In re The Bangalore Printing and Publishing Co.Ltd. (GST AAR Karnataka)
Whether the activity of printing of Question Paperbooks is to be covered under HSN 4901 under the description ‘Printed books, including Braille books’ in Serial Number 119 of Notification No.2/2017 Central Tax (Rate) or under the sub-clause (vi) of clause (b) in serial Number 66 with SAC 9992 of Notification No.12/2017.
1. The activity of printing of question papers by the applicant with the content supplied by educational institutions constitutes a supply of Services under Heading 9989 of the scheme of classification of services.
2. The supply of services as above to educational institutes, as defined from time to time, would be covered under Sl. No. 66 of Notification No.12/2017 – Central Tax (Rate) dated 28.06.2017 and corresponding Notification issued under KGST Act, 2017
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s The Bangalore Printing and Publishing Co. Limited (hereinafter called “applicant”) bearing GSTIN number 29AAACT7191G1Z1 has filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 read with Rule 104 of CGST Rules 2017 and Section 97 of the KGST Act, 2017 read with Rule 104 of KGST Rules 2017, in FORM GST ARA-01 by discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The applicant is a Private Limited Company registered under the Goods and Services Act, 2017 and is engaged in printing. The applicant has sought an advance ruling in respect of the following question:
“Whether the activity of printing of Question Paperbooks is to be covered under HSN 4901 under the description “Printed books, including Braille books” in Serial Number 119 of Notification No.2/2017 Central Tax (Rate) or under the sub-clause (vi) of clause (b) in serial Number 66 with SAC 9992 of Notification No.12/2017″.
3. The applicant has stated the following facts relating to the activity for which advance ruling is sought:
3.1 The applicant is engaged in the activity of printing of books, journals, question papers calendars etc.,
3.2 The applicant has received an order from a State Government Institutions for printing of Question paper book for State Level Higher Second Examinations. Each Question Booklet will contain 40 to 60 pages for the purpose of reading by the students.
3.3 The respective State Government Institutions would provide the applicant, the content, by soft copy/manuscripts or by email or otherwise, to be composed and printed. The applicant is required to maintain secrecy and print the content provided therein. Once printed the question booklets would be supplied by the applicant to the designated place of the State Government Institutions.
4. The applicant contends that it is not clear to them whether the activity of printing of Question Paper Books is to be covered under HSN 4901 under the Description Printed books, including Braille books in Serial Number 119 of Notification No.2/2017 Central Tax (Rate) or under the sub-clause (vi) of clause (b) in serial Number 66 with SAC 9992 of Notification No.12/2017.
PERSONAL HEARING: / PROCEEDINGS HELD ON 28.11.2018
5. Gautham Shenoy, Advocate and duly authorised representative of the applicant, appeared for personal hearing proceedings before this authority and reiterated the facts.
6. FINDINGS lis DISCUSSION:
6.1 We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri. Gautham Shenoy, Advocate, during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts.
6.2 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.
6.3 On examination of the nature of the printing activity carried out by the applicant, it is observed that only the content for printing is supplied by the customer whereas printing inputs including paper belong to the applicant.
6.4 In this regard CBIC has issued Circular no.11/11/2017- GST dated 20.10.2017, where in it is clarified as under:
“It is clarified that supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply.
In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing [of the content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services.
In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, predominant supply is that of goods and the supply of printing of the content [supplied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff”
6.5 The first issue raised by the applicant is whether the supply is classifiable under HSN 4901. In other words the applicant desires to know whether the supply amounts to supply of goods, which are classifiable under HSN 4901. In the instant case applicant is engaged in printing the content supplied by the recipient using their own physical inputs like paper, ink etc. Since there is involvement of rights in the question paper booklets printed and they cannot be supplied to anyone else and the confidentiality clauses of the contract are all involved, the same is to be treated as Composite supply with the supply of services being the principal supply. Therefore the supply made by the applicant shall qualify to be treated as a composite supply where the principal supply is the supply of service. Therefore their supply would not constitute a supply of goods. Such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services.
6. The second issue raised by the applicant is whether their supply is covered under the SAC 9992 which is related to Education Services and hence covered under the Entry No. 66 of the Notification No.12/2017 – Central Tax (Rate) dated 28.06.2017. The relevant entry reads as under:
