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TMI Blog2020 (10) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The printing activity undertaken by the Appellant is for the purpose of bringing into existence the trade advertisement which is used by the customer for advertising their products/services. What the customer requires is either a billboard or banner or display unit which advertises his product or service. The requirement of the customer is met by the Appellant through the activity of digital printing on PVC material. We have also seen a few invoices raised by the Appellant on his customers - the charges for the supply of the trade advertisement is based on the sqft of the product supplied. This evidences that what is supplied by the Appellant is in the nature of goods and not a service. The trade advertisements made by the Appellant are classifiable under sub-heading 4911 10 under the category of trade advertising material, commercial catalogues and the like. They will fall under the description goods under Heading 4911 given in entry Sl.No 132 of Schedule II of Notification No 01/2017 CT (R) dated 28.06.2017 - decision of AAR set aside. - KAR/AAAR 05/2020-21 - - - Dated:- 28-9-2020 - SHRI. D.P. NAGENDRA KUMAR, AND SHRI. M.S. SRIKAR, MEMBER Represented by : Sri Sye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertisement material is supply of goods. (ii) What is the classification of such trade advertisement material if the transaction is supply of goods? (iii) What is the classification and applicable rate of CGST on the supply of such trade advertisement material if the transaction is that of supply of service? 6. It was decided by the Karnataka Advance Ruling Authority vide Ruling No. KAR/ADRG 06/2020 dated 17 th Feb 2020 = 2020 (3) TMI 69 - AUTHORITY FOR ADVANCE RULING, KARNATAKA that: 1. The transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material is a supply of service. 2. The classification of the aforesaid supply of service is 9989 of the scheme of classification of services. 3. The applicable rate of GST on the supply of aforesaid service is 18% up to 30.10.2017 12% effective from 31.10.2017, as per Entry No.27 of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended. 7. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d advertisement material tantamount to supply of goods . They relied on the Supreme Court decision in the case of CCE-IV vs Fitrite Packers reported in 2015 (324) ELT 625 (SC) = 2015 (10) TMI 1047 - SUPREME COURT wherein it was held that the activity of printing which gives a distinct character and use to the product amounts to manufacture of goods. Thus, the activity cannot be said to be service. 7.3. The Appellant submitted that CBIC has also clarified in favour of the Appellant vide its Circulars which are binding on the Department. They relied on Board s Circular No 332/2/2017 TRU dated 07.12.2017 which clarifies that posters with photographs /images etc printed on Digital Printers on coated cotton/mix canvas media or other synthetic media are covered under HSN 4911 and attract 12% GST. Further, Circular No 11/11/2017 dt 20.10.2017 issued by the CBIC gave a clarification with regard to printing contracts and their case is covered under Para 5 of the said circular and thus merit being treated as supply of goods . They submitted that the impugned ruling being contrary to the Board s Circulars is legally untenable. 7.4. The appellant contended that the trade advert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 (3) TMI 60-Cestat Mumbai) In view of the above, they contended that the PVC printed sheets after being printed with the images/text/trade monograms to promote the sales of the customers is classifiable under Heading 4911 and consequently fall under SI.No 132 of Notf No 1/2017 CT (R) dt 28-06-2017 chargeable to 12% GST. They also relied on the Board s Circular F.No 332/2/2017-TRU dated 7-12-2017 which has clarified that the posters with photographs/images etc printed on Digital Printers on coated cotton/mix canvas media or other synthetic media are covered under HS Code 4911 and attract 12% GST. 7.5. The Appellant further submitted that they are selling trade advertisements as a single economic activity as the customer intends to purchase trade advertisement as a whole and does not intend to merely get a PVC material (blank) printed by the Appellant. Hence, these trade advertisements are tailor made to the specifications of the customers. They submitted that when printing gives a distinct character and use to the product, it amounts to manufacture of goods ; that once the activity amounts to manufacture, then, the supply necessarily has to be treated as that of goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical inputs including paper belonging to printer, the predominant supply is that of goods and the supply of printing of content is ancillary to principal supply of goods and therefore such supplies would constitute supply of goods . 7.7. In view of the aforesaid submissions, the Appellant pleaded that the impugned order is legally not sustainable and deserves to be set aside. PERSONAL HEARING 8. The appellant was called for a virtual personal hearing on 21st Sept 2020 but they sought an adjournment. Accordingly, the Appellants were called for another virtual hearing on 25 th September 2020. 8.1. The hearing on 25th September 2020 was conducted on the Webex platform following the guidelines issued by the CBIC vide Instruction F.No 390/Misc/3/2019-JC dated 21st August 2020. The Appellant was represented by their Advocate Shri. Syed Peeran who explained the facts of the case and submitted that the activity done by the Appellant is supply of goods. He submitted that the PVC and other inputs are procured by the Appellant and the printing as per the design and the specifications of the customer is done on his inputs. It is the finished product which is supplied to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade Show Graphics, Office Branding, in-store Branding, Banners, Free Standing Display Units and Signage Graphics. These trade advertisements are made using Poly Vinyl Chloride material. The Appellant procures orders from their customers for supply of trade advertisements. The customers indicate the type and specification of the PVC material on which they require the trade advertisement. The customer also provides to the Appellant the data of the image/text/trade monogram which is to be printed on the trade advertisement. On procuring the order, the Appellant purchases the PVC material (blank) from an independent supplier based on the specifications given by the Customer. The image/text/trade monogram which is given by the customer on a pen drive/CD/cartridge is loaded into a computer controlled digital image printer which prints the images on the PVC material. The printed trade advertisement is then shipped to the customer. The invoice is raised to the customer for the printing and supply of trade advertisement material. The Appellant charges the customers a rate based on the measurement of the printed trade advertisement. 11. In this background, the issue before us is to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here below: 1. Requests have been received to clarify whether supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc., printed with design, logo, name, address or other contents supplied by the recipient of such supplies, would constitute supply of goods falling under Chapter 48 or 49 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) or supply of services falling under heading 9989 of the scheme of classification of services annexed to notification No. 11/2017-CT(R). 2. In the above context, it is clarified that supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply. 3. Principal supply has been defined in Section 2(90) of the Central Goods and Services Tax Act as supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers no doubt own the rights to the content. Further, it is also not disputed that the Appellant has procured the PVC material as per the specification of the customer, to carry out the activity. However, what has been lost sight of is the fact that the activity of digital printing on the PVC material brings into existence a new product with a specific use for advertising and known in trade and common parlance as Flex banner or Flex billboard or free standing display unit . The Appellant is not merely printing the images or reproducing the content given by the customers on to the PVC material. The Appellant is making a product which serves as an advertising material for the customer. Without the activity of printing the content given by the customer, the PVC material is of no use to the customer as it does not serve the purpose of any advertisement. The activity of printing brings into being an advertisement product and it is this product which has been ordered by the customer. Printing by the Appellant in this case is ancillary to the main activity of making such advertisement materials. The printing is a service rendered by the Appellant to himself in order to execute the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced with the aid of computer or any other devices 49119990 --- Others 16. The trade advertisements made by the Appellant are classifiable under sub-heading 4911 10 under the category of trade advertising material, commercial catalogues and the like. They will fall under the description goods under Heading 4911 given in entry Sl.No 132 of Schedule II of Notification No 01/2017 CT (R) dated 28.06.2017, Other printed matter, including printed pictures and photographs; such as Trade advertising material, Commercial catalogues and the like, printed Posters, Commercial catalogues, Printed inlay cards, Pictures, designs and photographs, Plan and drawings for architectural engineering, industrial, commercial, topographical or similar purposes reproduced with the aid of computer or any other devices with rate of 6% CGST and 6% SGST. 17. In view of the above discussion, we pass the following order ORDER We set aside the ruling no NO.KAR ADRG 06/2020 dated 17/02/2020 = 2020 (3) TMI 69 - AUTHORITY FOR ADVANCE RULING, KARNATAKA passed by the Advance Ruling Authority and answer the questions of the Appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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