2019 (11) TMI 156 - AAR - GST

Classification of goods - Access Card printed and supplied by the applicant i.e. Pattabi Enterprises based on the contents provided by their customers - whether classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet? Classification of goods - Access Card printed and supplied by the applicant i.e., Pattabi Enterprises based on the contents provided by their customers - whether classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet and attracts GST rate of 5% in case of IGST and 2.5% CGST and 2.5% SGST in case of Intra State supplies? - applicability of N/N. 1/2017-CT (Rate) SI.No. 201 1/2017-IT (Rate) Sl.No.201 dated. 28.06.2017 and SGST/UTGST Notifications. HELD THAT - In the instant case the applicant is engaged in printing the content supplied by the recipient using their own physical inputs including paper, ink etc. Since there is involvement of rights to stay in the temple precincts attached to the card and other involvement of privileges and can only be issued by the recipient of supply of Access Cards , the same is to be treated as Composite supply with the supply of services being the principal supply - Therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services. Section 8(1)(a) of the Central GST Act clearly mandates that in case of a composite supply comprising of two or more supplies, where one of these supplies is the principal supply, such composite supply shall be treated as a supply of such principal supply. The supply made by the applicant thus amount to a supply of service and not supply of goods, as envisaged by the applicant. The supply of the applicant is covered under the Serial No. 27 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 and is liable to tax at 9% under the CGST Act. Similarly the supply is liable to tax at 9% under the KGST Act. Interstate supply of such supplies would be liable to tax at 18% under the IGST Act.

Summary

Issues: Classification of goods and services under HSN code 4901 10 20 for 'Access Card' and applicable GST rates.

Analysis:
The applicant, a partnership firm in the printing industry, sought an advance ruling on the classification and tax rates for the 'Access Card' they manufacture. The 'Access Card' contains information for pilgrims and is supplied free of cost to temples. The applicant argued that the 'Access Card' falls under HSN code 4901 10 20 and should be taxed at 'CGST 2.5% + SGST 2.5%' or IGST 5%. During the personal hearing, the applicant's representative reiterated that the 'Access Card' is a printed material, not a service. The Authority considered the nature of the printing activity and relevant laws, including Circular no. 11/11/2017-GST, which addresses composite supplies of printed goods. The Circular distinguishes between supplies where the content is supplied by the recipient (considered a service) and where physical inputs belong to the printer (considered goods). In this case, as the applicant uses their own physical inputs to print the 'Access Card' content supplied by the recipient, the supply is deemed a service under heading 9989. Therefore, the 'Access Cards' are classified under SAC 9989 and taxed at 9% under CGST, KGST, and 18% under IGST, as per Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017.

In conclusion, the Authority ruled that the supply of 'Access Cards' and similar printed materials by the applicant, with content provided by the recipient, are classified under SAC 9989 and subject to taxation at 9% under CGST and KGST, and 18% under IGST.