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2022 (6) TMI 1254 - AAR - GSTClassification of supply - supply of goods or supply of services - naturally bundled composite supply or not - Manufacture and supply of printed leaflet product on the physical inputs owned by the printer while the matter of printing content being supplied by the recipient - HSN heading under 4901 of GST Tariff Act or SAC code 9989, is applicable - determination of tax liability payable on such printed leaflet product supplied - HELD THAT - Though the purchase Order/Bid furnished do not explicitly say that the scope of applicant is only 'Printing of the content' extended, it is seen from the Item description, that the work involves printing in a particular quality of paper/paper procured from certain Vendors; using particular colour of ink and Art Work and the supply of such leaflets is to be in certain form, i.e., folded and the leaflets are to be supplied in packages of certain number of the products. Thus, it is seen that the applicant undertakes printing of the leaflets using the materials of the specified standards and supplies the printed leaflets - In the case at hand, the recipient gives the content for printing and the applicant undertakes printing using the Paper and Ink purchased on his own account and the printed leaflet is supplied to the recipient. Thus applying the above definition, the supply is a composite supply consisting of printing service alongwith the supply of Paper in the form of printed leaflets. The printing process involves approval of the sample and accordingly printing the approved content/artwork. Thus the supply is a composite supply as per the definition at Section 2(30) of the Act stated above. The predominant element in this composite supply is the one for which the recipient is under taking the transaction with the supplier, i.e., printing of the leaflets. The supply of the material on printing is only ancillary to the main supply. The supply undertaken by the applicant involves printing and supply as leaflets in the required format; the content which instructs the users of the product in words, intangible inputs whose rights are with customer and shared with the applicant for printing in the required material/media. The nature of the physical inputs is transformed with the printing activities and without the printing, the final product cannot be used as a leaflets as required by the recipient. Thus the predominant activity is printing the contents of the customer in the required tangible inputs sourced by the applicant as per the requirement of the recipient and going by the clarification, the principal supply in the considered transaction is 'Supply of Service' - in the case at hand, the supply made by the applicant to the recipient is a composite supply with 'Supply of Printing Service' as the Principal Supply. The supply of printing services on paper are classifiable under SAC 998912. The principal supply being the 'Supply of Printing service', the composite supply at hand is classifiable under SAC 998912 and the applicable rate on such supply is that applicable for such supply. Applicable rate of GST on such supply - HELD THAT - SAC 9989 covers 'Other Manufacturing Services; Publishing, Printing and reproduction Services; materials recovery services'. The applicable GST rate is provided vide SI.No. 27 of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 Notification G.O.(Ms) No.72 dated 29.06.2017. The said entry has undergone many changes and effective from 1st day of October 2021, the applicable rate is CGST @ 9% as per SI.No.27 of Notification 11/2017-C.T.(Rate) Dated 28.07.2017 as amended by Notification No. 06/2021-C.T.(Rate) dated 30th September 2021 SGST @ 9% as per SI.No. 27 of Notification G.O. (Ms) No. 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017 as amended.
Issues Involved:
1. Classification of the manufacture and supply of printed leaflet products as supply of goods or services under GST. 2. Determination of the applicable HSN heading or SAC code for the printed leaflet products. 3. Determination of the tax liability payable on the printed leaflet products. Detailed Analysis: Issue 1: Classification as Supply of Goods or Services The applicant, engaged in printing content supplied by the recipient using their own paper and ink, sought clarification on whether this constitutes a supply of goods or services. The applicant argued that the supply should be classified as a composite supply with the principal supply being the printing service, citing CBIC Circular No. 11/11/2017-GST dated 20-10-2017, which clarifies that when the content is supplied by the recipient and the physical inputs are owned by the printer, the principal supply is the printing service. The ruling agreed with this interpretation, stating that the predominant element is the printing service, making it a composite supply with the principal supply being the supply of services under SAC 9989. Issue 2: Applicable HSN Heading or SAC Code The applicant contended that the supply should be classified under SAC 9989, specifically under SAC 998912 for "Printing and reproduction services of recorded media, on a fee or contract basis." The ruling confirmed this classification, noting that the supply of printing services on paper falls under SAC 998912. This classification was supported by the CBIC Circular No. 11/11/2017-GST, which differentiates between supply of goods and services based on the principal supply in composite supplies involving printing. Issue 3: Determination of Tax Liability The applicable rate of GST for SAC 9989 was examined. Effective from October 1, 2021, the applicable rate is CGST @ 9% as per SI.No.27 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 as amended by Notification No. 06/2021-C.T.(Rate) dated 30th September 2021, and SGST @ 9% as per SI.No. 27 of Notification G.O. (Ms) No. 72 dated 29.06.2017 as amended. The ruling confirmed that the applicable rate of tax for the supply of printed leaflets is 18% (9% CGST and 9% SGST). Ruling: 1. The manufacture and supply of printed leaflet products, where the content is provided by the recipient and the physical inputs are owned by the printer, is classified as a composite supply with the principal supply being the supply of services. 2. The applicable classification code for this supply is SAC 9989. 3. The applicable rate of tax effective from October 1, 2021, is CGST @ 9% and SGST @ 9%, totaling 18%. This judgment addresses the classification and taxability of printed leaflet products under GST, providing clarity on the applicable SAC code and the tax rate, ensuring compliance with the statutory provisions and CBIC clarifications.
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