2024 (1) TMI 1095 - AAR - GST

Printing progress cards for government departments doesn't qualify for GST exemption under Serial No. 3,3A of Notification 12/2017 /2017

AAR, West Bengal ruled on printing activities' GST exemption eligibility. The authority held that printing comprehensive report progress cards for ... Supply of goods versus supply of services - Temporary transfer of copyright - Composite supply and principal supply - Classification of printing activities as printing services under Tariff Code 9989/998912 - Exemption under Notification No. 12/2017 - Serial No. 3 and 3A (services to Government/local authorities) - Circular No. 11/11/2017 clarification on printing where content is supplied by recipientSupply of goods versus supply of services - Temporary transfer of copyright - Printing and supply of text books to JCERT is a supply of goods. - HELD THAT: - The agreement conferred on the applicant a temporary copyright for the academic year 2023-24 and authorised the applicant to print and supply books on its own account to JCERT, with the right to sell excess copies on payment of additional royalty. The Authority found that where the printer holds usage rights and prints using inputs procured by itself and supplies the finished product on its own account, the activity cannot be treated as the printing service contemplated by the Circular No. 11/11/2017 where the content-owner and printer are different. The predominant character of the transaction is the transfer of printed books - movable, distinct items - and therefore the supply is to be treated as supply of goods (printed books). [Paras 4]Printing and supply of text books to JCERT shall be treated as supply of goods.Composite supply and principal supply - Classification of printing activities as printing services under Tariff Code 9989/998912 - Circular No. 11/11/2017 clarification on printing where content is supplied by recipient - Printing and supply of the 'Bilingual Parental Calendar' to JEPC is a supply of services. - HELD THAT: - The specimen calendar supplied by the applicant showed that JEPC provided the content and the applicant printed using paper and ink procured by it. Applying the test of principal supply, the Authority held the transaction to be a composite supply where the predominant element is the printing/reproduction activity performed by the applicant. Consequently, the principal supply is printing services and the supply is classifiable under printing and reproduction services (Tariff Code 998912). The fact that the calendar is designed for educational use did not alter its character where the printing activity remained predominant. [Paras 4]Printing and supply of 'Bilingual Parental Calendar' to JEPC would be treated as supply of services.Supply of goods versus supply of services - Composite supply and principal supply - Printing and supply of notebooks for JEPC (School Kit Scheme) is a supply of goods. - HELD THAT: - The notebooks were produced by the applicant using its own inputs and were meant for free distribution as part of the School Kit Scheme; the recipient (JEPC) provided multicolour matter for printing but the predominant supply was held to be the goods themselves (notebooks). The printing of content supplied by the recipient was ancillary to the principal supply of goods, and therefore the transaction falls under the relevant headings of Chapters 48 or 49 (printed goods). [Paras 4]Printing and supply of notebook would be treated as supply of goods.Supply of goods versus supply of services - Exemption under Notification No. 12/2017 - Serial No. 66(b)(iv) and Serial No. 3/3A - Printing and supply of Comprehensive Report Progress Card to the Education Department, Government of Assam is a supply of services and is not covered by the exemption for services to an educational institution. - HELD THAT: - While printing of materials related to conduct of examinations may, in general, fall within services relating to conduct of examination (and thereby within certain exemptions when supplied to an educational institution), the Authority noted that the present supply was made to the Education Department, Government of Assam and not to an 'educational institution' as defined for the purpose of the exemption. Hence the exemption at Sr. No. 66(b)(iv) of Notification No. 12/2017-Central Tax (Rate) does not apply, and the supply is to be treated as printing services. [Paras 4]Printing and supply of Comprehensive Report Progress Card to the Education Department, Government of Assam would be treated as supply of services.Exemption under Notification No. 12/2017 - Serial No. 3 and 3A (services to Government/local authorities) - Composite supply and principal supply - No ruling is pronounced on eligibility for exemption under Serial Nos. 3 and 3A of Notification No. 12/2017; the matter is left undecided for want of documents to ascertain value of goods in the composite supplies. - HELD THAT: - Entries 3 and 3A provide exemptions for pure services and certain composite supplies to Government/local authorities where the goods component does not exceed specified thresholds. The Authority observed that the supplies in question involve paper, ink, binding and packing (i.e., goods) and that the applicant had not furnished documents to determine the value proportion of goods versus services. For that reason, the Authority refrained from pronouncing any ruling on entitlement to exemption under Serial Nos. 3 or 3A and did not make a determination on that issue. [Paras 4]Ruling on eligibility for exemption under Serial Nos. 3 and 3A of Notification No. 12/2017 is not pronounced due to lack of evidentiary data on value composition.Final Conclusion: The Authority held that printing and supply of text books and notebooks are supplies of goods, printing and supply of the bilingual parental calendar and comprehensive report progress card are supplies of services; no determination was made on exemption under Serial Nos. 3/3A of Notification No. 12/2017 for lack of material to ascertain the goods component in the composite supplies. Issues Involved:1. Classification of items supplied as goods or services.2. Eligibility for exemption under Notification No. 12/2017 Central Tax (Rate).Issue 1: Classification of Items Supplied as Goods or ServicesTextbooks to JCERT:The applicant, engaged in printing books, supplies textbooks to JCERT. The contract involves a temporary transfer of copyright for which the applicant pays royalty. The Authority observed that the applicant holds the copyright and prints the books using its own materials. Thus, the supply is classified as 'supply of goods.'Bilingual Parental Calendar to JEPC:The applicant supplies a calendar that includes educational content and activities. The Authority determined that the calendar remains a calendar despite its educational content. As the recipient provides the content and the applicant undertakes the printing, it constitutes a composite supply with printing services as the principal supply. Hence, it is classified as 'supply of services.'Notebooks to JCERT:The applicant supplies notebooks featuring designs and logos of the Jharkhand Government. The contract is for printing and supplying notebooks for free distribution under the School Kit Scheme. The Authority held that the predominant supply is of goods, with printing being ancillary. Therefore, it is classified as 'supply of goods.'Comprehensive Report Progress Card to Assam Government:The applicant prints progress report cards for the Assam Government. Unlike the textbooks, there is no temporary transfer of copyright. The Authority concluded that this supply relates to the conduct of examinations and is classified as 'supply of services.'Issue 2: Eligibility for Exemption under Notification No. 12/2017 Central Tax (Rate)Pure Services (Serial No. 3):The term 'pure services' excludes works contract services or composite supplies involving goods. Since the supplies involve materials like paper and ink, they do not qualify under this entry.Composite Supplies (Serial No. 3A):For composite supplies to qualify under this entry, the value of goods must be less than 25% of the total value. The applicant did not provide documents to ascertain this value. Therefore, no ruling was given on this issue.Ruling:1. Printing and supply of textbooks to JCERT: Supply of goods.2. Printing and supply of Bilingual Parental Calendar to JEPC: Supply of services.3. Printing and supply of notebooks: Supply of goods.4. Printing and supply of Comprehensive Report Progress Card to Assam Government: Supply of services.