and 143 of the CGST Act.
If you do nothing
If you assume this ruling automatically applies to your business, you risk misclassifying your services and applying the wrong tax rate. If your local tax officer disagrees with your interpretation, you could face demands for unpaid tax, interest, and penalties. Always verify your specific business arrangement against the law rather than relying on a ruling meant for another company.
The terms explained
- Job work
- Any treatment or process undertaken by a person on goods belonging to another registered person.
- Principal
- The person or company that owns the goods and sends them to a job worker for processing.
- Delivery challan
- A document used to track the movement of goods without an immediate sale, often used when sending items for job work.
The ruling in detail
Appellate Authority for Advance Ruling
M/s ADITHYA AUTOMOTIVE APPLICATIONS PVT LTD
Appeal Order No. 19/AAAR/25/11/2021 dated 25.11.2021 · Uttar Pradesh
Questions before the authority
- Whether the body building activity on the chassis provided by the principal would amount to manufacturing services attracting 18% of GST.
- Whether clarification of CBIC vide para no. 12.3 of Circular No. 52/26/2018-GST date 09.08.2018 clarifying 18% rate of GST in respect of building of body of buses would also apply in the case of applicant.
Facts
The Appellant is engaged in the business of body building and mounting of bodies on chassis provided by principals like TATA Motors. The chassis are received on a returnable challan basis, and the Appellant performs fabrication and mounting services using their own additional materials. The Appellant sought a ruling on whether this activity constitutes a job work service taxable at 18% GST.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of body building activity | Taxable as job work services at 18% GST Subject to fulfillment of conditions under Section 141 and 143 of the CGST Act |
| Applicability of Circular No. 52/26/2018-GST | Applicable The circular is squarely applicable to the Appellant's case |
The Appellate Authority held that the activity of body building and mounting on chassis supplied by the principal constitutes a job work service. Consequently, the activity is taxable at the rate of 18% GST, consistent with the clarification provided in the relevant CBIC circular.
Reasoning
The Authority determined that the Appellant acts as a job worker because the chassis remains the property of the principal and is received on a delivery challan. Relying on Section 2(68) of the CGST Act, it concluded that the use of the Appellant's own materials for fabrication does not disqualify the activity from being classified as job work. The Authority further relied on Circular No. 52/26/2018-GST, which distinguishes between bus body building and other body building services, confirming that the 18% rate applies to the latter when performed on chassis provided by a principal.
Provisions relied on
- Section 2(68) of the CGST Act, 2017
- Section 2(72) of the CGST Act, 2017
- Section 141 of the CGST Act, 2017
- Section 143 of the CGST Act, 2017
- Circular No. 52/26/2018-GST dated 09.08.2018
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
For the practitioner
This ruling provides **favorable clarity** for body builders who receive chassis from principals, confirming that such activities qualify as **job work services taxable at 18%**. It settles the dispute regarding the impact of using the job worker's own materials on the classification of the service. Practitioners should note that this ruling is strictly contingent upon the **fulfillment of conditions** prescribed under Sections 141 and 143 of the CGST Act.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2024-02/up_aaar_19_2021-22_25.11.2021_aaapl.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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