As we all know, the economic impact of Covid 19 virus pandemic has been largely disruptive. The work process of various sectors has been heavily hampered due to this outbreak. In this Article we are discussing the impact of Covid 19 on Print Media Industry. Because of this pandemic and subsequent lockdown, it was really very difficult for the Media Companies to print and distribute hard copies of Magazines, News Journals, etc. As a goodwill gesture and to continue good relationship with the subscribers many Media Companies started providing e-magazines, journals [soft copies] in lieu of printed version to their customers.
As per the provisions of GST Laws, supply of Printed version of Magazines, Periodicals, News Journals, etc. are exempt and not chargeable to GST, however, supply of soft copies of these Magazines and Journals are taxable. Similarly, publishing of advertisement in Hard copies and Soft copies of these Magazines and Journals is taxable at different GST rates. Now in order to understand the GST implication on Print Media Industry due to Covid 19 Pandemic, we will consider different scenarios as under:
XYZ Print Media Company LTD [hereinafter referred to as XYZ] has received a subscription order for supply of periodical News Journal/Magazine for the period Jan’2020 to Dec’2020. Due to lockdown in the Country, theses News Journals/Magazines could not be supplied to the subscribers for the months of April’2020 and May’2020.
XYZ has already received the advance money from the subscribers for the yearly subscription of the Printed version of News Journals/Magazines. However due to the unforeseen reason caused by the corona virus pandemic, XYZ could not print and supply the News Journals/Magazines for 2 months i.e. April’2020 & May’2020. In order to fulfil the contract obligations of these two months period, the subscribers were provided with PDF version of such Magazines instead of printed version.
CASE 1 – Only PDF version of Magazines were provided to subscribers for these two months;
CASE 2 – XYZ will extend the period of subscription by two months where hard copies of Magazines will also be provided for Jan’2021 and Feb’2021 and no charges will be received from the subscribers for this extended period of two months. Also, in addition to this subscribers will be provided with the PDF version of Magazines for these two months i.e. April’2020 & May’2020 free of cost.
GST Liability under CASE 1:
As per Notification No.2/2017-Central Tax (Rate) dated 28/06/2017 supply of Printed News Journal/Magazines falling under the “tariff item 4902” * is exempt and is not chargeable to GST, however this exemption notification is not applicable to “PDF version i.e. E-Magazines”. Meaning thereby, printed version of News Journals/Magazines is exempt from tax and PDF version is chargeable to tax. Hence GST will be levied for the months of April’2020 & May’2020 when digital version of News Journal/Magazines is supplied instead of printed version.
The digital i.e. PDF version of such Magazine is covered under Heading 9984 – Telecommunications, broadcasting and information supply services and is chargeable to GST @18% vide Notification No. 11/2017-Central Tax (Rate) dated 28/06/2017.
This also conveys that XYZ co. will now be at a loss to the extent of extra GST liability as subscribers initially subscribed for print version which was not chargeable to GST at the time of subscription, however now subscriber is been provided with PDF version for the lockdown period (i.e. April’2020 & May’2020) & same is chargeable to GST.
*Tariff item 4902 includes Newspapers, journals and periodicals, whether or not illustrated or containing advertising material.
GST Liability under CASE 2:
In the instant case, the subscribers had agreed to pay the consideration for receiving supply of goods (i.e. Printed Magazines). In view of the difficulties of delivering the same to the subscribers for the months of April’2020 & May’2020, XYZ decided to extend the subscription for two months period i.e. Jan’2021 & Feb’2021. The ad idem understanding between the parties remains that of sale and purchase of hard copies of the Magazines only. So further extension of the contract is merely a renegotiation of terms of original supply between subscribers & XYZ.
Hence, there will be no additional GST liability in case of supply of such Printed Magazines to the subscriber.
Also, as per as per section 7(1)(c), “supply” includes the activities specified in Schedule I, made or agreed to be made without a consideration. One of the activities in Schedule I of CGST Act 2017, includes – Supply of goods or services or both between related persons, or between distinct persons as specified in section 25, when made in the course or furtherance of business. Though in the above case, the supply of free PDF version to the subscribers during the lockdown phase was made in the course or furtherance of business & without any consideration, but it was made neither to any related party nor to a distinct person.
Therefore, there will be no GST liability in this case also but input tax credit with respect to such supplies would not be available to XYZ.
Now we should also understand that what will be the GST liability in the above scenarios in case of sale of space for advertisement in print media/digital media by XYZ to the advertisers.
CASE 1: When contract with the subscribers has not been extended.
As per Notification No. 11/2017-Central Tax (Rate) dated 28/06/2017, selling of space for advertisement in Print media attracts GST rate @5%. So, this benefit of reduced rate shall not be available for the months of April’2020 & May’2020 as in that period advertisements were displayed in the digital or PDF version instead of Printed version.
Therefore, in this case GST shall be applicable @18%.
CASE 2: When contract with the subscribers has been extended.
In case of supply of free of cost PDF version, advertisements would have also been displayed in it which consequently give rise to GST liability in the hands of XYZ as in case of sale of space of advertisement for digital media & hence GST shall be levied @18% for April’2020 & May’2020, although there was no GST liability in case of supply of such free of cost PDF version as discussed above.