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TMI Blog2020 (12) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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. In the instant case applicant is supplying answer booklets/copies with or without OMR having its name logo etc. of his customer and the printing material used in printing of the said items pertains to the applicant. We further observe that the supply of printing to the content as supplied by the recipient of the supply is the ancillary to the principal supply of the answer booklets/copies with or without OMR, therefore the supply will be considered a supply of goods falling under respective heading of chapter 48 or 49 of custom tariff. The activity of printing of Answer Booklets/ Answer copies and supplying it to Educational Institutions to be used in examinations by using its own raw material consisting of paper, printing ink etc. is Supply of goods falling under chapter Heading/ Tariff item 4820 of entry 123 of the schedule II to the notification 01/2017 central tax (Rate) dated 28/06/2017 as amended and chargeable to GST @ 12% X X X X Extracts X X X X X X X X Extracts X X X X ..... to the educational institutions. * The answer booklets may be with or without OMR sheets which is printed separately depending upon the work order. If the work order is with OMR sheet, then the OMR sheet is printed separately and then tied to answer booklet. * Consideration from educational institution is received on the basis of number of answer booklets supplied. The major component of cost of the answer booklet is paper. Out of total cost per answer booklet approx. 80% of cost is of the paper and the balance 20% is cost of printing, packaging etc. of the required content. 2. Question -1: Whether the activity of printing of Answer Booklets / Answer Copies and supplying it to Educational Institutions to be used in examinations by using its own raw material consisting of paper, printing ink etc. is 'Supply of Goods' or 'Supply of Service? Applicant's interpretation of law From the facts narrated in Annexure-II it is evident that the supply of Answer Booklet to the Educational Institutions is Composite Supply of goods and services. The issue as to whether the supply of answer booklet is supply of goods or supply of service would be determined on the basis of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -4820. Reliance is also placed on the Circular No. 11/11/2017-GST dated 20.10.2017 which also postulates the theory that in case of printing contracts whether supply constitutes supply of goods or supply of services would be determined on the basis of what constitutes the principal supply. Para 5 of the said circular clarifies that 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. Hence, the supply of Answer Booklets to Educational Institution is Supply of Goods and not Service. 4. Question No. 2: If the answer to the Question No.1 is 'Supply of Goods' then a. whether the said answer booklet is classifiable under Chapter Heading -4820 or 4911; b. what will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory provisions are as under : (a) As per Rule 3(c) of General Rules for the interpretation of the Schedule, "when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration". (b) As per Rule 4 of General Rules for interpretation of the Schedule, "goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin". (c) As per Chapter note 10 of Chapter 48, heading 4820 does not cover loose sheets or cards, cut to size, whether or not printed, embossed or perforated. (d) As per Chapter note 12 of chapter 48, except for the goods of heading 4814 or 4821, paper, paperboard, cellulose wadding and articles thereof, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of goods, fall in Chapter 49. (e) As per Chapter note 14 (inserted on 28-5-2012) paper and paper products of heading nos. 4811, 4816 or 4820 intended to be used for further printing or writing are classifiable in their respective headings even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore are not covered under heading 4820 and also provision of Chapter note 14 is inapplicable in the matter. The printing on these documents gives their essential character. In view of explanatory note to heading 4911 they are classifiable under heading 4911. (d) Answer books with or without OMR, answer booklets and passbooks These are not loose sheets, cut to size and therefore these are not out of the purview of heading 4820. Printing on these goods is merely incidental and such goods are intended to be used for further printing or writing. Answer books with or without OMR and answer booklets are intended for completion in manuscript while passbooks are intended for completion in manuscript or typescript. Provisions of Chapter note 12 and 14 of Chapter 48 and provisions of Rule 4 of General Interpretative Rules are applicable in the matter and therefore these are classifiable under heading 4820. ..................... From the perusal of the aforesaid circular it is evident that the answer booklets are classifiable under Chapter Heading- 4820. The same principal; whether the printing is incidental to its primary or not is determining factor for deciding the classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of examination is exempt by virtue Entry No. 66(b)(iv) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 [Entry 69(b)(iv) of Notification issued under IGST] which is reproduced as under: - SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 66 Heading 9992 Services provided - (a) by an educational institution to its students, faculty and staff; (aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee (b) to an educational institution, by way of,- (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or housekeeping services performed in such educational institution; (iv) services relating to, admission to or conduct of examination by, such institution; (v) supply of online educational journals or periodicals: Provided that nothing contained in sub-items (1), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. 9 - 30 Heading 9992 Education services. 9 - From the perusal of the aforesaid entries according to the applicant the more appropriate classification of the said service of supply of answer booklets to educational institution would be under the head 'Education Services' classifiable under Service Accounting Code (SAC) - 9992 as the said service of printing and supplying Answer Booklets to an educational institution enables the educational institution to conduct the examination. c. Rate of tax Rate of tax on such education services would be 18% as mentioned at S No. 30 of CGST Notification No. 1 1/2017-CT(Rate) dated 28.06.2017 as amended; IGST Notification No. 8/2017-Integreted Tax (Rate) dated 28.06.2017 as amended; Notification No. F. 12(56) FD/Tax/2017-Pt-I-49 dated 29.06.2017 issued by Tax Division of Government of Rajasthan as amended. B. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT 1. Whether the activity of printing of Answer Booklets / Answer Copies and supplying it to Educational Institutions to be used in examinations by using its own raw material consisting of paper, printing ink etc. is Supply of Goods' or 'Supply of Service? 2. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions to be used in examinations by using its own raw material consisting of paper, printing ink etc. and rate of tax chargeable on the said activity/item in their GST ARA-01 dated 27.05.2020. 3. The Circular No. 11/11/2017-GST dated 20.10.2017 has 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. 4. 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 part of that composite supply is ancillary. 5. In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in manuscript) Thus, printed work books containing questions followed by spaces for writing or other exercises would fall within the scope of Chapter 49. The said goods are different from Exercise Books falling under Chapter 48 which are stationary items with blank pages with lines for writing and some time may also include printed texts for copying manually, as explained in the preceding para. Further, since printing in case of printed workbooks is not merely incidental to the primary use of the goods, such goods are classifiable under Chapter 49, in terms of chapter note 12 to chapter 48 of erstwhile CETA, 1985. Similarly, HSN Chapter note (6) to Chapter 49 read with HSN explanatory note under heading 49.03 covers children's workbooks consisting essentially of pictures with complementary texts, for writing or other exercises, and children's drawing or colouring books, provided the pictures form the principal interest and are not subsidiary to the text. Thus, children's drawing books which are in harmony with said HSN Chapter note (6) and HSN Explanatory note to heading 4903 would fall under Chapter 49. In view of above, it appears that the nature of the activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat composite supply is ancillary. In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the 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. 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. 6. As per the circular, if the activity of printing gives essential charact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter note 14 is inapplicable in the matter. The printing on these documents gives their essential character. In view of explanatory note to heading 4911 they are classifiable under heading 4911. (d) Answer books with or without OMR, answer booklets and passbooks These are not loose sheets, cut to size and therefore these are not out of the purview of heading 4820. Printing on these goods is merely incidental and such goods are intended to be used for further printing or writing. Answer books with or without OMR and answer booklets are intended for completion in manuscript while passbooks are intended for completion in manuscript or typescript. Provisions of Chapter note 12 and 14 of Chapter 48 and provisions of Rule 4 of General Interpretative Rules are applicable in the matter and therefore these are classifiable under heading 4820. ............................. 9. Further the Circular No. 1057/06/2017-CX 07.07.2017 has clarified that exercise Books have been explained in HSN under explanatory note (2) to Heading 4820 as, "These may simply contain sheets of lined paper but may also include printed examples of handwriting for copying in manuscript". Such exercise Books are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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