Classification of Printing of Content in Public Domain - Whether goods or services?

[Mith Moh]

A printer undertakes printing of religious books such as the Bible, Quran, Bhagavad Gita, and extracts or translations thereof. The content is in the public domain and is either supplied by the customer or independently sourced by the printer. The printer supplies the paper, ink, plates and all other consumables, manufactures the finished books, and supplies them to churches, temples, mosques, educational institutions and charitable or religious organizations. The books are intended for use as study material, reference books, translated publications or religious literature.

Circular No. 11/11/2017-GST dated 20.10.2017 clarifies that where only the content is supplied by the publisher or the person who owns the usage rights to the intangible inputs, while the printer supplies the physical inputs, the principal supply is printing and the transaction is classifiable as a service under Heading 9989. The Explanatory Notes to Group 99891 further state that the group covers transfer of intangible inputs for outsourced production and that the service provider does not own or retain the usage rights to the intangible inputs.

However, public-domain works have no exclusive copyright owner or publishing rights, and any person is legally entitled to reproduce and publish them.

In this context,:

1. Can public-domain content be regarded as an "intangible input" transferred by the customer for the purposes of Group 99891?
2. Does the expression "publisher or the person who owns the usage rights to the intangible inputs" in Circular No. 11/11/2017-GST include a person who merely has the legal right to reproduce public-domain content, or is it intended to apply only where the person owns or controls proprietary intellectual property?
3. Where the printer supplies all physical inputs and ultimately supplies printed books, should the transaction be classified as a printing service under Heading 9989 or as a supply of printed books under Chapter 49 (Heading 4901)?

[Shilpi Jain]

In this case, it looks more like a printing services which is being provided and cannot be regarded as printed books sale, unless you're able to prove that this is a book that you have printed and is being supplied to various persons and not custom made for a particular person and supply being made only to one person.

So the facts, the contracts, the situation, etc. all that are going to make a lot of difference, on what is the final conclusion.

[Sanjeev Agarwal]

Public-domain content cannot ordinarily be regarded as the "intangible input" contemplated under Group 99891. The Explanatory Notes and Circular No. 11/11/2017-GST envisage a situation where the customer transfers proprietary intangible inputs, such as copyrighted manuscripts or licensed content, while retaining ownership or usage rights. The printer merely undertakes outsourced production and does not acquire those rights.

Public-domain works, however, stand on a different footing. No person owns exclusive copyright or publishing rights in the Bible, Quran, Bhagavad Gita or other public-domain texts. Every person is independently entitled by law to reproduce them. Therefore, when a customer merely provides a copy of such content, there is no transfer of proprietary intellectual property or exclusive usage rights, but only the furnishing of material that is already freely reproducible.

Accordingly, the expression "publisher or the person who owns the usage rights to the intangible inputs" in Circular No. 11/11/2017-GST should be interpreted as referring to a person who owns or controls proprietary intellectual property, and not a person who merely enjoys the same legal right as everyone else to reproduce public-domain works.

Where the printer supplies the paper, ink, plates and all other consumables, manufactures the finished books and supplies them to customers, while the content is in the public domain and no proprietary rights are transferred by the customer, the transaction is more appropriately characterized as a supply of printed books classifiable under Heading 4901 of Chapter 49, rather than as a printing service under Heading 9989.

However, since the Circular does not expressly address public-domain works, the issue is not entirely free from doubt. A contrary departmental view may contend that any customer-supplied content constitutes an intangible input. Nevertheless, on a plain reading of the Circular and the Explanatory Notes, the stronger and more legally sustainable view is that Heading 4901 applies where no proprietary intellectual property is supplied by the customer and the printer supplies finished books.

[KASTURI SETHI]

The aspect of composite supply in this scenario is worth examination.

[KASTURI SETHI]

To be on safer side, the querist may seek Advance Ruling under Section 97 (2) (a) (b) & (e) of CGST Act.

AI Summary

GST classification of public-domain book printing turns on proprietary content rights, custom production, and supply of finished books.
GST classification of printing public-domain content depends on whether the arrangement is outsourced printing using customer-supplied intangible inputs or a supply of finished books. One view is that public-domain content involves no transfer of proprietary intellectual property or exclusive usage rights; where the printer supplies all physical inputs and finished books, Heading 4901 may apply. An alternative view treats custom-made books supplied solely to a customer as printing services under Heading 9989. Contractual terms, supply arrangements and composite-supply considerations remain material.