2022 (8) TMI 868 - AAR - GST

Printing services to educational institutions exempt under GST Notification 12/2017 entry 66, answer booklets taxable as goods

AAR Karnataka ruled on GST classification for printing services to educational institutions. The applicant supplied printed materials including question ... Classification of supply - supply of service to an Educational Institute or not - printing stationery items such as question papers, admit cards, answer booklets, SSLC Pass Certificate, the overprinting of variable data and lamination, fail marks cards, Circulars, ID Cards and other formats used for and during examinations, envelopes for packing answer booklets on contract basis for the Karnataka Secondary Education Examinations Board and utilized for the conduct of examinations - applicability of Sr. No. 66 (Heading 9992) of Notification No.12/2017-Central Tax (Rate), as amended. HELD THAT:- In the instant case, the applicant is supplying question papers, admit cards, SSLC Pass Certificate, the overprinting of variable data and lamination, fail marks cards, Circulars, ID Cards printed with the content supplied by the recipient i.e., KSEEB, made using physical inputs including paper belonging to the printer. Here, supply of printing (of content supplied by the recipient of supplier) is the principal supply and therefore such supplies would constitute supply of service falling under Heading 9989 of the scheme of classification of services - it is evident that Karnataka Secondary Education Examination Board is an educational institution for the limited purpose of providing services by way of conduct of examination to the students. The services provided by the applicant are exempted as per entry No.66 of Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 as amended vide Notification No.02/2018-Central Tax (Rate) dated 25th January, 2018. In the instant case, the applicant is also supplying answer booklets, other formats used for and during examinations and envelopes for packing answer booklets printed with the content supplied by the recipient i.e., KSEEB made using physical inputs including paper belonging to the printer. Here, the usage of the products gives its essential characteristic while printing (of content supplied by the recipient of supplier) is an ancillary activity and therefore such supplies would constitute supply of goods falling under respective Headings of Chapter 48 and 49 of the Customs Tariff - The supply of answer booklets and other formats used for and during examinations falling under the heading 4802 is taxable as per entry No.112 of Schedule II of Notification No.1/2017-Central Tax (Rate), dated 28th June, 2017 and the supply of envelopes for packing answer booklets falling under the heading 4817 is taxable as per entry 152 of Schedule III of Notification No.1/2017-Central Tax (Rate) dated 28th June, 2017. Issues Involved:1. Whether the proposed printing activities constitute a supply of service to an 'educational institution' as defined in Notification 12/2017 CT(R).2. Whether the service provided to educational institutions by way of printing examination stationery is covered by Sr. No. 66 (Heading 9992) of Notification No.12/2017-Central Tax (Rate) and subject to Nil rate of tax.Detailed Analysis:Issue 1: Classification of Printing Activities as Supply of Service to an Educational InstitutionThe applicant sought clarification on whether their proposed activities of printing examination-related stationery items for the Karnataka Secondary Education Examinations Board (KSEEB) would constitute a supply of service to an 'educational institution' under Notification 12/2017 CT(R).- Applicant's Argument: The applicant argued that KSEEB qualifies as an 'educational institution' as per the definitions provided in Notification No.12/2017-CT(R) and various judicial precedents. They cited the legislative intent and judicial interpretations, including the ruling in Sahitya Mudranalaya Private Limited v Additional Director General, which affirmed that examination boards are integral to the educational process and thus qualify as educational institutions.- Authority's Finding: The Authority agreed with the applicant, referencing Notification No.14/2018-Central Tax (Rate), which clarifies that Central and State Educational Boards are treated as educational institutions for the limited purpose of conducting examinations. Therefore, the printing activities proposed by the applicant, when related to the conduct of examinations, constitute a supply of service to an educational institution.Issue 2: Tax Exemption for Services Provided to Educational InstitutionsThe applicant also sought clarification on whether their services would be exempt from GST under Sr. No. 66 (Heading 9992) of Notification No.12/2017-Central Tax (Rate).- Applicant's Argument: The applicant contended that the printing services provided to KSEEB should be exempt from GST as they fall under the category of services related to the conduct of examinations, which are covered under Entry No.66 of Notification No.12/2017-Central Tax (Rate).- Authority's Finding: The Authority examined Circular No. 11/11/2017-GST, which clarifies that if the principal supply in a composite supply is the printing of content supplied by the recipient, it constitutes a supply of service. The Authority concluded that the printing of question papers, admit cards, SSLC Pass Certificates, etc., where the content is supplied by KSEEB, constitutes a supply of service under Heading 9989. These services are exempt from GST as per Entry No.66 of Notification No.12/2017-Central Tax (Rate).Ruling:1. Supply of Service:- The printing of question papers, admit cards, SSLC Pass Certificates, overprinting of variable data and lamination, fail marks cards, Circulars, and ID Cards on a contract basis for KSEEB constitutes a supply of service to an 'educational institution'.- These services are exempt from GST under Entry No.66 (Heading 9992) of Notification No.12/2017-Central Tax (Rate), as amended.2. Supply of Goods:- The printing of answer booklets, other formats used during examinations, and envelopes for packing answer booklets on a contract basis for KSEEB constitutes a supply of goods.- The supply of these goods is taxable under respective headings of Chapter 48 and 49 of the Customs Tariff.In conclusion, the Authority ruled that the applicant's activities related to the printing of examination materials for KSEEB are classified as either supply of services or supply of goods, with the former being exempt from GST and the latter being taxable as per the relevant tariff headings.