1.1 Brief of the Case

1.2 Background of the case

Tata Marcopolo Motors Ltd. is engaged in bus body building on chassis supplied by Tata Motors Ltd. (TML). The petitioner receives chassis from TML, fits custom-built bus bodies on them, and returns the completed vehicles to TML.

• They sought a ruling on whether their activity qualifies as:
• Job work under Section 2(68) and Section 143 of CGST Act, and
• Whether it would be treated as a supply of services.

1.3 Key Provisions discussed

• Section 2(68) of CGST Act Definition of Job Work
• Section 143 of CGST Act Procedure for job work without payment of tax
• Schedule II (para 3) of CGST Act Job work as supply of service
• Section 7(1) Definition of "Supply"

1.4 Petitioner’s Arguments

The petitioner argued that:

• The chassis is owned by Tata Motors Ltd. and merely brought to Tata Marcopolo for fitting of the bus body.
• They do not transfer title in the chassis or bus.
• They perform a process on goods owned by another person (i.e., TML), which qualifies as job work.
• Therefore, it is a supply of service, not goods.

1.5 Respondent’s Arguments

• The CGST department did not dispute the ownership of chassis by Tata Motors.
• Their concern was whether the composite outcome (a new bus) alters the nature of transaction into supply of goods rather than job work.

1.6 Court’s Findings and Analysis

The AAR examined:

• Whether the activity amounts to job work: Yes, since the process is done on goods (chassis) belonging to another registered person.
• The petitioner’s activity fits the definition of job work under Section 2(68).
• Ownership remains with Tata Motors, and Tata Marcopolo only provides fabrication/fitting services.
• Under Schedule II, job work is deemed as supply of services.
• Mere change of form (chassis to complete bus) does not change the nature of transaction from service to goods.

1.7 Court’s Decision

The AAR held:

The activity of fitting bus bodies on chassis provided by Tata Motors Ltd. qualifies as job work under Section 2(68) and shall be treated as supply of services under Schedule II of the CGST Act, 2017.

1.8 Significance of the Judgment

• Clarified that conversion or transformation of goods does not preclude job work status.
• Reinforced that ownership of goods is the key test to determine job work.
• Established that fabrication/customization services on customer-owned goods fall within the job work ambit and attract tax as service, not goods.
• Important for auto, manufacturing, and engineering industries operating on contract processing models.

1.9 Conclusion

The Tata Marcopolo ruling sets a clear precedent for distinguishing job work from supply of goods in complex manufacturing arrangements. It provides clarity for contract manufacturers and job workers regarding tax treatment and procedural compliance under Section 143.