TaxTMI 
TaxTMI 
2020 (2) TMI 896
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....ndustrial Area, Mysore - 570 018. (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 46/2019 Dated: 17 Sept 2019 = 2019 (11) TMI 156 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. Appellant is a partnership firm having GSTIN: 29AAIFP8459L1ZB engaged in the manufacture and supply of cartons, corrugated boxes, paper folders, sleeves, other packaging containers, labels, tags, pamphlets, booklets, brochures, leaflets and similar printed matter falling under HSN Code 48 and 49. 4. The appellant filed an application for Advance Ruling under section 98 of the CGST Act, 2017 and KGST Act, 2017 on the following questions:- (i) Whether 'Access Card' printed and supplied by the Appellant based on the contents provided by their customers is rightly classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet? (ii) Whether 'Access card' printed and supplied by the appellant based on the contents provided by their customers attracts GST rate of 5% in case of IGST and 2.5% CGST and 2.5% SGST in case of Intra state supplies vide Notification No. 1/2017-CT (Rate)....
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....supply of goods or services. Thereafter, relevant HSN/ SAC would be determined in accordance with the scheme of classification under GST, so that the correct rate of tax could be determined. In the instant case, before determining the rate of tax applicable on supply of Access cards it should be decided first that the supply of Access card whether it is supply of goods or service. 10. In this regard Appellant submitted that the term "goods" is defined in section 2(52) of the CGST Act, 2017 means,- every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Therefore, every movable property is 'goods' under GST except money and securities. However, the term 'movable property' is not defined in the GST law hence finding recourse to Section 3(36) of the General Clauses Act, 1897 which defines the term 'movable property' to mean property of every description, except immovable property. The term 'immovable property' is defined in section 3(26) of the General Clauses Act, 1897 to include land, benefits to....
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....ts, brochures, leaflets and similar printed matter. Entry no. 201 of Schedule I to Notification. No. 01/2017-CT(R) covers "Brochures, leaflets and similar printed matter, whether or not in single sheets" under Chapter Heading 4901 as taxable at 2.5% CGST and 2.5% KGST. Further, they relied on the HSN Explanatory Notes to Heading 4901 which provides as under:- This heading covers virtually all publications and printed matter, illustrated or not, with the exception of publicity matter and products more specifically covered by other headings of the Chapter (particularly heading 4902, 4903 or 4904). It includes: (B) Brochures, pamphlets and leaflets, whether consisting of several sheets of reading matter fastened together (e.g., stapled), or of unfastened sheets, or of single sheets. 14. In this regard Appellant relied on the following case laws as under. 14.1. The Apex court in the case of Gujarat Perstorp Electronice Ltd 2005 (186) E.L.T. 532 (S.C.) = 2005 (8) TMI 657 - SUPREME COURT had held printed material falling under chapter heading 4901 of Customs Tariff Act, 1975 as goods. 14.2. In the case of Metagraphs Pvt. Ltd. cited [1996 (88) ELT 630 (SC)] = 1996 (11) TMI 68 - SUPRE....
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....a product of printing industry following ratio of Apex Court's decision as reported in Metagraphs at supra. 15. Further Appellant submitted that classification of goods is governed by First Schedule to the Customs Tariff Act, 1975 which is meant for import of goods. Import of printed material is specifically classified under Chapter Heading 4901 as goods; that when such access cards are imported by any person, the Customs has been classifying it under Heading 4901. Similarly, when the customer places an order for such access card to any printing industry located abroad, the same would be imported under heading 4901. Further, VAT was levied on the sale of Access Cards at the rate of 5.5%. Therefore, the intention of the legislature all along has been to classify the 'access cards' as supply of goods and the same treatment should be applicable under GST as well. They submitted that since supply of access cards are covered under the definition of 'goods' under Section 2(52), the same cannot be considered as 'service'. Further, printing of 'access cards' is not covered under any of the service activities mentioned under Schedule II to the CGST Act, 2017. Printing of access cards could....
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....re basically in the nature of job work. The appellant is making access cards complete in all respects according to the specifications of the customer and selling the same to them. Hence access cards are goods and not service. 19. Appellant mentioned that the Government has issued Circular no.11/11/2017-GST dated 20th October 2017 to provide clarification on taxability of printing contracts under GST. Para no. 4 of the circular provides that in case of books, pamphlets, brochures, annual reports, the supply of printing service is the principal supply, whereas para no. 5 provides that in case of envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. the principal supply is supply of goods. All the products specified in para 4 and para 5 are goods of chapter 48 or 49. However the circular does not provide clarity on taxability of 'printed access cards' or 'leaflets'. The intention of the buyer in all the cases is to obtain the hard-bound movable property in the form of goods. End use is based on the function of the goods. Therefore, such differentiation in para 4 and 5 is not in line with the principles of classification. This brings about ambiguity in the Circular....
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....rochures, leaflets and attracts GST rate of 5% in case of IGST and 2.5% CGST and 2.5% SGST in case of Intra state supplies. DISCUSSIONS AND FINDINGS 22. We have gone through the records of the case and taken into account the submissions made by the Appellant in their grounds of appeal as well as at the time of personal hearing. The issue before us is to decide whether the activity of printing and supply of 'Access card' by the appellant based on the contents provided by their customers is an activity of supply of goods or supply of service. The classification and the GST rate applicable will depend on the determination of the nature of activity i.e whether it is a supply of goods or supply of service. 23. The undisputed facts are that the Appellant is supplying "Access Cards" to their customer M/s Trilok Security Systems India Pvt ltd who provide Mass Queue Management System services at various pilgrim destinations in India. M/s Trilok Security Systems India Pvt Ltd use the "Access cards" to manage the large pilgrim crowds at pilgrimage destinations like Tirumala Tirupati Devasthanams, Shri Saibaba temple, Shirdi, Sree Mata Vaishnavo Devi Shrine, Haridwar, Rishikesh, etc. The "A....
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.... services falling under heading 9989 of the scheme of classification of services annexed to notification No. 11/2017-CT(R)." 2. In the above context, it is clarified that supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply. 3. Principal supply has been defined in Section 2(90) of the Central Goods and Services Tax Act as supply of goods or services -which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. 4. In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing [of the content supplied by the recipient of supply] is the prin....