In re Colo Color (Prop. Hiral Pinkal Rambhia) (GST AAR Maharashtra)
Question 1):- Whether the activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media will be classifiable under Service Code 998912 or 998386?
Answer :- The activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media will be classifiable under Service Code 998386 and liable to tax @18% ( 9 % each CGST and MGST).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING MAHARASHTRA
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s Colo Color (Prop. Hiral Pinkal Rambhia), seeking an advance ruling in respect of the following question.
1) Whether the activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media will be classifiable under Service Code 998912 or 998386?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression `GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
“Statement of relevant facts having a bearing on the questions) raised :
1.1. The Applicant is a multifaceted retail, wholesale and institutional Sales Company that offers a range of products, solutions, services and equipment related to digital printing.
1.2. The Applicant operates a retail chain of 19 digital labs and studios in the brand name of “Colo Photo Shop”, with 15 dealer outlets and one distribution hub in Mumbai.
1.3. The Applicant is associated to more than 25,000 photographers, who are in the profession of photography and having their studios, color labs or they are freelancer photographers. 1.4. The Photographers & retail customers shoot images through Digital Cameras & provide the photos to Applicant in Pen Drive, CD, Memory Card, or in any other storage media.
1.5. Applicant provides the photographers with printing services in its high equipped digital labs.
Applicants prints the photographs in various sizes as per the requirement of the photographers.
1.6. The Applicant also provides the printing services to retail customers who provide the content on the pen drive, CD, memory card or any other storage media.
1.7. Applicant provides following printing_solutions to the photographers & retail customers:
a. Wide Format Printing
b. Output on photographic paper in various sizes
c. Output on off-set paper size up to 13″x19″
1.8. Applicant submits that there are two competing entries for classification of the Activity of printing services carried out by the Applicant. The Applicant states that the first relevant ntry is under SAC Code 998912 as “Printing and reproduction services of recorded media, on a fee or contract basis”. Applicant states that the rate of CGST for services falling under SAC Code 9989 is prescribed under Entry 27 of Sch. to Notification No. 11/2017 C.T. (Rate) dtd 28.6.2017 as amended by Notification No. 20/2017 C.T. (Rate) dated 22.08.2017.
1.9. The Applicant submits that other relevant SAC for the classification of the above activity is under SAC 998386 as “Photographic and videographic processing services”.
1.10 Applicant States that the services falling under SAC 9983 are liable to CGST at 9% under Entry 21 of Schedule to Notification No. 11/2017-Central Taxes (Rate) — 28.06.2017 .
3a. Statement containing the applicant’s interpretation of law and or facts as the case may be, in respect of the aforesaid question(s) :
1. Applicant submits that by plain reading of the description of competing entries, the aforesaid activity of printing services provided by the Applicant falls under SAC 998912:
1.1. Applicant submits that in the present case, the Applicant is providing services of printing of content from a recorded media. Therefore, on a plain reading of the two competing entries it is clear that it is covered under 998912 being reproduction services of a recorded media.
1.2. In the above activity, the applicant is not engaged in providing any photographic or videographic processing services. The Applicant is merely printing or reproducing the content given by the photographers and retail customers on a recorded media. The processing is done by the professionals themselves. The Applicant merely prints it. Hence, the applicant cannot be said to be providing services as per SAC 998386.
2. The Applicant states on a technical grounds also mere printing of the photographs cannot be termed as photographic processing. Something more than mere printing is required to be called as photographic processing. The Applicant is not carrying out any processing in the present case. Thus, the said activity will be covered under SAC 998912 only.
3. The Applicant craves leave to add, alter or amend the grounds at the time of hearing . Additional submissions on 07.05.2019.
1,4. The Photographers shoot images through Digital Cameras, edit it at their end only & provide the photos to Applicant on Pen Drive, CD, Memory Card, or in any other storage media.
1.5 Applicant provides the photographers with printing services in its high equipped digital labs. Applicant has invested in the advanced digital lab machines such as Nortisu QSS 3202 Applicants prints the photographs in various sizes as per the requirement of the photographers in its digital lab machine
1.6 The Applicant also provides the printing services to retail customers who provide the content on the pen drive, CD, memory card or any other storage media.
1.7. Applicant provides following printing solutions to the photographers & retail customers:
a. Wide Format Printing
b. Output on photographic paper in various sizes
c. Output on off-set paper size up to 136×19″
d. Made to order Albums
e. Collage
f. Photo Book Album
g. Instant Passport & Visa Photos
Submission
3. The Applicant submits that by plain reading of the description of competing entries, the aforesaid activity of printing services of a recorded media provided by the Applicant falls under SAC 998912:
3.1. The Applicant submits that in the present case, the Applicant is providing the services of printing of content from a recorded media. The photographers provide the edited photos or albums to be printed in the advanced digital lab machines of the Applicant.
3.2. The Applicant states that it does not carry out any processing other than printing on such photographs provided on recorded media. In other words, the Applicant does not carry out any editing or other processes on the photographs provided by the clients.
3.3. Thus, looking,at the actual activity of the applicant, the applicant is merely printing the content provided on recorded media. Therefore, on a plain reading of the two competing entries it is clear that the above activity is covered under 998912 being printing services of a recorded media
3.4. Applicant does not provide any photographic or videographic processing services. Applicant is merely printing or reproducing the content given by the photographers from a recorded media to a paper. Hence, the applicant cannot he said to be providing services as per SAC 998386.
4. The facts of the present case are directly covered by the Advance Ruling in the case of Photo Products Company Ltd. in the State of West Bengal dated 30.05.2018.
4.1. The Applicant submits that the case of the applicant is directly covered by the West Bengal AAR in the case of Photo Products Ltd. dated 30.05.2018. In the said AAR on the identical facts, the Hon’ble WB AAR has held that printing of photographs from the content provided on a media by the customers is classifiable under 998912.
4.2. Applicant submits that the said AAR of Hon’ble WB Authority is directly applicable in the facts of the present case. Thus, the said should be followed. Alternatively, it may lead to dis-parity & discrimination. The same transaction in different States will be given a different meaning & liable to GST at different rates. This is not permissible in a law. Hence, applicant’s activity is classifiable under the SAC 998912 liable to GST at 12%.
5. Clarification issued by the CBIC vide Circular No. 81/03/2019-GST dated 01.01.2019 is not applicable in the present case.
5.1 The Applicant submits that, the CBIC vide its Circular dated 01.01.2019 has clarified on the activity of service of printing of pictures covered under SAC 998386. In the said Circular, after relying on the Explanatory Notes to the Scheme of Classification of Services, the CBIC has clarifies that colour printing_of imp_ges from film or digital media is covered under SAC 998386 liable to GST @ 18%
5.2. The Applicant submits that the said Clarification of CBIC is not applicable in the facts of the present case. The said clarification is given in respect of the services falling under SAC 998386, i.e. where a photo studio has provided the services of the photographic processing and colour printing of the images.
5,3. In the facts of present case the clarification given by CBIC shall be applicable at the hands of the photographer, When the photographer gives the printed album to its customer, the same will fall under 998386. However, the said classification will not apply when the photographer gets the album printed from the digital tab printer such as the Applicant on a contract basis.
5.4. In the present case, form the plain reading of the two competing entries, the services provided by the Applicant falls under SAC 998912. Thus, the above clarification is not applicable in the facts of the present case,
5.5. Assuming, without accepting the clarification of CBIC is applicable in the facts of the present case, then in such case the Applicant submits that the said Clarification is issued contrary to law and without considering the binding effect of the WB AAR. Thus, the said Clarification cannot be applied in the facts of the present case.
6. CBIC has erred in relying on the Explanatory Notes to the Scheme of Classification of Services for classifying the above activity in the clarification.
6.1. The Applicant submits that, Explanation (ii) to Notification No. 11/2017-CT(R) provides as follows:
Reference to “Chapter”, “Section” or “Heading”, wherever they occur, unless the context otherwise requires, shall mean respectively as “Chapter, “Section” and “Heading” in the annexed scheme of classification of services (Annexure).
6.2. Thus, for interpreting the Chapter, Section or Heading of various Services referred to in the Notfn No. 11/2017, one may refer to the annexed scheme of classification of services.
6.3. As per the Annexure – Scheme of Classification of Services, the following two entries are extracted below for ready reference:
