GST Classification for Bus Body Building: Goods or Services?
The Karnataka Authority for Advance Ruling clarified that bus body building is a service if done on a customer's chassis, but goods if pre-fabricated.
- Ruling
- Advance Ruling No. KAR ADRG 12 / 2019 dated 25-06-2019
- 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
- Building a body on a customer's chassis is a job work service.
- Mounting a pre-fabricated body onto a chassis is a supply of goods.
- The classification depends on whether the chassis is provided by the customer.
In short
The company asked the Karnataka Authority for Advance Ruling (AAR) whether building and mounting bus bodies on customer-provided chassis counts as a supply of goods or a supply of services under the Goods and Services Tax (GST).
What has changed
How it worked before
Businesses were often unsure if body building should be taxed as a service or as the sale of a finished product, leading to inconsistent tax treatment.
What has changed
The authority ruled that if you build the body directly on the customer's chassis, it is a service. If you build the body separately and then mount it, it is a supply of goods. This means your GST rate and filing category depend on your specific manufacturing process.
Who this affects
Bus body builders and manufacturers who work on chassis provided by their clients.
An example
A local workshop builds a bus body from scratch on a chassis sent by a transport company. Under this ruling, they are providing a job work service. If they instead bought a pre-made body and bolted it onto the chassis, they would be supplying goods.
What you should do
Review your manufacturing process to see if you are building on the chassis or mounting a pre-made body. Note that this ruling only binds the company that asked; your local tax officer may have a different view based on your specific contract.
If you do nothing
If you classify your work incorrectly, you may pay the wrong GST rate. This can lead to tax demands, interest, and penalties if an officer disagrees with your classification during an audit.
The terms explained
- Job work service
- A process where you perform work on goods owned by another person, such as building a bus body on a customer's chassis.
- Composite supply
- A package of goods or services that are naturally bundled together and sold as a single transaction.
- Chassis
- The base frame of a vehicle, including the engine and wheels, upon which the body is built.
The ruling in detail
Authority for Advance Ruling
M/s TATA MARCOPOLO MOTORS LTD.
Advance Ruling No. KAR ADRG 12 / 2019 dated 25-06-2019 · Karnataka
Questions before the authority
- 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?
Facts
The applicant is engaged in building and mounting bus bodies on chassis provided by customers on a free-of-cost basis. They use their own inputs, manpower, and facilities to perform the fabrication. The applicant sought clarification on whether this activity constitutes a supply of goods or a supply of services for GST classification purposes.
Ruling
| Question | What the authority ruled |
|---|---|
| Ready-built body mounting | Supply of goods under HSN 8707, attracting 28% GST Applies when the body is built without the physical presence of the chassis |
| Step-by-step body building on chassis | Supply of service under SAC 9988, attracting 18% GST Applies when the body is built on the chassis provided by the owner |
The authority distinguished between two scenarios based on the process involved. It held that ready-built body mounting is a supply of goods, while step-by-step body building on a customer-provided chassis is a supply of services.
Reasoning
The authority relied on Circular No. 52/26/2018-GST to differentiate the tax treatment. It determined that if the body is built on a chassis provided by the principal, it qualifies as a **job work service** under SAC 9988. Conversely, if the body is fabricated independently and then mounted, it constitutes a **composite supply** of goods under HSN 8707. The decision turned on whether the applicant required the customer's goods to perform the manufacturing process.
Provisions relied on
- Section 2(68) of the CGST Act 2017
- Section 2(30) of the CGST Act 2017
- Section 97(2)(a) of the CGST Act 2017
- Schedule II of the CGST Act 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Circular No. 52/26/2018-GST dated 09-08-2018
For the practitioner
This ruling provides a clear **bifurcation of tax liability** for bus body builders based on their operational workflow. It confirms that the timing and method of body fabrication relative to chassis availability determine the GST classification. Practitioners should note that this order does not provide a blanket classification for all body-building activities, as it depends on the specific contractual and physical execution of the work.
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/krntk_aar-12-2019-tata_marcopolo_motors_limited.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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