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TMI Blog2022 (7) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice, which includes a host of activities like planning, concept development, creating the basic idea for an advertisement, writing the words, selection of media to be used, design of ads, illustrations, posters, placement of advertisements in media etc. In the instant case, appellant is selling space for advertisement in print media. Further in some cases, apart from selling space, he is also providing art work, which makes the advertisement more appealing and attractive. And such additional activity is done at no extra cost. However, costing comes into picture after classification. Value addition does not have a bearing in classifying the nature of service provided. As such, the processes, the ingredients, quantity of inputs used in supply, the purpose of art work and its impact of appearance of advertisement will have a bearing on the nature of service supplied. Apart from selling the space for advertisement in print media, the appellant is also providing the services of designing or art work as pronounced in their contentions. Advertising in itself is a specialized service, where the act of exhibiting or marketing information about a product or service provided is importan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) On the applicant who had sought it in respect of any matter referred to in sub-Section (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. * * * * * Subject: GST Appeal filed by M/s. Time Education Kolkata Private Limited,95B, 2nd Floor, Siddamshetty Complex, Park Lane, Secunderabad 500 003, Telangana State under Section 100 (1) of TGST Act, 2017 Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or time is enumerated as 998366 in the SAC given in the annexure to the notification. This is not specifically mentioned in the serial no. 21(i) or (i)(a) of the above notification. Clearly this service will fall under item (ii) of serial no. 21 i.e., other professional, technical business services taxable at the rate of 9% under CGST SGST respectively. 5. Further, AAR examined that the Notification makes a clear distinction between sale of mere advertisement space and Other advertisement space , which is having a separate SAC code i.e., 998366. The applicant is supplying (2) different services and each is attracting different tariffs under this notification. Therefore the question of deducing a composite supply from the combination of drafting a design and incorporating a space does not arise. Hence where only space for advertisement and print media is supplied (SAC 998362) the rate of tax applicable is 2.5% under CGST SGST respectively and where they are supplying ornate space it shall be treated as other advertisement space falling under item (ii) of serial no. 21 and accordingly will attract tax @9% under CGST SGST respectively. 6. In view of the above discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of ruling that the classification made (HSN 998366) when the Advertisement space in print media is sold with addition of artwork and GST rate thereon. 2. In the instant case, the relevant extracts of Explanatory Notes to HSN (Classification of services) are given below: 998363 Sale of advertising space in print media (except on commission) This service code includes sale of advertising space in books, brochures, pamphlets, etc.; sale of advertising space in newspapers, journals and periodicals; sale of advertising space in postcards, timetables, forms, posters or other printed matter 998364 Sale of TV/radio advertising time (except on commission) This service code includes sale of TV and radio advertising time 998365 Sale of Internet advertising space (except on commission) This service code includes sale of Internet advertising space 998366 Sale of other advertising space or time (except on commission) This service code includes: - sale of advertising space on billboards, buildings, vehicles, etc. - sale of advertising space in electronic media other than on-line - sale of advertising space in video and mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or Otiose. It is settled law that the legislature uses every word, phrase, sentence, or part thereof is for a purpose and the legislative intention is that every part of the statute should be given effect and any interpretation making any words or part of legislature redundant shall be avoided. In this regard, relied on Chief Information Commissioner Vs State Of Manipur 2012 (286) E.L.T. 485 (S.C.); Bansal Wire Industries Ltd. vs. State of U.P. 2011 (269) ELT 145 (S.C.). Therefore, the averment of impugned order to say that present transaction is not composite supply is wholly incorrect and requires to be set aside. D. Appellant once again wishes to explain how the present transaction would become Composite supply and GST rate of 5% (as applies to the Selling of space ) applies. 1. The section 8, ibid reads as under: 8. The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; 2. From the above, it is clear that if the supply comprising of the two or more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the principle supply which is defined under sub-section (90) of Section 2 of CGST Act, 2017 and reads as follows principal supply means the 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. From the above referred definition, Applicant understands that in the instant case sale of space is the principal supply in the composite supply as the sale of space constitutes predominant element and the artwork is only ancillary and would be given as complimentary. E. Further, the press release dated 23.08.2017 given by Ministry of Finance, GOI clarified as follows: If the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax @18%. If such supplies are part of any composite supply, the rate applicable for the principal supply shall apply. The artwork by Appellant forms part of composite supply as explained above and the principal supply is the sale of space for advert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARA-02. They filed the appeal on 12.01.2022, which is within the prescribed time-limit. Personal Hearing: 9. In terms of Section 101(1) of the Act, the appellant was given personal hearing, in virtual mode on 31.01.2022. Shri Sudhir V.S., Chartered Accountant of M/s. Hiregange Associates LLP and Authorised Representative appeared for the Appellants. The appellants reiterated their written submissions made along with the application and no additional submissions were made at the time of personal hearing. They requested to set aside the advance ruling in respect of said issue that are being contested and consider their appeal favourably. Disscussions and Findings : 10. We have gone through the order of the lower authority, appellants submissions and all other relevant documents. The appellants are claiming that, they sell Advertisement space in Print media with or without artwork and no additional consideration would be charged for addition of the artwork. In both cases (with or without artwork), the transaction will classify under HSN 998363 and attract GST at 5% (CGST 2.5% + SGST 2.5%) in terms of Sl. No. 21(i) of Notification No. 11/2017-Central Tax (Rate) date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, Electronic media, and advertising in video motion pictures. Print media includes books, brochures, pamphlets, etc.; newspapers, journals and periodicals; postcards, timetables, forms, posters or other printed matter. The activity of the appellants in the subject case is sale of advertising space in print media and is not on Bill boards, Buildings, Vehicles etc. Therefore, the findings of AAR and its ruling with regard to classification of service is not in consonance with the explanatory notes. As such a fresh look at the activity or service provided by the appellant has to be examined. 14. In this context, it is pertinent to note that, Advertising services is a specialized service, which includes a host of activities like planning, concept development, creating the basic idea for an advertisement, writing the words, selection of media to be used, design of ads, illustrations, posters, placement of advertisements in media etc. In the instant case, appellant is selling space for advertisement in print media. Further in some cases, apart from selling space, he is also providing art work, which makes the advertisement more appealing and attractive. And such additional activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marketing advertising campaigns, i.e. sending advertising and promotional messages directly to consumers through methods such as direct mail and telemarketing, rather than via mass media; aerial advertising services; delivery services of free samples and other advertising material; demonstration and presentation of advertising services at point of sale; sales promotion (if no orders are received) 16. From a combined reading of discussion at para 15 above and the explanatory notes, as the appellant is selling space and also providing design or art work, the activity cannot be called as mere selling of advertising space but Advertising Service falling under HSN 998361. Therefore, the concept of composite service for deciding the rate of tax, cannot be applied to Advertising Service, which involves host of activities which have their own relevance and importance. The intent of leaving a space empty is for the purpose of advertisement only. In general, advertising means the action of calling something to the attention of public for the purpose of business. As such activities like, design, color, shape, illustrations, etc are equally important. More so the intent of selling the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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