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TMI Blog2022 (6) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... ase at hand, the recipient gives the content for printing and the applicant undertakes printing using the Paper and Ink purchased on his own account and the printed leaflet is supplied to the recipient. Thus applying the above definition, the supply is a composite supply consisting of printing service alongwith the supply of Paper in the form of printed leaflets. The printing process involves approval of the sample and accordingly printing the approved content/artwork. Thus the supply is a composite supply as per the definition at Section 2(30) of the Act stated above. The predominant element in this composite supply is the one for which the recipient is under taking the transaction with the supplier, i.e., printing of the leaflets. The supply of the material on printing is only ancillary to the main supply. The supply undertaken by the applicant involves printing and supply as leaflets in the required format; the content which instructs the users of the product in words, intangible inputs whose rights are with customer and shared with the applicant for printing in the required material/media. The nature of the physical inputs is transformed with the printing activities and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Service Tax Act. M/s. The Coronation Arts Crafts, 115-117, 343, Thiruthangal Road, Sivakasi, Virudhunagar District. Tamil Nadu - 626 123 (hereinafter called the 'Applicant') is registered under GST Vide GSTIN 33AABCK2495F1ZP. They have sought Advance Ruling on the following question: 1. Manufacture and supply of printed leaflet product on the physical inputs owned by the printer while the matter of printing content being supplied by the recipient is classifiable as supply of goods or supply of services as per the provisions of GST Act. 2. While supplying such printed leaflet product whether HSN heading under 4901 of GST Tariff Act or SAC code 9989 is applicable. 3. Determination of tax liability payable on such printed leaflet product supplied as above. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are one of the suppliers of printed leaflet product to M/s. Hindustan latex Ltd, a Government of India enterprise who in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equire advance ruling on the classification of this manufacturing activity undertaken by them on behalf of the unit M/s Hindustan Latex Ltd; Karnataka State, Kerala State on the physical inputs owned by the supplier printer while the printing matter content being supplied by the recipient and on the determination of tax liability payable on such printed leaflet product. It is also requested that the order of the Advance ruling Authority may please be intimated to the recipient of supply namely M/s. Hindustan Latex Ltd; Karnataka State, Kerala State. 2.2 On the legal interpretation, the applicant has stated that GST includes supply of goods or supply of service or both. For classifying a transaction whether as supply of goods or supply of service there are some norms available in the Schedule II formulated as per Section 7(1A) of CGST Act 2017. As per the available instructions the transaction of manufacture of printed articles and supply thereof using their own inputs (paper or paper board) and the printing content being supplied by the recipient has to be decided either as a supply of goods or as supply of service. For the determination of such classification in the case of sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the hearing virtually and reiterated the submissions. To a specific query the AR stated that the paper and ink are of them and the content is supplied by the recipient. He referred to the clarification of CBIC Circular No. 11/11/2017 dated 20.10.2017. He further stated that they have entered in to a contract with M/s Hindustan Latex Ltd. He was asked to furnish copies of contracts, Purchase orders, invoice copies for the transaction for which ruling is sought. 3.2 The applicant filed a written submission dated 11.03.2022, wherein, he reiterated the divergent practice prevailing in classifying the supply of printed leaflets and requested clarification. The copies of price bid forms along with rate of tax quoted by other suppliers along with specimen copies of their invoices and some other specimen products were submitted. 3.3 In pursuance of the Virtual Personal hearing held on 16.3.2022, the applicant submitted the copy of Tender Form HLL, price bid of other units and their unit, rate of Tax, Invoice Copy of their units and other suppliers, and the copy of Board Circular No. 11/11/2017 GST Dt. 20.10.2017 On 8.4.2022, the Registry asked the applicant to furnish copies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the clarification sought vide the application may fall under 'composite supply' in which tax to be levied on principal supply. Here, the principal supply is to convey the message to the customers in printed medium, therefore printing service is the principal supply in this matter and the applicant is rightly charging the tax under HSN: 9989 at the rate of 18% (including CGST and SGST). 5. Center Jurisdictional Officer vide their letter GEXCOM/TECH/GST/1065/2022-Tech-O/o Commr -CGST-Madurai dated 06.04.2022 informed that there are no pending proceedings on the issue raised in the Advance Ruling application. 6. We have carefully examined the submissions of the applicant in their application, their oral and written submission during the personal hearing, their further submissions after PH and the comments of the State Centre jurisdictional officer in the instant case. The questions on which advance ruling is sought are as follows: (i) Whether Manufacture and supply of printed leaflet product on the physical inputs owned by the printer while the matter of printing content being supplied by the recipient is classifiable as supply of goods or supply of services as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Description 'Leaflet Instr. Mala-N GMPS' and HSN Code 4901. IGST is raised @ 5% Tax Invoice No. 000030 dated 03.10.2018 of V.P. Mehta Co raised on INDOCO Remedies Ltd against Order No. HP/1819/00528 dated 20/07/2018 with the Description 'Leaflets paracetamol 500mg caplet' and SAC Code 49011020. IGST is raised @5% Price Schedule of 'Sudana Printers' of Contract No. PUR 08/RI/PQ/OCP/11/2021-22 dated 18.02.2021 for supply of Leaflet to HLL Lifecare Limited, Kerala wherein the GST rate is quoted @5% of the Basic Rate Price Schedule of The Coronation Arts Crafts' of Contract No. PUR 08/RI/PQ/OCP/11/2021-22 dated 18.02.2021 for supply of Leaflet to HLL Lifecare Limited, Kerala wherein the GST rate is quoted @ 12% of the Basic Rate PO No. 3110134560 dated 16.08.2021 in Enquiry/Tender No. 1110523478 for 'Leaflet Instr. Mala-N' printed on specific paper using specific ink colour/Art Work to be supplied in folded condition in Bundles of 50 Nos. 7.3 From the submissions, it is seen that the Enquiry letter/Tender are floated for supply of Leaflets and based on the Price Schedule of the contract, PO are issued to the bidders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y printing the approved content/artwork. Thus the supply is a composite supply as per the definition at Section 2(30) of the Act stated above. The predominant element in this composite supply is the one for which the recipient is under taking the transaction with the supplier, i.e., printing of the leaflets. The supply of the material on printing is only ancillary to the main supply. Also, the Purchase Order is raised for 'Printed Leaflets' and of the value of supply is arrived at based on the number of such printed leaflets required. The recipient has undertaken this transaction with applicant mainly to avail the printing services of the applicant. Further, CBIC vide Circular No. 11/11/2017-GST dated 20.10.2017, has clarified as to what constitutes the 'Principal supply' in composite supply of printing contracts. The same is reproduced as under, for ease of reference: Subject: Clarification on taxability of printing contracts 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Principal Supply' in cases where the printing of such content is ancillary to supply of goods as in the cases of Para 4. In the considered transaction, the supply undertaken by the applicant involves printing and supply as leaflets in the required format; the content which instructs the users of the product in words, intangible inputs whose rights are with customer and shared with the applicant for printing in the required material/media. The nature of the physical inputs is transformed with the printing activities and without the printing, the final product cannot be used as a leaflets as required by the recipient. Thus the predominant activity is printing the contents of the customer in the required tangible inputs sourced by the applicant as per the requirement of the recipient and going by the clarification above, the principal supply in the considered transaction is 'Supply of Service'. It is pertinent to note that this authority in an earlier instance in the case of M/s. Macro Media Digital Imaging Pvt Limited under similar facts, has held that the supply of printed material as a composite supply, when the content for printing is that of the recipie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er printing services n.e.c. The supply of printing services on paper are classifiable under SAC 998912, as given in the explanation above. The principal supply being the 'Supply of Printing service', the composite supply at hand is classifiable under SAC 998912 and the applicable rate on such supply is that applicable for such supply. 9. The final issue to be decided is the applicable rate of GST on such supply. SAC 9989 covers 'Other Manufacturing Services; Publishing, Printing and reproduction Services; materials recovery services'. The applicable GST rate is provided vide SI.No. 27 of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 Notification G.O.(Ms) No.72 dated 29.06.2017. The said entry has undergone many changes and effective from 1st day of October 2021, the applicable rate is CGST @ 9% as per SI.No.27 of Notification 11/2017-C.T.(Rate) Dated 28.07.2017 as amended by Notification No. 06/2021-C.T.(Rate) dated 30th September 2021 SGST @ 9% as per SI.No. 27 of Notification G.O. (Ms) No. 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017 as amended. 10. In light of the above, we rule as under: RULING 1. The printing of content p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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