GST Rate for Bus and Truck Body Fabrication Services
Fabricating a vehicle body on a chassis owned by another party is a service taxable at 18% GST.
- Ruling
- Order Number 06/2019 dated 03/05/2019
- 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
- The company asked if body fabrication on a customer's chassis is a service.
- The authority ruled this is a job work service, not a goods supply.
- The activity is classified under SAC 9988 and taxed at 18%.
In short
The company asked the Authority for Advance Ruling (AAR) whether building a bus or truck body on a chassis provided by a client counts as a service or a sale of goods. Because the chassis remains the property of the client throughout the process, the authority decided this is a job work service.
What has changed
How it worked before
Businesses were often unsure if this process should be taxed as a supply of goods (the finished vehicle) or a supply of services (the fabrication work).
What has changed
The ruling confirms that this activity is a service taxable at 18%. This is lower than the 28% rate often applied to the sale of a complete motor vehicle, helping businesses correctly categorize their invoices.
Who this affects
Motor vehicle dealers and body builders who perform fabrication work on chassis supplied by their customers.
An example
A local body builder, 'FastBuild Fabricators', receives a truck chassis from a transport company to build a cargo body. FastBuild provides the labor and some raw materials while the transport company retains ownership of the chassis. Based on this ruling, FastBuild should treat this as a service under SAC 9988 and charge 18% GST instead of the higher rate for a complete vehicle.
What you should do
If you perform similar work, you may use this 18% rate as a reference. However, remember that an advance ruling only legally binds the company that asked for it and their specific tax office; it is not a law that automatically applies to your business.
If you do nothing
If you apply the 18% rate without confirming your specific facts match this ruling, a tax officer may disagree and demand the difference in tax plus interest and penalties. Relying on a ruling that does not apply to your specific contract can lead to costly disputes during an audit.
The terms explained
- Job work
- Any treatment or process undertaken by a person on goods belonging to another registered person.
- Composite supply
- A supply consisting of two or more taxable supplies that are naturally bundled and provided together in the ordinary course of business.
- SAC
- Services Accounting Code, a system used to classify services for GST purposes.
The ruling in detail
Authority for Advance Ruling
M/s. Sanghi Brothers (Indore) Private Limited
Order Number 06/2019 dated 03/05/2019 · Madhya Pradesh
Questions before the authority
- Whether mounting of Bus/ Truck /Ambulance Body by the job worker on the chassis supplied by the principle for which the job worker charged fabrication charges including cost of certain material that was consumed during the process of job work would amount composite supply in which supply of service being principal supply therefore on the basis of provision of Sec. 8(a) of the CGST Act the same should be classified as supply of service under HSN 9988
Facts
The applicant is engaged in the trading of motor vehicles and provides chassis to job workers for the fabrication and mounting of bus, truck, or ambulance bodies. The job worker procures necessary materials and performs the fabrication work on the chassis, which remains the property of the applicant throughout the process. The applicant sought a ruling on whether this activity constitutes a composite supply of services taxable under HSN 9988.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification and taxability of body building on chassis supplied by principal | Classified as supply of service under SAC 99881, taxable at 18% (9% CGST + 9% SGST) Applicable where the chassis is supplied by the principal and the job worker charges fabrication fees including materials consumed |
The Authority ruled that the activity of mounting a body on a chassis supplied by the principal constitutes a supply of services. It is classified under SAC 99881 as manufacturing services on physical inputs owned by others. The activity is taxable at 18% GST.
Reasoning
The Authority relied on the definition of job work under the CGST Act and the clarification provided in Circular No. 52/26/2018-GST. It determined that since the ownership of the chassis remains with the principal, the activity qualifies as a job work service rather than a supply of goods. Consequently, under Section 8(a) of the CGST Act, the service component is the principal supply. The ruling confirms that such fabrication work is **taxable as a service** at the rate of 18%.
Provisions relied on
- Section 97(2) of CGST/SGST Act, 2017
- Section 98 of CGST/SGST Act, 2017
- Section 2(68) of CGST Act
- Section 2(30) of CGST Act
- Section 8(a) of CGST Act
- Section 143 of CGST Act
- Circular No. 52/26/2018-GST
- Circular No. 34/8/2018-GST
For the practitioner
This ruling provides clarity for motor vehicle dealers and body builders that body fabrication on a principal-supplied chassis is a **service-based supply** taxable at 18%. It distinguishes this from the supply of a complete vehicle, which attracts 28%. Practitioners can use this to justify the 18% rate for job work arrangements, provided the ownership of the chassis does not transfer to the job worker.
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/mp-06-2019-sanghi_brothers_indore_pl.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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