2018 (6) TMI 519 - AAR - GST

Printed advertisement materials classified as 'supply of goods' under CGST Act, 2017

IN RE: M/s. Macro Media Digital Imaging Private Limited

The authority concluded that the printed advertisement materials manufactured and supplied by the applicant are classifiable as 'supply of goods' under ... Classification of supply - supply of goods and/or services - printed advertisement materials - Whether the printed advertisement materials classifiable as 'supply of goods? - If yes, whether it is classifiable under chapter heading 4911 of first schedule to Customs Tariff Act, 1975? - Held that:- As per Section 7 of CGST Act, 2017 read with Schedule-II Sl. No. 1(a) of CGST Act, 'any transfer of the title in goods is a supply of goods' - In the instant case the applicant is engaged in the business of manufacturing and sale of digital printed materials, wherein preparation of such printed material would be undertaken as per the customers specification and except specifying the specifications and designs to be printed, clients/customers of applicant does not provide any materials and all required materials for the preparation of the advertisement materials are procured by the applicant ,and the applicant is transferring the title in the goods i.e., printed advertisement materials. Therefore, instant case of supplying printed advertisement materials amounts to supply of 'goods' only. The printed advertisement material are classifiable under Tariff heading 4911 in accordance with the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule as made applicable for the interpretation and classification of goods under GST Tariff. Ruling:- The printed advertisement materials manufactured and supplied by the applicant are classifiable as 'supply of goods' - The printed advertisement material are classifiable under chapter heading 4911 of the GST Tariff and the rate of tax applicable is 6% CGST + 6% SGST. Issues Involved:1. Whether the printed advertisement materials are classifiable as 'supply of goods'.2. If yes, whether they are classifiable under chapter heading 4911 of the first schedule to the Customs Tariff Act, 1975.Detailed Analysis:Issue 1: Classification of Printed Advertisement Materials as 'Supply of Goods'The applicant, engaged in the business of manufacturing and sale of digital printed materials, sought clarification on whether their printed advertisement materials could be classified as 'supply of goods'. The applicant argued that these materials, being movable property, fall under the definition of 'goods' as per Section 2(52) of the CGST Act, 2017. They emphasized that their activities involve the transfer of title in goods, which aligns with the definition of 'supply of goods' under Section 7 of the CGST Act, 2017.The applicant supported their stance by referring to the TRU Circular No. 11/11/2017-GST dated 20-10-2017, which clarified that printing contracts similar to their case constitute 'Supply of goods'. They also highlighted that the major costs incurred in their operations are towards materials like ink and paper, further reinforcing the classification as goods.Conclusion on Issue 1:The authority concluded that the printed advertisement materials manufactured and supplied by the applicant are classifiable as 'supply of goods'. This conclusion was based on the definitions and provisions under the CGST Act, 2017, and the applicant's business practices of transferring title in the printed materials.Issue 2: Classification under Chapter Heading 4911The applicant contended that their printed advertisement materials should be classified under chapter heading 4911 of the first schedule to the Customs Tariff Act, 1975. They argued that these materials, being used for trade advertising, do not fall under any other heading of Chapter 49. The applicant referred to Chapter Note 5 to Chapter 49, which excludes publications devoted to advertising from heading 4901 and classifies them under heading 4911.The applicant also pointed out that the rate of tax for goods under heading 4911 is specified in the GST rate notifications. They cited Notification No. 1/2017 - Central Tax (Rate) dated 28-06-2017, which categorizes goods under six schedules based on description and HSN, attracting different rates of tax. The applicant's understanding was that their printed advertisement materials fall under heading 4911, liable for GST at the rate of 12% (6% CGST + 6% SGST).Conclusion on Issue 2:The authority agreed with the applicant's interpretation and concluded that the printed advertisement materials are classifiable under chapter heading 4911 of the GST Tariff. The applicable rate of tax for these materials is 6% CGST + 6% SGST, as specified in the relevant GST rate notifications.Final Order:The application filed by M/s Macro Media Digital Imaging Private Limited was disposed of with the following rulings:1. The printed advertisement materials are classifiable as 'supply of goods'.2. These materials are classifiable under chapter heading 4911 of the GST Tariff, with an applicable tax rate of 6% CGST + 6% SGST.