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TMI Blog2020 (2) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Trilok Security Systems in the performance of the Mass Queue Management System services. The intention of the Appellant s activity is to bring into existence an Access card for which printing is ancillary. The resultant product Access card is therefore a product of the printing industry. The lower Authority has relied on the CBIC Circular No 11/11/2017-GST dated 20.10.2017 to hold that the activity undertaken by the Appellant is a supply of service. The principal supply in the case of the Appellant is not the printing service but a supply of the Access cards which is a product emerging out of the printing activity. Therefore, the provisions of Para 5 of the Board s Circular will apply in this case and the printing and supply of Access cards by the Appellant is a supply of goods. We therefore set aside the ruling given by the lower Authority. The Access cards being printed cards in single sheets are classifiable under sub-heading 4901 10 20 under the category of pamphlets, booklets, brochures, leaflets and similar printed matter. They will fall under the description of the term leaflet under 4901 10 20 - In the GST rate Notification No 01/2017 CT (R) dated 28.06.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2017-IT (Rate) Sl.No.201 dated 28.06.2017 and SGST/UTGST Notifications. 5. It was decided by the Karnataka Advance Ruling Authority vide Ruling No. KAR/ADRG 46/2019 dated 17th Sept 2019 = 2019 (11) TMI 156 - AUTHORITY FOR ADVANCE RULING, KARNATAKA that the supply of access cards , and similar material printed by the applicant with the contents supplied by the recipient of supply are classifiable as a supply of service under SAC 9989 and liable to tax under CGST at 9%, KGST at 9% and at 18% under the IGST Act. 6. Aggrieved by the said Ruling of the Authority (herein after referred to as impugned order ), the Appellant has filed an appeal under section 100 of the CGST Act, 2017 and KGST Act, 2017 on the following grounds. 7. Appellant submitted that Authority merely relied on CBIC Circular vide No. 11/11/2017- GST dated 20.10.2017 to decide the transaction instead of detailed examination of nature of activities undertaken by the appellant. The Authority of Advance ruling held that since there is involvement of rights to stay in temple precincts attached to the card and other involvement of privileges and can only be issued by the recipient of supply of Access Car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. 11. In view of the above definitions Appellant submitted that the Access cards supplied are neither land nor benefits arising out of land nor things attached to the earth. Further, the access cards are also not money and securities. Therefore, access cards supplied are goods under GST. Further Appellant referred to Article 366(12) of the Constitution of India which defines the term goods to include all materials, commodities and articles. In support of this the appellant relied on the decision of the Constitution Bench of the Supreme Court in the case of Tata Consultancy Services v. State of Andhra Pradesh reported in [(2005) 1 SCC 308 = 2004 (178) E.L.T. 22 (S.C.)] = 2004 (11) TMI 11 - SUPREME COURT , where the Honourable Supreme Court in relation to sale of software held that,- in our view, the term goods as used in Article 366(12) of the Constitution and as defined under the said Act is very wide and include all types of movable properties, whether those: properties be tangible or intangible. The term all materials, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Metagraphs Pvt. Ltd. cited [1996 (88) ELT 630 (SC)] = 1996 (11) TMI 68 - SUPREME COURT the Apex court held a similar view in interpreting labels as follows,- Printed aluminium labels are products of printing industry since printing of the labels is not incidental to its use but primary as it communicates to the customer about the product and this serves a definite purpose - Printing of carton by itself does not bring the carton into existence hence not a product of printing industry though printing is undertaken 14.3. In the case of CCE v. Fitrite Packers 2015 (324) ELT 625 (SC) = 2015 (10) TMI 1047 - SUPREME COURT , in relation to printing of duty paid GI paper where printing was done on jumbo rolls as per design and specifications of customers with logo and name of product in colourful form, the Supreme Court held that printing is not merely a value addition, but resulting into a paper with distinct character and use of its own which it did not bear earlier. 14.4. The CESTAT Delhi held that printing of identity cards which are smart cards merit classification under heading 4901 of the Central Excise Tariff and not under heading 8542 or 8523, in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not covered under any of the service activities mentioned under Schedule II to the CGST Act, 2017. Printing of access cards could not also be said to be job work service unless the goods for printing like paper, ink etc are also supplied by the customer, which does not happen in this case. Therefore the supply of access cards which is goods is not to be treated as supply of service under GST. 16. Appellant submitted that section 2(30) of the CGST Act, 2017 provides for the definition of composite supply as follows,- A supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. 17. Further, Appellant referred to Section 8(a) of the CGST Act, 2017 which provides that to determine tax liability of composite supply comprising two or more supplies, one of which is a principal supply, the tax as applicable to the principal supply shall apply. Principal supply is defined in section 2(90) of the CGST Act, 2017 to mean the supply of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore, such differentiation in para 4 and 5 is not in line with the principles of classification. This brings about ambiguity in the Circular No. 11/11/2017-GST which is not in line with the Supreme Court decision of Metagraphs ibid. The Apex Court in case of Kalyani Packaging Industry v. Uol, cited [2004 (168) E.L.T. 145 (SC)] = 2004 (5) TMI 78 - SUPREME COURT held that departmental clarification giving different interpretation of a phrase than the Supreme Court is not binding. Courts/Tribunals cannot ignore a judgment of Supreme Court and follow circulars of Board. Further, it is settled law that clarifications and circulars issued by Central and State Governments representing merely their understanding of statutory provisions are not binding on Court. Circular contrary to statutory provisions has no existence in law as held by the Supreme Court in Ratan Melting Wire Industries cited [2008 (231) E.L.T. 22 (SC)] = 2008 (10) TMI 5 - SUPREME COURT. 20. Appellant further submitted that even though as per Section 103 of the CGST Act, 2017 rulings given by the Authority for Advance ruling are applicable only for the Appellant, the rationale can however be adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess cards to manage the large pilgrim crowds at pilgrimage destinations like Tirumala Tirupati Devasthanams, Shri Saibaba temple, Shirdi, Sree Mata Vaishnavo Devi Shrine, Haridwar, Rishikesh, etc. The Access cards are given to the pilgrims free of cost and they contain the pilgrim s digital photo and thumb impression along with information regarding distance to temple, precaution to be taken by pilgrims who are old, sick, physically weak, first aid centres and certain restrictions for movement of pilgrims, are printed. The contents/ creatives to be printed on the Access Card is provided by M/s Trilok Security Systems India Pvt Ltd to the Appellant. All the physical inputs required for printing such as paper, machinery, ink etc., belongs to the Appellant and only the intangible input of creative content to be printed is supplied by the customer. Appellant uses 210 GSM of size 56 x 71 Cms Art Card for printing the content using the different colours of ink Like GEOS G Yellow, Magenta, Cyan and Black. The Cards are cut to the required sizes with perforation and supplied to the customer. 24. In the above factual background, it is seen that the activity undertaken by the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing [of the content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services. 5. In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, predominant supply is that of goods and the supply of printing of the content [supplied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff. 26. The lower authority has relied on Para 4 of the said Circular to hold that since the content is supplied by the recipient who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets are classifiable under sub-heading 4901 10 20 under the category of pamphlets, booklets, brochures, leaflets and similar printed matter. They will fall under the description of the term leaflet under 4901 10 20. In the GST rate Notification No 01/2017 CT (R) dated 28.06.2017, Brochures, leaflets and similar printed matter, whether or not in single sheets are covered under entry SI.No 201 of Schedule I with rate of 2.5% CGST and 2.5% SGST. 29. In view of the above discussion, we pass the following order ORDER We set aside the ruling no No. KAR ADRG 46/2019 dated 17/09/2019 = 2019 (11) TMI 156 - AUTHORITY FOR ADVANCE RULING, KARNATAKA passed by the Advance Ruling Authority and answer the questions of the Appellant as follows:- (i) The Access Card printed and supplied by the Appellant based on the contents provided by their customers is a supply of goods and is rightly classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet. (ii) The Access card printed and supplied by the appellant attracts GST rate of 5% in case of inter-state supplies and 2.5% CGST and 2.5% SG ..... X X X X Extracts X X X X X X X X Extracts X X X X
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