2022 (9) TMI 779 - AAR - GST

Tax Rates for Printing Services Clarified: Own Inputs at 18%, Client-Supplied Inputs at 12% Under GST Rules

In Re: M/s. Hyderabad Security Offset Printers Private Limited,

AAR ruled on tax rates for printing leaflets. For printing services using own inputs, the tax rate is 9% CGST and 9% SGST. When physical inputs are ... Classification of goods - rate of GST - HSN Code - printing of leaflets - to be classified under heading 9989 or not - HELD THAT:- The applicant is providing services of printing but this activity of printing does not fall under item (i) of heading 9989 i.e., printing of newspapers, books (including Braille books), journals and periodicals and hence is covered under Heading 9989 (ii) of Notification No.11/2017-Central Tax (Rate), dated: 28-06-2017 as amended and is taxable at 9% CGST & 9% SGST. By amendment the entry was introduced at serial no. 26 with chapter heading 9988 at sub item (iia), it is clarified that where the applicant uses physical input, i.e., paper supplied by their client for the purpose of goods falling under chapter 48 or 49 of customs taxable @6% CGST then the same will be taxable at 6% under CGST. Issues:Rate of tax and HSN code for printing of leaflets.Analysis:The case involves an application filed by a company engaged in printing leaflets and packing materials for pharmaceutical clients to determine the tax rate applicable to their services. The applicant sought clarification on the rate of tax and HSN code for printing leaflets. The Authority for Advance Ruling (AAR) admitted the application after verifying the payment of the requisite fee and receiving no objections from the jurisdictional officer.During the personal hearing, the applicant's representatives explained their business activities, highlighting their printing services for pharmaceutical companies and the specific query regarding the tax rate applicable to leaflets. The applicant currently charges 18% tax on such leaflets but wanted to ascertain the accurate tax liability through the AAR.In the discussion and findings, the AAR examined the relevant notifications under the GST Act. The AAR determined that the printing services provided by the applicant did not fall under the category of printing newspapers, books, journals, and periodicals, but rather under 'Other manufacturing services; publishing, printing, and reproduction services' as per the notifications. As per the notifications, the printing activity was taxable at 9% CGST and 9% SGST.Additionally, the AAR referred to an amended notification that specified a lower tax rate of 6% CGST for services involving the treatment or process on goods supplied by another person for printing goods falling under specific chapters. Therefore, if the applicant used physical inputs supplied by their client falling under certain chapters, the tax rate applicable would be 6% CGST.Based on the discussion, the AAR provided a ruling stating that the tax rate for printing leaflets would be 9% CGST and 9% SGST when the applicant uses physical inputs, and 6% CGST and 6% SGST when the physical inputs are supplied by the recipient of services. This ruling clarified the tax liability for the printing services provided by the applicant, addressing the specific query raised in the application.