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2020 (10) TMI 765
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....ital Imaging Private Limited, 10A, Kumaraswamy Street, Lakshmipuram, Chrompet, Kanchipuram, Tamilnadu-600044 (hereinafter referred to as 'Applicant') is registered under the GST Vide GSTIN 33AABCM9451F1ZL. The applicant has various regional offices located at Chennai, Noida, Vishakhapatnam, Vijayawada, Mumbai, Bangalore, Kochi, Kolkata. They are engaged in printing of billboards, Building Wraps, Fleet Graphics, Window Graphics, Trade Show Graphics, Office Branding; In-store Branding; Banners; Free Standing Display Units and Signage Graphics (hereinafter referred as trade advertisement material). They have sought Advance Ruling on the following questions: 1. Whether the transaction of printing of content provided by the customer, on poly vinyl chloride banners and supply of such printed trade advertisement material is supply of goods.? 2. What is the classification of such trade advertisement material if the transaction is a supply of goods? 3. What is the classification and applicable rate of Central Goods and Services Tax on the supply of such trade advertisement material if the transaction is that of supply of services? The Applicant has submitted th....
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....he former represents the service activity of printing carried out by the applicant and latter represents the physical supply of printed trade advertisements on the PVC material. 2.3 The applicant has stated that in the Pre-GST regime, under the erstwhile VAT regime they were paying VAT on the transaction of printing and supply of the trade advertisements. They have also stated that different states had different nature of transaction which varied from 'pure sale' transaction to a transaction of 'works contract'. The applicant has stated that they have paid applicable VAT to respective State Government Exchequer. However, in states where the subject transaction of printing and supply of trade advertisements was considered as 'works contract', the applicant was not charging any service tax, as it is settled position of law that process of printing on PVC material (blank) to make such PVC material in form of advertisement is an activity amounting to 'manufacture'. Further, the applicant has stated that in terms of Central Excise Tariff Act, 1985, the trade advertisements manufactured by the applicant were classifiable under Chapter Heading 4911, under which all products were exempt....
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.... property and eventually goods in terms of Section 2(52) of CGST Act. 2.5 The applicant has stated that their supply of trade advertisement material is composite supply in terms of section 2 (30) of CGST Act 2017 as their supply of trade advertisements satisfies the essentials of definition of Composite Supply. Further, to substantiate the above conclusion the applicant has drawn reference to the Advance ruling issued by the Hon'ble Authority in the case of Re: Giriraj Renewables Private Limited, 2018 (9) TMI 1183. The applicant has stated that PVC material and service of printing on PVC material is naturally bundled and is supplied by the applicant in the ordinary course of business. Further, the applicant has referred to Section 2(90) of CGST Act 2017, to clarify that principal supply is part of composite supply which dominates the composite supply and the other part of it is ancillary to the dominant part. The applicant has stated that the question of what constitutes the predominant element of the composite supply, should be derived from the specific terms and conditions of the contract. In order to support the above conclusion, the applicant has placed reliance on the follo....
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....t has also referred to the ruling issued by the Hon'ble Authority for Advance Ruling, Hyderabad in Re: M/s KI Hi-Tech Secure Print Ltd 2018 (10) TMI 445, wherein the printing on PVC cards was considered as supply of 'goods'. The applicant has further submitted that once any supply has been classified as supply of goods, there rests no purpose to test the said supply again on the basis definition of Services under Section 2(102) of CGST Act. 2.7 In terms of classification of trade advertisement material, the applicant has submitted that the printed trade advertisements are excluded from Chapter 39 of the Customs Tariff Act, 1975 (hereinafter the Tariff Act) by virtue of Section Note 2 to Section VII. The said note specifically provides that if the plastic material is printed with motif, character or pictorial representation which are not merely incidental to the primary use of the goods, the printed plastic material will fall under Chapter 49. The Applicant refers to Chapter Note 5 to Chapter 49, which states that subject to Note 3 to that Chapter, heading 4901 does not cover publications which are essentially devoted to advertising. Such publications are to be classified in head....
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.... view of the aforesaid facts and submissions the applicant has stated that the activities of procuring PVC material, printing of branded advertisement on the said material in terms of design and graphics provided by the customer is an activity constituting a composite supply, principal supply of which is supply of 'goods' and that the correct classification of the trade advertisements supplied by them is Heading 4911 and taxable @ 12%. 3.1 The applicant was extended an opportunity to be personally heard on 13.12.2019. The authorised representative of the applicant appeared before the authority and gave written submissions. They stated that they procure PVC material, along with other inputs on which they print the designs given by the client. They stated that they will be under the category of supply of goods classification under Heading 4911.They gave various case laws to justify their stand. They stated that they will submit invoices of inputs, details of the material used with a write up of their manufacturing process, output invoices with photos/videos of where the material supplied is being used within 4 weeks' time after which they will be heard again. 3.2 In the written....
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....eting in all sides if the graphic is on a billboard skin o The main categories of digital printing applications are primarily in three categories as outdoor applications, indoor applications and signage applications. Within these three categories there are lit, non-lit and back-lit applications but there is not much differentiation in the printing process. Different materials are used for Frontlet Applications, Backlit applications and Indoor applications o The scope of the applicant in all these cases is to get the ready-to-print designs from the customer, check quality of design and printability on the specified sizes and applications like outdoor print, indoor print or signage print and printing the finalized drafts and delivering the same. * Statement containing the details of major inputs and the corresponding output * Sample copies of input/output Tax invoices * Sample Purchase Order of GR Jewellers (PO No. 7600003679 dt. 28.11.2019), Airtel Payments Bank Limited(APBL---Tamil Nadu/ PUR/ 10000414) * Pictures showing display of trade advertising materials 4.1 The applicant was again heard on 29.01.2020. The authorised rep....
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....des the design and graphics and also specifies the material for such advertisements. Thus the bundle of activities including the purchase of PVC(blank) and printing on poly vinyl material with trade monograms of the customers as agreed by the applicant falls within the scope of supply of service in terms of TRU Circular No. 11/11/2017-GST dated 20.10.2017. The said authority has opined that the supply is classifiable under SAC 9989-Other manufacturing services; Publishing, Printing and reproduction services and liable to pay GST@ 18%. 6. We have carefully examined the submissions of the applicant in their application, their oral and written submission during the personal hearing, their further submissions after PH and the comments of the central jurisdictional officer in the instant case. The questions on which advance ruling is sought are as follows: 1. Whether the transaction of printing of content provided by the customer, on poly vinyl chloride banners and supply of such printed trade advertisement material is supply of goods. 2. What is the classification of such trade advertisement material if the transaction is a supply of goods? 3. What is the ....
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....licant • The Purchase Order is raised on the applicant. The purchase Order gives the details of the type of Printing and media/material, like Backlit Flex, Foam board with dimensions/ Hoardings with dimensions, material(DD Flux, SD Flex 300 GSM) and the quantity required • The unit price is based on the per Sq. Feet and accordingly the value is arrived at • The dispatch instructions (Destination) is also spelt in. The applicant has furnished sample copies of input Tax invoices to establish the incoming materials on own account and also furnished output Tax Invoice wherein they have described the output as 'Printing and Supply of Trade Advertising material-HSN 4911' 7.4 The applicant has stated that under GST, it is the contention of the applicant that the supply made by them is a naturally bundled composite supply, with supply of goods, 'trade advertisement' being the principal supply and thereby the applicable HSN is 4911 and the applicable rate is g12%. They have relied on the decisions of various legal fora in the earlier tax regime and the ruling of Appellate Authority of Advance Ruling(AAAR) in their own case in the State of West Be....
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.... to justify such a transaction. The other supply would only be ancillary to the main supply and even without that ancillary supply, the nature of the inputs involved would change significantly enough for the recipient to undertake the transaction. In the instant case, the Purchase Order is raised for 'Prints' and the media/material in which the output is required are spelt in. The value of the PO is arrived at based on the number of such advertisings required and the value of the unit number is calculated per dimensions. The invoice description is "printing and supply of trade materials', 'Media printings', the business process furnished shows that the primary activity is to make high quality prints with proof reading concentrated to content, color and sharpness in the desired media/ material. The digital content is given pi the recipient and they desire to use the final product of printed ilex banners/hoardings/billboard/standees to serve as advertisements of their own products or services. The recipient has undertaken this transaction with applicant mainly to get the printing services of the applicant. Without the printing activities, the blank PVC flex cannot be used as advertis....
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....ual 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 principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services. 5. In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, predominant supply is that of goods and the supply of printing of the content [supplied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff. From the above clarification, it is evident that 'Supply of service' is the 'Principal Supply', when the content is supplied by the owner of the intangible i....
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....refore, the supply of printing services on plastic in this case PVC materials are classifiable under SAC 998912. The principal supply being the 'Supply of service', the composite supply is also classifiable under SAC 998912 and the applicable rate on such supply is that applicable for such SAC. 9. SAC 9989 covers 'Other Manufacturing Services; Publishing, Printing and reproduction Services; materials recovery services'. The applicable GST rate is @ 18%(CGST + SGST) as per Sl.No.27 of Notification 11/2017 CT(Rate) Dated 28.07.2017 & G.O. (Ms) No. 72 dated 29.06.2017 No. II(2)/CTR/532(d-14)/2017. For ease of reference the relevant entry is given below: S.No. Chapter, Section or Heading Description of Service Rate (Per cent) Condition 27 9989 Other manufacturing services; publishing, printing and reproduction services; materials recovery services. 9 The above Notification is amended vide 20/2017-C.T.(Rate) dated 22.08.2017 as under: (vii) for serial number 27 and the entries relating thereto, the following shall be substituted, namely,- (1) (2) (3) (4) (5) "27 Heading 9989 (i) Services by way of printing of....
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.... Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. Thus for the purposes of classification under GST, the First Schedule to Customs Tariff Act is only applicable. From the list of Inputs used by the applicant, it is seen that the materials used are as follows: Sl.No. PVC Material Name HSN Classification 1 Vinyl(Self Adhesive) 3919 90 50/3919 90 90 2 Back Lit Flex 3921 90 26 3 Blockout Flex 3921 90 26 4 Foam Board 3920 61 90 Note 2 to Section VII of Customs Tariff states: 2. Except for the goods of heading 3918 or 3919, plastics, rubber, and articles thereof printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49. Chapter 49 of Customs Tariff states: 4911 OTHER PRINTED MATTER, INCLUDING PRINTED PICTURES AND PHOTOGRAPHS 4911 10 - Trade advertising m....
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....nt, as expressly stated, in the Statement of "12. Objects and Reasons, that the Central Excise Tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to "reduce disputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must he preferred, in case of any difference between the meaning of the expression given in the HSN and the meaning of that term given in the Glossary of Terms of the ISI." 18. When one goes to the HSN Explanatory Notes to 'other printed matter', Item No. 10 which has already been referred ....