In re Marketing Communication & Advertising Ltd. (GST AAR Karnatka)
The applicant have sought advance ruling in relation to supply by applicant to various distilleries and sought ruling on correct classification of Security Excise Adhesive Labels i.e., HSN Code applicable and The rate of tax applicable on supply of Security Excise Adhesive Labels.
We observe that the primary use of the Security Excise labels is for security. We also observe that akin to Note No.2 to entry 49 in Central Excise Tariff, a similar Note No. 12 is existing in Chapter 48 of GST Tariff which reads as below:
“Except for the goods of Heading 4814 or 4821, paper, paperboard, cellulose wadding and articles thereof, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49.”
We further observe that that the sixth edition of volume III of Explanatory Notes of World Customs Organisation in relation to Chapter Heading 4911 also includes at item No. 10, ”Self-adhesive printed stickers designed to be used, for example, for publicity, advertising or mere decoration, e.g., “comic stickers” and “window stickers”.
We therefore conclude that the judgment of the Hon’ble Supreme Court in the case of M/s. Holostick India Ltd wholly applies to the instant case and therefore the product in question is classified under the Heading 4911 and rate of tax is 12% as per Sr. No. 132 of schedule II of Notification No. 01/2017-CT (R) dated 28.06.2017.
FULL TEXT OF ORDER OF APPELLATE THE AUTHORITY OF ADVANCE RULING, KARNATAKA
ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 & UNDER 98(4) OF THE KGST ACT, 2017
1. M/s. Marketing Communication & Advertising Limited, 42, MCA Housed 4th Flor, Millers Road, Vasanth Nagar, Karnataka, Bangalore-560052, having GSTIN number 29AAACM7139D1ZI, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 & KGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs.5,000/-each under the CGST Act and the KGST Act.
2. The applicant, M/s Marketing Communication & Advertising Limited (MCAL) is a State Public Sector Enterprise owned by the Government of Karnataka is into the activity of printing of security excise labels for supply to various distilleries as per the directions of the Government of Karnataka. The Commissioner of State Excise, Government of Karnataka has issued Order for procurement of security excise labels. The rate for printing and supply of security excise labels is approved by the Department of Excise, Government of Karnataka every year.
3. The applicant (MCAL), for the purpose of printing and supply of labels as per the requirement of Department of Excise, Government of Karnataka, has entered into an agreement dated 13th September 2017 with M/s Manipal Technologies Ltd., for carrying out printing of labels in the premises of MCAL for further supply to various distilleries. In terms of this agreement, M/s Manipal Technologies Ltd. has installed the required machinery in the premises of MCAL for printing of security excise labels. The labels are printed by using 80 GSM Maplitho paper with 60 GSM Silicon Paper and 20 GSM of hot melt gum using web offset printing with Intaglio and Hologram security features. The activity of printing of labels is carried out by Manipal Technologies Ltd., under the strict control and supervision of MCAL & also the Department of Excise, Government of Karnataka and delivered to the designated place, get acknowledgement therefrom & submit the same to MCAL for getting payment. A copy of the Invoice No. KAA9118914 dated 25.11.2019, issued by M/s Manipal Technologies Limited towards printing and supply of labels, reveals that they have charged GST @ 12% (CGST 6% and SGST 6%) and classified the said activity under SAC Code 9989. Further the applicant have enclosed a copy of the Invoice No. 1820126 dated 27.12.2019, issued by them to M/s Khoday RCA Industries, Bangalore, which reveals that they have charged GST @ 18% (CGST 9% and SGST 9%), on classifying the activity under HSN Code 4821.
4. The applicant have sought advance ruling on the following queries, in relation to the supply by the applicant to various distilleries:
1) The correct classification of Security Excise Adhesive Labels i.e., HSN Code applicable
2) The rate of tax applicable on supply of Security Excise Adhesive Labels
PERSONAL HEARING: / PROCEEDINGS HELD ON 30.07.2020
5. Sri. Girish, Cost Accountant and duly authorised representative of the applicant appeared for personal hearing proceedings on 30.07.2020 before this authority and reiterated the submissions already made along with the application.
DISCUSSION & FINDINGS
6. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts.
6.1 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act.
6.2 The applicant gets the printing of security excise labels on job work basis by M/s. Manipal Technologies Limited and supplies the same to various distilleries as per the directions of Government of Karnataka. The applicant seeks classification and rate of tax on these security excise labels. The applicant at present is classifying the product under HSN Code 4821 attracting CGST @ 9% and SGST @ 9%. However, they are of the opinion that the product is rightly classifiable under HSN Code 4911 attracting CGST @ 6% and SGST @ 6%. They have relied upon Supreme Court judgment in the case of M/s. Holostick India Ltd [2015-TIOL-2236-CESTAT-MAD],
6.3 HSN Code 4821 & 4911 in GST Tariff- Goods, reads as below:
