Appellate authority classifies 'Access Cards' as goods under HSN code, not service.

The appellate authority determined that the 'Access Cards' printed and supplied by the appellant constitute goods under HSN code 4901 10 20, not a service as initially classified. The cards were considered a product of the printing industry, falling under the GST rate of 5% for inter-state supplies and 2.5% CGST and 2.5% SGST for intra-state supplies, as per Notification No. 01/2017 CT (R) dated 28.06.2017. The lower authority's ruling was set aside in favor of classifying the 'Access Cards' as goods and applying the appropriate GST rates.

---

---

Issues Involved:
1. Classification of 'Access Cards' under GST.
2. Determination of GST rate applicable to 'Access Cards'.

Issue-wise Detailed Analysis:

1. Classification of 'Access Cards' under GST:

The appellant, a partnership firm engaged in the manufacture and supply of various printed materials, filed an application for Advance Ruling to determine whether 'Access Cards' printed and supplied based on customer-provided content fall under HSN code 4901 10 20. The initial ruling classified the supply of 'Access Cards' as a service under SAC 9989, subject to 18% GST. The appellant contended that the ruling ignored the nature of the transaction between the appellant and their customer, focusing instead on the end-use of the cards by the customer's clients.

The appellant argued that the 'Access Cards' should be classified as goods under HSN 4901 10 20, citing definitions and precedents that classify similar printed materials as goods. They emphasized that the essential aspect of the transaction was the supply of tangible printed cards, not a service. The appellant also referenced several legal cases and definitions to support their claim that 'Access Cards' are goods, highlighting the physical and movable nature of the cards.

Upon review, the appellate authority found that the activity undertaken by the appellant resulted in the creation of a distinct product known as 'Access Cards,' which are used by the recipient for managing pilgrim crowds. The authority noted that printing was ancillary to the creation of the 'Access Cards,' making the cards a product of the printing industry. Consequently, the appellate authority disagreed with the lower authority's reliance on the CBIC Circular No. 11/11/2017-GST, which classified the activity as a service. Instead, the appellate authority applied the provisions of Para 5 of the Circular, classifying the 'Access Cards' as goods.

2. Determination of GST Rate Applicable to 'Access Cards':

Having classified the 'Access Cards' as goods, the appellate authority examined the appropriate GST rate. Chapter 49 of the Customs Tariff covers products of the printing industry, with heading 4901 specifically addressing printed books, brochures, leaflets, and similar printed matter. The appellate authority determined that the 'Access Cards,' being printed cards in single sheets, fall under sub-heading 4901 10 20, which includes pamphlets, booklets, brochures, leaflets, and similar printed matter.

According to GST rate Notification No. 01/2017 CT (R) dated 28.06.2017, "Brochures, leaflets and similar printed matter, whether or not in single sheets" are covered under entry SI.No 201 of Schedule I, attracting a GST rate of 2.5% CGST and 2.5% SGST for intra-state supplies, and 5% IGST for inter-state supplies.

Order:

The appellate authority set aside the lower authority's ruling and concluded that:
1. The 'Access Card' printed and supplied by the appellant is a supply of goods, classifiable under HSN code 4901 10 20.
2. The 'Access Card' attracts a GST rate of 5% for inter-state supplies and 2.5% CGST and 2.5% SGST for intra-state supplies.

---