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2018 (5) TMI 594 - AAR - GSTClassification of books - Work Books or Exercise Book - Sulekh Sarita - Whether the books Sulekh Sarita are Printed Books classifiable under HSN 4901 10 10 or are classifiable as Exercise Books under HSN 4820 of the GST Tariff? - Held that - the main feature which differentiates Work Books of heading 4901 from the Exercise Books of heading 4820 is that whereas the Work books of heading 4901 contain questions or exercise with space for writing the answers whereas, the Exercise Books of heading 4820 contain printed texts with space for copying manually. Hence, presence of printed text does not affect their classification under heading 48.20 as exercise books. Further, since, none of the books contain any pages with children s picture, drawing or colouring matter, classification of any of them under heading 49.03 is not possible. Hence, the goods are to be correctly classified under HSN 4820 Liability of registration under GST to discharge GST on reverse charge basis - Person supplying wholly exempted goods - The Sections 22, 23 and 24 have to be read together and from the combined reading of the same it is held that the applicant is required to take registration if it has GST liability under reverse charge mechanism. It is also observed that there is no threshold exemption for payment of GST under Reverse charge mechanism. Ruling - The products supplied by the applicant Sulekh Sarita Part-A , Sulekh Sarita Part-B and Sulekh Sarita Part 1-5 are correctly classified under HSN 4820 and not under HSN 4901 or 4903. Hence, they are not covered under entry no. 119 or 121 of Notification No. 2/2017 Central Tax (Rate) dated 28.06.2017 and parallel notifications of SGST and IGST - The applicant is liable for registration if it has GST liability under reverse charge mechanism irrespective of the situation that it has no liability to pay GST as supplier of goods and/ or services.
Issues Involved:
1. Classification of the books 'Sulekh Sarita' under GST Tariff. 2. Requirement of GST registration for persons dealing exclusively in tax-exempt goods but liable to pay tax under reverse charge mechanism. Issue-wise Detailed Analysis: Issue 1: Classification of the books 'Sulekh Sarita' under GST Tariff The applicant, a publishing house, sought clarification on whether the books 'Sulekh Sarita Part-A', 'Sulekh Sarita Part-B', and 'Sulekh Sarita Part 1-5' should be classified as 'Printed Books' under HSN 4901, 'Picture Books' under HSN 4903, or 'Exercise Books' under HSN 4820. Applicant's Argument: The applicant contended that 'Sulekh Sarita' books should be classified as 'Printed Books' under HSN 4901. They argued that these books are authored by experienced Hindi teachers and contain textual content aimed at teaching Hindi letters, matras, idioms, word formation, and vocabulary. The books also include paragraph writing exercises to enhance children's thinking and imagination. The applicant emphasized that 'exercise books' typically contain only lined paper for writing, whereas 'Sulekh Sarita' books contain substantial instructional content, making them 'Printed Books' rather than mere 'Exercise Books'. Jurisdictional Officer's Argument: The Jurisdictional Officer referenced CBEC Circular No. 1057/6/2017-CX, which clarified that 'Exercise Books' are classifiable under HSN 4820. According to the circular, 'Exercise Books' may contain printed examples of handwriting for copying but remain classified under HSN 4820 if the printing is incidental to their primary use of writing. The officer argued that 'Sulekh Sarita' books fit this description and should be classified under HSN 4820. Authority's Analysis: The Authority examined the HSN notes for headings 4820, 4901, and 4903. They noted that heading 4820 covers stationery items, including 'Exercise Books', which may contain printed examples for copying. Heading 4901 covers 'Printed Books' with textual matter, including educational workbooks with spaces for writing answers. Heading 4903 covers children's picture, drawing, or coloring books where pictures form the principal interest. The Authority observed that 'Sulekh Sarita' books primarily feature printed text for children to copy, with writing being the primary use and printing incidental. Therefore, they concluded that these books are correctly classified under HSN 4820 as 'Exercise Books' and not under HSN 4901 or 4903. Ruling on Issue 1: The products 'Sulekh Sarita Part-A', 'Sulekh Sarita Part-B', and 'Sulekh Sarita Part 1-5' are classified under HSN 4820 and not under HSN 4901 or 4903. Consequently, they are not covered under entry no. 119 or 121 of Notification No. 2/2017 – Central Tax (Rate) dated 28.06.2017. Issue 2: Requirement of GST registration for persons dealing exclusively in tax-exempt goods but liable to pay tax under reverse charge mechanism Applicant's Argument: The applicant argued that under Section 23(1) of the CGST Act, persons exclusively supplying goods or services that are wholly exempt from tax are not required to register under GST. They contended that since they exclusively deal in 'Printed Books', which are exempt, they should not be required to register, even if they have GST liability under reverse charge mechanism. Jurisdictional Officer's Argument: The Jurisdictional Officer pointed out that Section 24 of the CGST Act mandates compulsory registration for persons liable to pay tax under reverse charge mechanism, irrespective of their exemption status under Section 23. Authority's Analysis: The Authority analyzed Sections 22, 23, and 24 of the CGST Act. They noted that Section 24 overrides Section 22 but does not explicitly override Section 23. However, they concluded that for harmonious construction, all sections must be read together. They determined that Section 24 requires registration for persons liable to pay tax under reverse charge mechanism, even if they exclusively supply exempt goods. Ruling on Issue 2: The applicant is liable for registration if it has GST liability under reverse charge mechanism, irrespective of the fact that it exclusively supplies tax-exempt goods. Conclusion: The Authority ruled that 'Sulekh Sarita' books are classified under HSN 4820 as 'Exercise Books'. Additionally, the applicant must register under GST if liable to pay tax under reverse charge mechanism, regardless of their exclusive supply of tax-exempt goods.
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