2018 (6) TMI 38 - AAR - GST

Classification of supply - Activity of Printing content supplied by the customers on photographic paper - whether it is supply of goods or service and whether the activity carried out by the Applicant is taxable under HSN 4911 or SAC 9989? - Held that - Supply of printed pictures and photographs and similar items, reproduced with the aid of computer or any other device, is classifiable under Heading 4911 of the First Schedule of the Custom Tariff Act, 1975 which is aligned to the GST Act for the purpose of classification. The photo prints supplied by them to their customers are not marketable commodities in the open market and as goods they have no value to persons other than the specific customer who provides the input content. Hence, it is clear that, the printed material have no value as independent goods - The Applicant, therefore, cannot be said to be supplying goods classifiable under heading 4911 of the Tariff Act. Ruling - The activity carried out by the Applicant printing of photographs from media is classifiable under SAC 9989 and taxable at 12% under Serial No. 27 (i) of N/N. 11/2017 Central Tax (Rate) dated 28/06/2017 (1135 FT dated 26/06/2017 of the State Tax), as stood amended vide N/N. 31/2017 Central Tax (Rate) dated 13/10/2017 (1795 FT dated 13/10/2017 of the State Tax).

Summary

Issues:
1. Nature and classification of the activity - supply of goods or service under HSN 4911 or SAC 9989.

Analysis:
1. The applicant sought an Advance Ruling to determine whether their activity of printing content supplied by customers on photographic paper is classified as the supply of goods or service under HSN 4911 or SAC 9989. The ruling was sought under section 97(2)(a) of the CGST/WBGST Act, 2017. The application was admitted as there were no objections raised by the concerned officer.

2. The process involves customers providing digital content, which is then printed on photographic paper using specific equipment like Fuji Frontier Digital Minilab or Durst Theta 76 HS Digital Printer. The content is transferred from electronic devices to printed material as per customer requirements.

3. The classification under Heading 4911 of the Custom Tariff Act pertains to printed matter like pictures, photographs, trade advertising material, and more. However, in this case, the content is customer-specific, not pre-printed, and the applicant has no ownership of the content. As the printed material has no value as independent goods and is specific to individual customers, it does not qualify as goods under Heading 4911.

4. Various judgments cited by the applicant were analyzed, with most found irrelevant to the case. The judgments related to activities of photo labs as works contracts, but printing does not fall under works contract as per the GST Act. The Rainbow Colour Lab case highlighted that the dominant intention of a photo lab is to provide a printing service, treating it as a service.

5. The ruling concluded that the applicant's activity of printing photographs from media is classified under SAC 9989, making it a service. Therefore, the activity is taxable at 12% under specific notifications of the Central Tax (Rate) as amended. The ruling remains valid unless declared void under the provisions of the GST Act.