9911796707
TMI Blog2020 (7) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the same provision under the APGST Act. Further, henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or AP GST Act would be mentioned as being under the GST Act. 3. Brief Facts of the case: 3.1 M/s Macro Media Digital Imaging Private Limited, Plot 44, Apparel Export Park, Auto Nagar, Visakhapatnam-530012, (hereinafter referred to as the Applicant) is engaged in the business of printing of trade advertising material, for which required raw materials such as poly vinyl, flex, paper, cloth printing inks etc. are being procured by themselves. The activity of printing is based on specification provided by the clients in terms of design, size, material specification etc. The applicant states that their activity of printing on such poly vinyl material with trade monograms of the customers constitutes 'manufacture' in terms of Central Goods and Service Tax Act 2017 and such manufactured products are supplied by the applicant to the customers. 3.2 The applicant besides having its main office at Visakhapatnam, operates from the various regional offices located at Chennai, Noida, Vishakhapatnam, Vijayawada, Mumbai, Bangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources the desired PVC material (blank) from independent supplier and under takes the activity of printing on the material. 3.7 That billing format of the invoices raised by the Applicant on the customers is such that in the description field, Applicant specifies charges on two accounts i.e. 'printing' and 'supply', wherein the former represents the service activity of printing carried out by the Applicant and latter represents the physical supply of printed trade advertisements on the PVC material. Pre-GST Regime 3.8 That under the erstwhile Value Added Tax (hereinafter referred to as 'VAT') regime, the Applicant was paying VAT on the transaction of printing and supply of the trade advertisements. However, under different states, the nature of such transaction varied from 'pure sale' transaction to a transaction of 'works contract'. The state-wise status of such transactions wherein Applicant had VAT registration is as under:- S.No. State Nature of Transaction 1. Telangana Works Contract 2. Tamil Nadu Pure Sale 3. Maharashtra Works Contract 4. Uttar Pradesh Pure Sale 5. Karnataka Pure Sale 6. West Bengal Works Contract 7. Kerala Pure Sale 8. Andhra P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act That Rule 2(52) of the CGST Act defines the term 'goods' as under: - "(52) "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; From the above definition of goods, it is clear that any property which is movable and is not in form of money or securities, shall qualify to be 'goods'. (2) The term 'service', has been defined under Section 2(102) of the CGST Act as under:- "(102) "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; The above referred definition of 'service', clarifies that in order to determine if the end result of the supply is the supply of 'goods' or 'service', it is paramount to determine if the end result of activity is supply of 'goods' or not. Further, the supply will be considered as supply of 'service', only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the title in the goods qua printed materials. Therefore, instant case of supplying printed advertisement materials amounts to supply of 'goods'. (10) The Applicant refers to TRU Circular No. 11/11/2017-GST dated 20.10.2017 on taxability of printing contracts wherein vide Para 5 it was clarified that printing contracts, similar to the instant case, constitute 'supply of goods'. The relevant extract is reproduced below for ready reference: "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." (11) To substantiate this proposition further, the transactional matrix between the applicant and its customers is elaborated below. Transactional Matrix between Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is a composite supply and supply of goods is a principal supply" (15) Supply consists of two or more supplies of goods, or services or both- the Applicant submits that in the single economic supply of trade advertisements to the customers, the Applicant is making two supplies, namely: (1) Supply of goods - Printed PVC material; and (2) Supply of services - Printing of content supplied by customer on PVC material (16) Two supplies are naturally bundled - It is stated that the two aforementioned supplies made by the Applicant to its customers are naturally bundled and supplied in conjunction with one another in ordinary course of business. That the objective of a customer to procure a printed trade advertisement from the Applicant to procure such goods (trade advertisement) which are used to promote the products/business of the customer by using the same. It is submitted that such objective of advertisement cannot be served by supplying PVC material (blank) which does not communicate any message about the products of the customer and neither can a message on standalone basis, without being printed on any medium such as PVC material (blank), serve the purpose of trade advert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the application of the above indicators we hold that the contract for providing the design, procurement, supply, development, testing and commissioning of the Plant which includes the supply of both goods and services is a composite supply as per the definition in the Act. There are two taxable supplies- one of goods and the other of services and they both are naturally bundled and it is natural and also a practice to expect that the contractor who will supply the goods will also supply the services along with it. In the business of contracts for the Solar Power Generating System, it is a practice to provide a Plant as a whole along with the supply of services." (18) In view of the foregoing, the Applicant states that PVC material (blank) and printing of image/written text on such PVC material are so interlinked to one another in ordinary course of business that one cannot stand without another and together they combine to form a trade advertisement, which is desired by the customer and is essentially the sole economic supply in present case. Hence, it is evident that PVC material and service of printing on PVC material, are naturally bundled and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive goods in form the of trade advertisements. (23) In view of the foregoing, it is submitted that pre-dominant supply in the composite supply of trade advertisement is supply of 'goods' by the Applicant to its customers. (24) The Applicant also submits that element of printing is ancillary to the composite supply of trade advertisements. The Applicant submits that design of image/ text/trade monograms to be printed on the concerned trade advertisement is provided by the customer and Applicant has no role to play in designing/ alteration of the same. Mere work to be carried out by the Applicant is to load such linage/text/trade monograms on the computer controlled digital image printer and to take out prints on the PVC material (blank). The Applicant does not employ any skill for provision of service of printing for the customer. Hence, the Applicant is essentially supplying goods in form of trade advertisement to the customer and not services of printing. (25) In view of the foregoing, it is stated that in the subject transaction, supply of 'goods' in form of trade advertisement is the 'principal supply' and printing is 'ancillary', to the dominant supply of goods in form of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means of a duplicating machine, produced under the control of a computer, embossed, photographed, photo-copied, thermocopied or typewritten. It is noteworthy that the expression "produced under the control of a computer" is also covered under the term 'printed'. As stated above, the activity undertaken by the applicant on the PVC material (blank) is 'printing'. (2) In view of the above, if a product is printed PVC sheet or printed PVC flex is plastic material falling under Chapter 39, the relevant Heading of Chapter 39 is Heading 3920 or Heading 3921. A perusal of the goods falling under these headings would show that the printed plastic sheets would also fall under these headings. (3) However, Section Note 2 to Section VII which covers goods of Chapter 39, specifically provides that if the plastic material is printed with motif, character or pictorial representation which are not merely incidental to the primary use of the goods, then the printed plastic material will fall under Chapter 49. Thus, where the plastic article is printed with the text or material and such printing is not merely incidental to the primary use of such goods, such plastic material would be ousted from C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 (324) ELT 5 (SC) = 2015 (10) TMI 443 - SUPREME COURT ii. Universal Offsets v. CCE, Delhi-II - 2018 (10) G.S.T.L. 386 (Tri. - Del.) = 2018 (1) TMI 1086 - CESTAT NEW DELHI iii. Fitrite Packers - 1999 (108) ELT 680 (Tri) = 1999 (3) TMI 175 - CEGAT, NEW DELHI iv. Bharat Metal Decorators - 2005 (185) ELT 397 = 2005 (3) TMI 237 - CESTAT, MUMBAI v. Sai Security Printers Ltd. - 2006 (199) ELT 121 (Tri.) vi. Indradhanush Print. Pvt. Ltd. - 2013 (292) ELT 81 (Tri) = 2014 (3) TMI 913 - CESTAT BANGALORE (8) In view of the above, the applicant submitted that Vinyl (self-adhesive) initially classifiable under Heading 3919, after being printed with the images/ text/trade monograms to promote the sales of the customers becomes a form of trade advertisement which is classifiable under Heading 4911. 6. Record of Personal Hearing: Sri Bipin Verma, the authorized representatives of the applicant appeared for Personal Hearing on 23.10.2019 and produced physical samples of the materials and reiterated the written submissions. 7. Discussion a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/2/2017- TRU, Dt: December, 2017, with the consolidated FAQ under Sl.no 59 reiterates the same as under:
Sl.No
Queries
Replies
59
That is the classification and GST for posters with photographs/ images etc. printed on Digital Printers on coated cotton/ mix canvas media or other synthetic media?
These items fall under HS code 4911 and attract 12% GST
RULING
(Under Section 98 of Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017)
Question 1: Whether the transaction of printing of content provided by the customer, on poly Vinyl Chloride banners and supply of such printed trade advertisement material is supply of goods.
Answer 1: The supply of printed trade advertisement material is classified under Goods only as per Section 7 of CGST Act, 2017 read with Schedule-II Sl.No.1 (a) of CGST Act, 2017
Question 2: What is the classification of such trade advertisement material if the Transaction is a supply of goods
Answer 2: It is classifiable vide Notification No.1/2017 - Central Tax (Rate) dated 28.06.2017 under Sl.No.132 Chapter /Heading/ Sub-Heading/Tariff item 4911 and attracts tax rate of 12% (CGST 6% + SGST 6%). X X X X Extracts X X X X X X X X Extracts X X X X
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