Printing services taxable at 12% or 18% GST when recipient supplies content and materials under Entry 27

The AAR, Telangana ruled on GST classification for printing services where content and raw materials are supplied by the recipient. The authority held that printing constitutes the principal supply in such composite supplies, making the entire transaction taxable as printing services. Under Entry 27(i) of Notification 20/2017, printing of newspapers, books, journals and periodicals using printer's physical inputs attracts 12% GST. Other printing services fall under Entry 27(ii) as manufacturing services, taxable at 18%. The tax rate applicable to printing services applies to the entire composite supply value.

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Issues Involved:
1. Rate of tax under CGST and SGST on the service of printing where content and raw materials are supplied by the recipient.
2. Rate of tax under CGST and SGST on the service of printing where only the content is supplied by the recipient.

Issue-Wise Detailed Analysis:

1. Rate of Tax on Printing Services with Content and Raw Materials Supplied by Recipient:

The applicant, M/s. Dachepalli Printers, sought clarification on the applicable GST rate for printing services where the recipient supplies both content and physical inputs (such as paper and cover board). The Authority for Advance Ruling (AAR) observed that this scenario constitutes job work, defined under Entry No. 26 of Notification No. 11/2017 - Central Tax (Rate), dated 28-06-2017. Specifically, it falls under "Services by way of job work in relation to printing of books (including Braille books), journals and periodicals," which is taxable at 2.5% CGST and 2.5% SGST.

The AAR emphasized that when content and physical inputs are supplied by the recipient, the service provided by the applicant is classified under Heading 9988 (Manufacturing services on physical inputs owned by others). This classification covers various job work services, including printing of books, journals, and periodicals, which are taxable at a combined rate of 5% (2.5% CGST + 2.5% SGST).

2. Rate of Tax on Printing Services with Only Content Supplied by Recipient:

In cases where only the content is supplied by the recipient, and the physical inputs (such as paper) are provided by the printer, the service constitutes a composite supply. According to Section 2(30) of the CGST Act, a composite supply consists of two or more supplies naturally bundled and supplied together, with one being the principal supply. Here, the principal supply is the printing service.

The applicable tax rate for such composite supplies is determined by the principal supply, which in this case is the printing service. Initially, as per Notification No. 11/2017-CT(R), dated 28-06-2017, "Services by way of printing of newspapers, books (including Braille books), journals and periodicals, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer" were taxable at 6% CGST and 6% SGST.

However, this entry was amended by Notification No. 6/2021-Central Tax (R) dated 30-09-2021, which reclassified such services under "Other manufacturing services; publishing, printing and reproduction services; material recovery services," making them taxable at 9% CGST and 9% SGST from 01-10-2021 onwards.

Conclusion and Ruling:

The AAR concluded the following:
1. For printing services where both content and physical inputs are supplied by the recipient, the applicable tax rate is 2.5% CGST and 2.5% SGST.
2. For printing services where only content is supplied by the recipient, and the physical inputs belong to the printer, the tax rate is 6% CGST and 6% SGST up to 30-09-2021, and 9% CGST and 9% SGST from 01-10-2021 onwards.

This ruling clarifies the tax liability for different scenarios of printing services, ensuring compliance with the GST regulations.

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