Printing on PVC banners and supplying trade ads ruled as composite supply under SAC 998912

The ruling determined that the transaction involving printing content on PVC banners and supplying printed trade advertisement material constitutes a composite supply, with the principal supply being the service of printing. The trade advertisement material was classified under SAC 998912, with a tax rate of 9% CGST + 9% SGST from 01.07.2017 to 13.10.2017, and 6% CGST + 6% SGST from 13.10.2017 onwards.

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Issues Involved:
1. Whether the transaction of printing content provided by the customer on polyvinyl chloride (PVC) banners and the supply of such printed trade advertisement material is a supply of goods.
2. Classification of such trade advertisement material if the transaction is a supply of goods.
3. Classification and applicable rate of Central Goods and Services Tax (CGST) on the supply of such trade advertisement material if the transaction is a supply of services.

Issue-wise Detailed Analysis:

1. Whether the transaction of printing content provided by the customer on PVC banners and the supply of such printed trade advertisement material is a supply of goods:

The applicant is engaged in 'Wide format digital printing' for various trade advertisements. The content for these advertisements is provided by the customer in digital format. The applicant undertakes the process of printing on PVC materials and supplies the final printed product to the customer. The applicant contends that the supply is a composite supply with the principal supply being the trade advertisement (goods). They argue that the transaction should be classified as a supply of goods based on the nature of the final product being movable property. However, the ruling determined that the predominant element in the composite supply is the service of printing, making it a supply of services. The ruling referenced CBIC Circular No. 11/11/2017-GST, which clarifies that when content is supplied by the customer and the physical inputs belong to the printer, the principal supply is the service of printing.

2. Classification of such trade advertisement material if the transaction is a supply of goods:

The applicant submitted that printed trade advertisements should be classified under Heading 4911 of the Customs Tariff Act, which includes trade advertising material. They argued that the printed PVC materials should fall under Chapter 49 based on Section Note 2 to Section VII of the Customs Tariff, which states that printed plastics with motifs, characters, or pictorial representations not merely incidental to the primary use of the goods fall under Chapter 49. The ruling did not dispute this classification but emphasized that the principal supply in the composite supply is the service of printing, not the supply of goods.

3. Classification and applicable rate of CGST on the supply of such trade advertisement material if the transaction is a supply of services:

The ruling determined that the supply of printing services on PVC materials is classifiable under SAC 998912, which includes printing and reproduction services of recorded media on a fee or contract basis. The applicable tax rate for this service is 9% CGST + 9% SGST from 01.07.2017 to 13.10.2017 as per entry at Sl.No. 27 & 27(ii) of Notification No. 11/2017 CT(Rate) and 6% CGST + 6% SGST from 13.10.2017 as per the amended entry at Sl.No. 27(i) of the same notification.

Ruling:

1. The printing of content provided by the recipient on the PVC materials of the applicant and the supply of printed trade advertising material to the recipient is a composite supply, with the 'Supply of service of printing' being the principal supply.
2. The classification of the service is SAC 998912, and the applicable tax rate is 9% CGST + 9% SGST from 01.07.2017 to 13.10.2017 and 6% CGST + 6% SGST from 13.10.2017 onwards.

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