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TMI Blog2019 (8) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... r, alteration etc. of any immovable property. Under the GST Act, therefore, the Applicant s supply is no longer works contract, or, for that matter, any other composite contract to which Art 366(29A) of the Constitution applies. Composite contracts that are not covered by Art 366(29A) cannot be split up for taxation into a service contract and a contract for the supply of goods unless the transaction represents two distinct and separate contracts that are discernible as such. The test, therefore, for all such contracts is whether the parties have in mind or intend separate rights arising out of the supply of goods. It is to be ascertained from the substance of the contract. The Applicant loads the content in a digital image printer, prints the image on the PVC material, and supplies the printed material. The goods so supplied have no utility other than displaying the printed content. Service of printing, therefore, is the predominant element of the composite supplies the Applicant is making - Services by way of printing of the goods falling under Chapter 48 and 49 are classifiable under SAC 9989 and taxable under Sl No. 27(i) of Notification No. 11/2017 - CT (Rate) dated 28/06/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Application are not pending nor decided in any proceedings under any provisions of the GST Act. The officer concerned from the revenue has not objected to the admission of the application. The Application is, therefore, admitted. 2. Submissions of the Applicant 2.1 The Applicant prints billboards, building wraps, fleet graphics, window graphics, trade show graphics, office branding, in-store branding, banners, signage graphics etc. The recipient provides on a digital media the content in the form of image/text/trade monogram. The Applicant loads the content in a digital image printer, prints the image on the PVC material, and supplies the printed material. 2.2 The Applicant submits that treatment of the above transaction varied from state to state under the pre-GST regime. In some states, including West Bengal, it was treated as works contract, while some other states considered it a sale as defined under the Sale of Goods Act, 1930. The Applicant did not charge any service tax even where the transaction was treated as works contract. According to the Applicant, the traded advertisements were manufactured goods classifiable under heading 4911 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt places an order for the composite supply of the trade advertisement material. It establishes that the recipient intends to receive the goods in the form of trade advertisement. Supply of goods, therefore, constitutes the predominant element of the composite supply. 2.6 The Applicant further argues that the element of printing is ancillary to the supply of goods in the form of trade advertisement. The Applicant merely loads the content in the digital image printer, which does not involve any special skill or artwork. 2.7 The Applicant, therefore, concludes that the principal supply is goods in the form of trade advertisements [in its support the Applicant refers to Harrier LLC (2011) UKFTT 725 (TC) and the advance ruling by AAR, Telengana in K.L. Hi-Tech Secure Print Ltd (2018) 10 TMI 445 ]. 2.8 The Applicant further argues that the printed trade advertisements are excluded from Chapter 39 of the Customs Tariff Act, 1975 (hereinafter the Tariff Act) by virtue of Section Note 2 to Section VII [Explanatory Notes (iii) and (iv) to Notification No. 1/2017 - CT (Rate) dated 28/06/2017 align the GST Act with the Tariff Act for classification)]. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ascertained from the substance of the contract. In Bharat Sanchar Nigam Ltd [(2006) 3 SCC 1] = 2006 (3) TMI 1 - SUPREME COURT the apex court has called it the dominant nature test. 3.3 In the GST Act, such indivisible composite contracts are termed composite supply. The predominant element of it constitutes the principal supply, and the entire contract is treated as that of the principal supply. The Applicant admits that printed advertising material is a composite supply. It includes the supply of goods in the form of printed PVC material and of the service of printing the content provided by the recipient. The substance of the contract, the Applicant argues, is the supply of the printed PVC material. The service of printing is ancillary and merely enhances the value of the advertising material. 3.4 In its Circular No. 11/11/2017-GST dated 20/10/2017, the CBIC clarifies the treatment of various composite printing contracts. In all these contracts, the recipient provides the content for printing and the printer supplier the physical inputs. All the printed goods are classifiable under Chapters 48 and 49 of the Tariff Act. The difference, however, lies in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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