2019 (2) TMI 65 - AAR - GST

Classification of supply - Supply of goods or supply of services - composite supply or principal supply? - supply of books by CHHATTISGARH TEXT BOOK CORPORATION as per instruction of School Education Department CG Loksikshan Sanchnalay) after printing the Syllabus decided by the SCERT - supply of books by CHHATTISCARH TEXT BOOK CORPORATION as per instruction of various agencies of school Education Department CC such as Rajiv Gandhi Siksha Mission/ SCERT/office of District education officer etc.- zero rate sales or not - Held that - It is clear from the information provided by CHHATTISGARH TEXT BOOK CORPORATION that as per standing order issued by the State Government it performs activities related to various academic classes - the State Government has constituted the CHHATTISGARH TEXT 300K CORPORATION for various task in a continuous manner according to which CHHATTISGARH TEXT BOOK CORPORATION supplies the books owned and printed by it to School Education Department and Rajiv Gandhi Shiksha Mission every year whose syllabus is being approved by the experts. In the instant case in hand, ownership of printed books is never transferred to the School Education Department and Rajiv Gandhi Shiksha Mission etc. i.e. here the ownership of printed books at all times, lies with the CHHATTISGARH TEXT BOOK CORPORATION and more-over the sale price is being computed with reference to sale of books in applicant s books of accounts. Supply of books, 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. It is to be noted that in case of composite supplies, taxability is determined by the principal supply - from the details put forth by the applicant before us, it is observed that had it been the case where the printer of books engaged by Chhattisgarh Text Book Corporation for getting the books printed where only the 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 belongs to the printer, supply of printing of the content supplied by the recipient of supply would definitely qualify being treated as the principal supply and such supplies would constitute supply of service, which is not the case here. This, in this case supply of goods is involved i.e. supply of specified printed educational books / which is the principal supply and accordingly, the said supply merits being treated as printed books attracting zero rate as specified under serial no. 119 ( Printed books, including Braille books ) of notification no. 2/2017-State Tax (Rate) No. F-10-43/2017CT/V/70/ Dated 28-06-2017.

Issues Involved:
1. Whether the books supplied by Chhattisgarh Text Book Corporation (CGTBC) as per the instructions of the School Education Department (Loksikshan Sanchnalay) after printing the syllabus decided by SCERT would be considered as supply of goods or services and fall under HSN Code 4901 zero-rated goods.
2. Whether the books supplied by CGTBC as per the instructions of the School Education Department after printing the syllabus decided by SCERT would be considered as supply of services and fall under Services Accounting Code 9989, taxable at 12%.
3. Whether the books supplied by CGTBC as per the instructions of various agencies of the School Education Department such as Rajiv Gandhi Siksha Mission/SCERT/office of District Education Officer would be considered as supply of goods and fall under zero-rated goods.
4. Whether the books supplied by CGTBC as per the instructions of various agencies of the School Education Department would be considered as supply of services and fall under Services Accounting Code 9989, taxable at 12%.

Issue-wise Detailed Analysis:

1. Supply of Books as Goods or Services (HSN Code 4901):
The applicant, Chhattisgarh Text Book Corporation (CGTBC), is a registered society under the Chhattisgarh Society Registration Act, 1973. It undertakes the work of publishing and distributing books as per the syllabus decided by SCERT, as instructed by the School Education Department. The core issue is whether this activity constitutes a supply of goods or services under GST.

CGTBC argues that their activities involve the supply of printed books, which should be classified under HSN Code 4901, attracting zero GST. They emphasize that they purchase paper, get the content printed by job workers, and distribute these books as per the instructions of the School Education Department. The ownership of the books remains with CGTBC, and they bear the cost of any unsold or damaged books.

The ruling confirms that the supply of books by CGTBC constitutes a supply of goods. The books are classified under HSN Code 4901, which includes printed books and attracts zero GST as per Notification No. 2/2017-State Tax (Rate) dated 28-06-2017.

2. Supply of Books as Services (SAC 9989):
CGTBC sought clarification on whether their activities could be considered as supply of services, falling under Services Accounting Code 9989, and thus be taxable at 12%. They provided an example comparing their operations to a publishing company that gets books printed and sells them without charging GST to the end consumer.

The ruling clarifies that the principal supply in this case is the supply of printed books, not services. The process involves the supply of goods (books), and the ancillary activities like printing and distribution are part of this composite supply. Therefore, the supply does not fall under SAC 9989 but under HSN Code 4901, attracting zero GST.

3. Supply of Books by Various Agencies (Zero-rated Goods):
The issue extends to whether books supplied by CGTBC to various agencies of the School Education Department, such as Rajiv Gandhi Siksha Mission, would also be considered as supply of goods and fall under zero-rated goods.

The ruling reiterates that the supply of books by CGTBC, irrespective of the specific agency within the School Education Department, constitutes a supply of goods. These books fall under HSN Code 4901 and are zero-rated as per the relevant GST notification.

4. Supply of Books by Various Agencies (Taxable Services):
Similarly, CGTBC sought clarification on whether their supply of books to various agencies could be considered as supply of services, falling under SAC 9989 and taxable at 12%.

The ruling confirms that the supply of books to various agencies within the School Education Department is a supply of goods. The principal supply remains the printed books, classified under HSN Code 4901, and is zero-rated under GST.

Conclusion:
The ruling concludes that the supply of specified printed educational books by CGTBC, as per the instructions of the School Education Department or other agencies like Rajiv Gandhi Siksha Mission and SCERT, constitutes a supply of goods. These books fall under HSN Code 4901 and attract zero GST as per Notification No. 2/2017-State Tax (Rate) dated 28-06-2017. The supply does not constitute a supply of services under SAC 9989, and thus, is not taxable at 12%.

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