GST on Bus Body Building: Goods Supply or Job Work Service?
Building bus bodies on customer-supplied chassis using your own materials is a supply of goods, not a job work service.
- Ruling
- ADVANCE RULING NO. HAR/HAAR/R/2018-19/8 dated 26.04.2018
- Dated
- 26 Apr 2018
- Authority
- 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
- Paras Motor asked if mounting bus bodies is job work or goods supply.
- The company built bus bodies using its own raw materials.
- The customer provided only the vehicle chassis frame.
- Haryana AAR ruled it is a composite supply of goods under HSN 8707.
- Mounting the body on the chassis is secondary to supplying the body.
In short
Paras Motor Industries builds bus bodies for state transport corporations and private buyers. Customers send bare chassis, while the company supplies all raw materials, constructs the bus body, and mounts it. The company asked the tax authority whether this activity counts as a job work service or a sale of goods under GST.
What has changed
How it worked before
Many body builders assumed that fitting a bus body onto a customer's chassis was automatically a job work service because the chassis belonged to the buyer.
What has changed
The Haryana Authority for Advance Ruling held in order HAR/HAAR/R/2017-18/8 that because the fabricator provides all the raw materials, the main element of the deal is selling the bus body. Mounting it onto the chassis is only an ancillary service. Therefore, the entire transaction is a composite supply of goods under HSN 8707, not a job work service.
Who this affects
Bus body fabricators, coach builders, and commercial vehicle body manufacturers who fit bodies on customer-provided chassis using their own materials.
An example
Zenith Coach Builders receives bare chassis from private travel operators. Zenith uses its own steel, seats, and glass to construct and fit sleeper bus bodies onto those chassis. Based on the logic of this ruling, Zenith is making a composite supply of goods under HSN 8707 rather than providing a job work service.
What you should do
Review your supply contracts and material usage. If you build vehicle bodies using your own raw materials, check whether your invoicing follows this guidance. Keep in mind that advance rulings bind only the applicant, so consult a tax practitioner before making changes.
If you do nothing
If you classify your activity as job work when it is actually a supply of goods, tax officers can reclassify your sales during a GST audit. This may trigger tax demand notices, interest charges, and penalties. It can also disrupt input tax credit claims for your customers.
The terms explained
- composite supply
- A single transaction made up of two or more goods or services supplied together, where one main item naturally forms the core of the contract.
- principal supply
- The main or predominant good or service in a combined package that determines the GST rules for the entire sale.
- job work
- A service where a business carries out processing or treatment on goods owned by another registered person.
- HSN code
- An international standard code used under GST to categorize products and determine their correct tax rate.
The ruling in detail
Authority for Advance Ruling
M/s Paras Motor Industries
ADVANCE RULING NO. HAR/HAAR/R/2018-19/8 dated 26.04.2018 · Haryana
Questions before the authority
- Whether the activity of fabrication & fitting and mounting of bus bodies on the chassis supplied by the other party is a job work (SAC 9988 or contract of sale of bus body HSN CODE 8707
- If it is held to be a job work, what rate of tax is required to be charged and paid.
Facts
The applicant fabricates, fits, and mounts bus bodies onto chassis supplied by customers, primarily state roadways corporations. While the customer provides the chassis, all raw materials and inputs required for the bus body construction are provided by the applicant from its own account. The applicant sought an advance ruling on whether this activity constitutes job work or a supply of goods.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of bus body fabrication and mounting on customer-supplied chassis | Composite supply with principal supply being goods (bus bodies under HSN 8707) Held not to be a job work or supply of service |
| Rate of tax applicable if classified as job work | Not applicable Rendered redundant as the transaction was ruled to be a supply of goods |
The Authority held that the activity of fabrication, fitting, and mounting of bus bodies on customer-supplied chassis is a **composite supply** where the supply of goods (bus bodies under HSN 8707) is the **principal supply**. Since the activity was determined to be a supply of goods rather than a service, the question regarding tax rates for job work was declared redundant.
Reasoning
The Authority relied on CBEC Circular No. 34/8/2018-GST dated 03.03.2018, which explains that bus body building involves both goods and services and must be classified based on its principal supply. Applying Section 2(30) and Section 2(90) of the CGST/HGST Act, 2017, the Authority observed that because the applicant uses its own raw materials and inputs to build the bus body, the supply of the body constitutes the predominant element. Mounting the body onto the customer's chassis is merely an ancillary service to the main supply of goods.
Provisions relied on
- Section 2(30) of the CGST/HGST Act, 2017
- Section 2(90) of the CGST/HGST Act, 2017
- CBEC Circular No. 34/8/2018-GST dated 03.03.2018
For the practitioner
This ruling establishes that bus body fabrication using the fabricator's own materials on a customer-provided chassis is a **composite supply of goods** under HSN 8707, not a job work service under SAC 9988. Practitioners can use this precedent to resist job work reclassification where substantial material content is provided by the manufacturer rather than the customer.
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/AAR/haryana-ar_08_2018-19_dt.26.04.18_pmi.pdf
Legibility of the scan, as read: high.
Prepared 17-10-2026.
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