In re Macro Media Digital Imaging Private Limited (GST AAAR Tamilnadu)
The Appellant made an Application to AAR vide Application NO. 47 dated 18.11.2019 seeking advance ruling on the
1. Whether the transaction of printing of content provided by the customer on PVC banners and supply of such printed trade advertisement is supply of goods?
2. What is the classification of such trade advertisement material if the transaction is a supply of goods?
3. What is the Classification and applicable rate of GST on the supply of such trade advertisement material if the transaction is that of a supply of Services?
The original authority has ruled as follows:
1. The printing of content provided by the recipient on the PVC materials of the appellant and supply of printed trade advertising material to the recipient is a composite supply, and ‘Supply of service of printing’ is the principal supply.
2. The classification of the service is SAC 998912 and the applicable tax rate is 9% CGST + 9% SGST as per Sl.No.27/27 (ii) of Notification No.11/2017 CT(Rate) dated 28.06.2017 & G.o. (Ms)No.72 dated 29.06.2017 for the period 01.07.2017 to 13.10.2017 and thereupon the applicable rate is 6% CGST & 6% SGST as per Sl.No. 27(i) of Notification No. 11/2017- CT(rate) dated 28.06.2017 as amended & G.O.(Ms) No.72 dated 29.06.2017 as amended.
ON Appeal AAAR Held as follows-
It is evident that the Purchase Order is issued for ‘Printing’ the ‘Copyrighted Digital Content of the client’ in the desired material. The material blanks’ owned by the appellant are transferred to the client as Trade Advertisement material’ after undertaking Printing of the Content of the client on the blanks. The appellant is vested with and undertakes the printing of the content, the copyright of which rests with the recipient and the copyright always rests only with the client and the appellant do not have any propriety rights to the content. The content is never owned by the appellant, while the property in ‘blanks’ held by the appellant, on printing of the received content is transferred to the client. Thus the appellant do not have the whole propriety right on the final product-trade advertisement material’ supplied by them to their clients. In such a situation, applying the ratio of the above decision of Hon’ble Supreme Court and the Jurisdictional High Court, we hold that in the case at hand, in the execution of the printing contract, the property held by the appellant in blanks stands transferred as ‘Trade Advertisement Material’ and therefore the activity is a contract for work or service only and not a contract of sale of goods.
Once it is held that the activity is a contract for work or service wherein there is also transfer of property in goods incidentally then it is a composite supply as per Section 8 of the GST Act. Ongoing through the Purchase Order, write-up giving the scope Of the appellant, it is evident that the client desires the print of the content in a particular media and the contract with the appellant is not for the materials they own. Trade Advertisement Material’ is produced by printing the digital content in the required quality of the client on the blanks of the appellant; Printing is the main activity of the appellant and requirement of the client in the supply. Thus, the activity of Printing of the content is the principal supply during which the property held by the appellant in the media of such print gets transferred to their client incidentally. For these reasons we do not agree the contention of the appellant that the supply of Trade advertisement material’ is the principal supply and therefore, even if the supply is considered as a composite supply, the ‘Principal supply’ is ‘supply of goods’, i.e., Trade advertisement material and do not find any reason to deviate from the findings of the Lower Authority in this context.
To sum up, the decisions relied upon relating to the printing industry are on the count of whether the activity amounts to manufacture as per Section of the Central Excise Act; marketability of tailor-made goods; classification of printed goods using PVC whether the final product is a product of Printing Industry or Plastic and others based on the material used. The exception is the facts of the case in the case of Venus Album and their own case in the jurisdiction of Hyderabad during the Service Tax regime and both these decisions have not attained finality as Department have filed appeal in both these cases. Therefore, the ratio of decisions relied upon do not help the case of the appellant.
For reasons discussed above, we do not find any reason to interfere with the Order of the Advance Ruling Authority in this matter. The subject appeal is disposed of accordingly.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, TAMILNADU
Preamble
1. In terms of Section 102 of the Central Goods & Services Tax Act 2017/Tamilnadu Goods & Services Tax Act 2017(“the Act”, in Short), this Order may be amended by the Appellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the applicant within a period of six months from the date of the Order. Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard.
2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only
(a) On the applicant who had sought it in respect of any matter referred to in subsection (2) of Section 97 for advance ruling;
(b) On the concerned officer or the jurisdictional officer in respect of the applicant.
3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed.
4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
The subject appeal is filed under Section 100(1) of the Tamilnadu Goods & Services Tax Act 2017/ Central Goods & Services Tax Act 2017 (hereinafter referred to ‘the Act’) by M/S. Macro Media Digital Imaging Private limited (hereinafter referred to as ‘Appellant). The appellant is registered under GST vide GSTIN 33AABCM9451FIZL. The appeal is filed against the Order No.24/AAR/2020 dated 04.05.2020 passed by the Tamilnadu State Authority for Advance ruling on the application for advance ruling filed by the appellant.
2.1 The Appellant is a private limited company having various regional offices located at Chennai, Noida, Vishakhapatnam, Vijayawada, Mumbai, Bangalore, Kochi, Kolkata. They are engaged in supply of Billboards, Building Wraps, Fleet Graphics, Window Graphics, Trade Show Graphics, Office Branding, In-store Branding, Banners, Free Standing Display Units and Signage Graphics. These products are hereinafter referred to as ‘trade advertisements’. The printing of trade advertisements is carried out by the Appellant on Poly Vinyl Chloride (‘PVC’) material. The various types of PVC material on which printing is carried out are Frontlit Flex, Back Lit Flex, Block out Flex, Vinyl (self-adhesive) and Foam Board, all falling under Chapter 39 of the Customs Tariff Act, 1975 (CTA). The customers desirous of getting images/ written text/ trade monograms printed from them place a purchase order on them. The said purchase order spells out the type and specifications of the material on which the trade advertisement (provided by the customer) is to be printed. The scope of work under any such purchase order placed by the customer is as under: –
a) To procure the suitable PVC material (blank) namely Frontlit Flex/ Back Lit Flex/ Blockout Flex/ Vinyl (self-adhesive)/ Foam Board and also the printing ink from an independent supplier (vendor) in terms of the purchase order placed by the customer.
b) The data of image/ text/ trade monograms to be printed on the PVC material is received by the Appellant from the customer, on pen drive/ CD/ cartridge. The image/ text/ trade monogram in the said CD/ Pen Drive/ cartridge is later loaded into the computer controlled digital image printer, which prints the images on the PVC material. In cases where desired size of the trade advertisement is more than the size of PVC material that can be accommodated in the image printer, the Appellant prints the images/ written text in patches and later joins the said patches to make the full trade advertisement.
c) Supply of such printed trade advertisement to the shipping address mentioned in the purchase order.
2.2 The Appellant made an Application to AAR vide Application NO. 47 dated 18.11.2019 seeking advance ruling on the
1. Whether the transaction of printing of content provided by the customer on PVC banners and supply of such printed trade advertisement is supply of goods?
2. What is the classification of such trade advertisement material if the transaction is a supply of goods?
3. What is the Classification and applicable rate of GST on the supply of such trade advertisement material if the transaction is that of a supply of Services?
3. The original authority has ruled as follows:
1. The printing of content provided by the recipient on the PVC materials of the appellant and supply of printed trade advertising material to the recipient is a composite supply, and ‘Supply of service of printing’ is the principal supply.
2. The classification of the service is SAC 998912 and the applicable tax rate is 9% CGST + 9% SGST as per Sl.No.27/27 (ii) of Notification No.11/2017 CT(Rate) dated 28.06.2017 & G.o. (Ms)No.72 dated 29.06.2017 for the period 01.07.2017 to 13.10.2017 and thereupon the applicable rate is 6% CGST & 6% SGST as per Sl.No. 27(i) of Notification No. 11/2017- CT(rate) dated 28.06.2017 as amended & G.O.(Ms) No.72 dated 29.06.2017 as amended.
4.1 Aggrieved by the above decision, the Appellant has filed the present appeal. In the grounds of appeal, they have inter-alia, stated that:
> The issues on which Advance Ruling was sought, have already been decided by the Hon’ble Authority for Advance Ruling in the State of Telangana & State of Andhra Pradesh in their favour, i.e as ‘goods’. In light of the above ruling of the Hon’ble AAR, Telangana and the Hon’ble AAR, Andhra Pradesh in their own case, the impugned ruling by the Hon’ble AAR, Tamil Nadu is erroneous and has been passed without taking into consideration actual facts/ transactions in place.
> In the Appellant’s own case the Learned Joint Commissioner, Central Tax, CGST & CX, Kolkata North Commissionerate, Kolkata vide Order-in-Original No.42-43/JC/CGST&CX/North/K01/2017-18 dated 23.02.2018 while adjudicating the Show Cause Notices dated 18.03.2016 and 24.10.2016 covering the period from April 2010 to July 2016 under the erstwhile regime, held that the Appellant was the manufacturer of the goods falling under the Heading 4911 since the products of the Appellant are the products of printing industry. The said order has not been challenged by the Revenue and has, thus, attained finality. Hence, the impugned ruling is liable to be set aside.
> The Learned Authority under paragraph 8.1 of the impugned ruling has noted that in the present case there is supply of goods and also service of printing and that these supplies are naturally bundled together, thereby constituting a composite supply. Further, it has been held that the principal supply is the service of printing in relation to goods falling under Heading 4911. As regards the classification and applicable rate of tax on the said supply, it has been specified that the supply of printing services is classifiable under SAC 998912 which is incorrect and the transaction of printing of content provided by the respective customers, on PVC banners and supply of such printed trade advertisement material constitutes supply of goods’ for the reasons furnished herein below:
