In re Harmilap Media (P) Ltd. (GST AAR Uttarakhand)
(a) applicability of GST rate on selling of space/ time for advertisement in print media in case of advertising companies;
Selling of space for advertisement in print media by advertising company/ agency shall attract GST @ 5% [2.5% CGST + 2.5% SGST] in case of advertising companies/ agencies in all cases. However Volume incentives/ value incentives are part of commission and cannot be treated as sale of space in print media and therefore incentive will be charged @ 18%.
(b) applicability of GST rate if advertising company/ agency sells unit of Space in print media to client and designing/ composing is being done by advertising company/agency without charging separately in the bill for designing, etc., to client;
Composite supply comprises of selling of space in print media and designing/composing of the advertisement, shall attract GST @ 5% [2.5% CGST + 2.5% SGST] inasmuch as “selling of space in print media” is a principal supply which attract GST @ 5% [2.5% CGST + 2.5% SGST] as on date. Advertisement company/agency sells unit of space in print media to client and designing/composing is being done by advertising company /agency without charging separately in the bill for designing, etc., to client. Such case is a case of composite supply and in such case “selling of space in print media” is a principal supply. Hence it will attract GST @ 5% [2.5% CGST + 2.5% SGST] as on date.
(c) selling of space/ time for advertisement in print media by advertising companies is a pure service or otherwise. If yes, whether said pure service is exempted from payment of GST vide Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 when advertising agency is raising bill to Local Authority or otherwise; and
Supply of service viz. “Sale of Space for Advertisement in Print Media” is not a “Pure Service” and the exemption to said services are not admissible in terms of Notification No. 12/2017-CentraI Tax (Rate), dated 28-6-2017 (as amended from time to time).
(d) if exemption is available to local authority then said exemption is also available to advertising companies or not.
The exemption from GST is also not available to the applicant in terms of Notification No. 12/2017-CentraI Tax (Rate), dated 28-6-2017 (as amended from time to time).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,UTTARAKHAND
Note:- Under Section 100(1) of the Uttarakhand Goods and Services Tax Act, 2017, an appeal against this ruling lies before the appellate authority for advance ruling constituted under section 99 of the Uttarakhand Goods and Services Tax Act, 2017, within a period of 30 days from the date of service of this order.
This is an application under sub-section (1) of Section 97 of the CGST/SGST Act, 2017 (hereinafter referred to as Act) and the rules made thereunder filed by M/s. Harmilap Media (P) Ltd., 2nd Floor C-34, Meedo Plaza, Rajpur Road, Dehradun seeking an advance ruling on following issues :-
(a) applicability of GST rate on selling of space/ time for advertisement in print media in case of advertising companies;
(b) applicability of GST rate if advertising company/ agency sells unit of Space in print media to client and designing/ composing is being done by advertising company/agency without charging separately in the bill for designing, etc., to client;
(c) selling of space/ time for advertisement in print media by advertising companies is a pure service or otherwise. If yes, whether said pure service is exempted from payment of GST vide Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 when advertising agency is raising bill to Local Authority or otherwise; and
(d) if exemption is available to local authority then said exemption is also available to advertising companies or not.
2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section (1) of Section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
3. As per the said sub-section (2) of Section 97 of the CGST/SGST Act, 2017 advance ruling can be sought by an applicant in respect of :-
(a) Classification of any goods or services or both,
(b) Applicability of a notification issued under the provisions of this Act,
(c) Determination of time and value of supply of goods or services or both,
(d) Admissibility of input tax credit of tax paid or deemed to have been paid,
(e) Determination of the liability to pay tax on any goods or services or both,
(f) Whether the applicant is required to be registered?
(g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term.
4. In the present case applicant has sought advance ruling on applicability of GST rate and classification of supply of goods/services in case of sale of space in print media. Therefore, in terms of said section 97(2)(b) & (e) of CGST/SGST Act, 2017, the present application is hereby admitted.
5. Accordingly opportunity of personal hearing was granted to the applicant on 2-5-2019. Shri Ankit Gupta (CA) and Daman Preet (CA), on behalf of the applicant appeared for personal hearing on the said date and submitted documents describing therein exact nature of work being undertaken. Ms. Preeti Manral, Deputy Commissioner, SGST-Dehradun, concerned officer appointed by the State Authority, also present during the hearing proceedings.
6. From the documents submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing No. 05AAECK8145P1Z1. They are an Advertising Company/Agency engaged in selling unit of space in various print media to diversified clients on DAVP approved rate/DIPR approved rates or rates as per open market. Before proceeding in the present case, we would first go submissions filed by the applicant and the same is summarized as under :-
(i) Selling of space for advertisement in print media is leviable to GST @ 5%. If the advertisement agency works on principal to principal basis, that is; buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST @ 5% on the full amount charged by advertisement agency from the client. They are currently charging GST @ 5% to its clients as per the above provisions.
(ii) Supply of services without involving any supply of goods would be treated as supply of ‘pure services’. For example, supply of manpower for cleanliness of roads, public places, architect services, consulting engineer services, advisory services, and like services provided by business entities not involving any supply of goods would be treated as supply of pure services. On the other hand, let us take the example of a Governmental authority awarding the work of maintenance of street lights in a Municipal area to an agency which involves apart from maintenance, replacement of defunct lights and other spares. In this case, the scope of the service involves maintenance work and supply of goods, which falls under the works contract services. The exemption is provided to services involves only supply of services and not for works contract services. In the case of ‘”Sale of space for advertisement in print media” it includes sale of space on print media which forms material component of this supply. Material in the form of Newspaper is supplied for the unit space booked by the client. Based on the definition of Pure Service and considering the above fact “Sale of space for advertisement in print media/’ cannot be considered as Pure Service.
(iii) Further Notification No. 12/2017 has exempted “Pure Services” (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.
(iv) In this case, agency make some bills for Sale of Space for Advertisement in Print Media to some Local Authorities like Municipal Corporations in relation to some activities which are exempt under Notification No. 12/2017 as mentioned in paragraph above.
(v) Referring to the above notification, a case study of South Delhi Municipal Corporation (hereinafter referred to as SDMC) has been discussed. SDMC has denied paying GST as it considers Sale of Space for Advertisement in Print Media as a pure service falling under the ambit of above notification. In support of the same they have received a copy of letter from SDMC bearing No. 354/90/2018-TRU, dated 3-5-2018 issued by Department of Revenue, Ministry of Finance, Government of India on the above-mentioned subject. Ministry of Finance has clarified that as per Serial No. 3 of Notification No. 12/2017-Central Tax (Rate), SDMC is not liable to pay the GST on Health Education Campaigns through DAVP approved agencies.
(vi) They further stated that since the material component (newspaper) forms a major part of the value of supply, hence the said notification is not applicable to sale of space for Advertisement in Print Media.
(vii) Therefore they seek Advance Ruling as regard to the applicability of GST on the aforementioned proposed billing whether they fall under the ambit of exemption under Notification No. 12/2017 or otherwise.
7. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which was filed for our consideration in the application. Now we proceed by taking the issue one by one :-
(A) Applicability of GST rate on selling of space/ time for advertisement in print media in case of advertising companies.
(A.1) In this context we find that selling of space/time for advertisement in print media is mentioned at Entry No. 21 under Heading 9983 of Notification No. 11/2017-Central Tax (Rate), dated 28-6 2017 which attract GST @ 5% [2.5% CGST + 2.5% SGST].
(B) Applicability of GST rate if advertising company/agency sells unit of space in print media to client and designing/composing is being done by advertising company/ agency without charging separately in the bill for designing, etc., to client.
(B.1) In this context, we find that there are two slabs of GST rate prescribed, in respect of supply in question, at Entry No. 21 under Heading 9983 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 as under :
