GST Rates for Print Media Advertising Clarified: 5% for space/time, 18% for other services

The judgment clarifies that selling space/time for advertisement in print media attracts GST at 5%. Advertising agencies selling space in print media to clients and providing designing/composing services without separate charges fall under the 5% GST slab for selling space/time and 18% for other services. Selling space for advertisement in print media is not considered a pure service and does not qualify for GST exemption. The exemption under Notification No. 12/2017-Central Tax (Rate) is not applicable to advertising companies due to the involvement of goods in the service.

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Issues Involved:
1. Applicability of GST rate on selling of space/time for advertisement in print media.
2. Applicability of GST rate if the advertising company/agency sells space in print media to clients and provides designing/composing services without separate charges.
3. Classification of selling space/time for advertisement in print media as a pure service and its exemption from GST.
4. Availability of GST exemption for advertising companies if the exemption is available to local authorities.

Detailed Analysis:

(A) Applicability of GST rate on selling of space/time for advertisement in print media:

(A.1) The judgment clarifies that selling of space/time for advertisement in print media is specified under Entry No. 21, Heading 9983 of Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017, which attracts GST at the rate of 5% [2.5% CGST + 2.5% SGST].

(B) Applicability of GST rate if the advertising company/agency sells unit of space in print media to clients and provides designing/composing services without separate charges:

(B.1) The judgment explains that there are two GST rate slabs for services under Entry No. 21, Heading 9983 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017: 5% for selling of space/time for advertisement in print media, and 18% for other professional, technical, and business services.

(B.2) The judgment discusses different scenarios:
(a) If the advertisement agency works on a principal-to-principal basis, buying space from the newspaper and selling it to clients, GST at 5% is applicable on the total amount charged.
(b) If the agency sells space on a commission/trade discount basis, GST at 5% applies.
(c) If the agency acts as an agent and charges separately, GST at 5% applies.
(d) Services other than selling space, such as designing, attract GST at 18% unless part of a composite supply.
(e) Volume/value incentives received by the agency attract GST at 18%.

(B.3) The judgment identifies the situation as a composite supply (Section 2(30) and Section 2(90) of the Act), where selling of space in print media is the principal supply, and designing/composing services are ancillary. Therefore, the composite supply attracts GST at 5%.

(C) Classification of selling space/time for advertisement in print media as a pure service and its exemption from GST:

(C.1) The judgment refers to Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, which exempts pure services provided to government entities under certain conditions.

(C.2) For exemption, the service must be pure (without involving goods) and provided to government entities for functions under Articles 243G or 243W of the Constitution.

(C.3) The applicant argued that selling space for advertisement in print media includes material (newspaper), thus not qualifying as pure service.

(C.4) The judgment clarifies that 'supply' includes all forms of supply of goods and/or services, and the applicant's service involves goods (newspaper), disqualifying it as pure service under the said notification.

(C.5) The judgment concludes that selling space for advertisement in print media involves goods, thus not qualifying for exemption as pure service.

(D) Availability of GST exemption for advertising companies if the exemption is available to local authorities:

(D.1) The judgment states that the exemption under Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, is not available to advertising agencies as the service involves goods.

Order:

1. Selling of space for advertisement in print media by advertising companies/agencies attracts GST at 5%. Volume/value incentives are treated as commission and attract GST at 18%.
2. Composite supply of selling space in print media and designing/composing advertisements attracts GST at 5%, with selling space as the principal supply.
3. Selling space for advertisement in print media is not a pure service, and thus, the exemption under Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, is not applicable.
4. The exemption from GST under Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, is not available to the applicant.

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