2021 (12) TMI 471 - AAR - GST

Classification of services - supply of space for advertisement in print media or not - rate of GST at 5% GST on the invoices raised to the customers - N/N. 11/2017 - HELD THAT - Selling of space for advertisement in print media (SAC 998362) is taxable at the rate of 2.5% under CGST SGST respectively. As against this the service for Sale of other advertising space or time is enumerated as 998366 in the SAC given in the annexure to the notification. This is not specifically mentioned in the serial no. 21 of the above notification. Clearly this service will fall under item (ii) of serial no. 21 i.e., other professional, technical business services taxable at the rate of 9% under CGST SGST respectively. The Notification makes a clear distinction between sale of mere advertisement space and Other advertisement space , which is having a separate SAC code i.e., 998366. The applicant is supplying (2) different services and each is attracting different tariffs under this notification. Therefore the question of deducing a composite supply from the combination of drafting a design and incorporating a space does not arise. Hence where only space for advertisement and print media is supplied (SAC 998362) the rate of tax applicable is 2.5% under CGST SGST respectively and where they are supplying ornate space it shall be treated as other advertisement space falling under item (ii) of serial no. 21 and accordingly will attract tax @9% under CGST SGST respectively.

Summary

Issues:
1. Determination of whether the services supplied by the applicant constitute the supply of space for advertisement in print media.
2. Clarification on the applicable GST rate for the services provided by the applicant.
3. Analysis of the distinction between different types of advertisement services under the relevant notification.

Analysis:
The applicant, a company engaged in the purchase and supply of advertisement space along with artwork, sought an advance ruling to ascertain the tax implications of their services. The key questions raised were whether the services provided could be classified as the supply of advertisement space and the appropriate GST rate applicable to their invoices.

Upon review, the Authority for Advance Ruling (AAR) examined the classification of services related to advertisement space under Notification No. 11/2017. The AAR noted that the notification categorized services under Heading 9983, with a specific mention of selling space for advertisement in print media taxed at 2.5%. However, the service of 'Sale of other advertising space or time' fell under a different category, attracting a higher tax rate of 9%.

The AAR emphasized the distinction between selling mere advertisement space and 'Other advertisement space,' which had a separate SAC code. The ruling clarified that the applicant's services fell under 'Other advertisement space' (SAC code 998366), subject to an 18% GST rate, rather than the lower rate applicable to selling space in print media.

Consequently, the AAR issued a ruling stating that the services provided by the applicant were classified as 'Other advertisement space' under SAC code 998366, attracting an 18% GST rate, contrary to the applicant's assumption of a 5% tax rate. The ruling highlighted the importance of correctly identifying the nature of services provided to determine the applicable tax rate accurately.

In conclusion, the advance ruling provided clarity on the classification and tax treatment of the applicant's services, emphasizing the need for businesses to align their tax calculations with the specific categories outlined in relevant notifications to avoid misinterpretation and ensure compliance with GST regulations.