TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 856
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....igital Imaging Pvt Ltd, 32/1, Visweswaraiahlndl Estate, KIADB Road, Mahadevapura, Bengaluru 560048.(herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 06/2020 Dated: 17th Feb 2020 = 2020 (3) TMI 69 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The Appellant is a Private Limited company engaged in manufacturing of Billboards, Building Wraps, Feet Graphics Fleet Graphics, Window Graphics, Trade Show Graphics, Office Branding, In-store Branding, Banners, Free Standing Display Units and Signage Graphics (herein after referred to as "trade advertisements". The customers place purchase orders on the Appellant for supply of trade advertisements and the same are printed by the Appellant on Poly Vinyl Chloride (PVC) material such as Vinyl, Back Lit Flex, Blockout Flex and Foam Board which is procured by them. 4. The design and graphics of the advertisements are provided by the customers themselves. The Appellant merely undertakes the activity of printing on the material. Further the Appellant, in the bill, charges on two accounts i.e. 'printing' and 'supply', wherein the former represent the service activity of printing and....
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....ers and hence the impugned ruling is liable to be set aside. 7.2. The Appellant submitted that supply of trade advertisement amounts to a supply of goods. The definition of 'goods' as given in Section 2(52) of the CGST Act indicates that any property which is movable in nature and is not in form of money or securities shall qualify to be 'goods'. They submitted that it is a settled legal position under the erstwhile provisions of Central Excise as well as Sales Tax regime, that, things which are capable of being moved from one place to another without any substantial damage while shifting, are 'movable property'. The printed trade advertising materials are freely moveable from one place to another and thereby they are 'movable property' and consequently they fall within the ambit of goods; that the definition of 'service' as given under Section 2(102) of the said Act implies that in order to determine if a particular supply constitutes 'supply of service', it is important to rule out that such supply is not of goods; that it would be considered as supply of 'service' only when it does not qualify as supply of 'goods'. The AAR has erred in not proceeding first to determine if....
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....ypescripts and plans" and Chapter Note 2 to Chapter 49 provides that "Printed" also means produced under the control of a computer. They submitted that in their case, the Appellant is printing advertisements on PVC material (blank) by using a computer controlled digital image printer, which qualifies as 'printing as per Chapter Note 2 to Chapter 49. Further the printed PVC material is plastic falling under Chapter 39. However, by virtue of Section Note 2 to Section VII, when a plastic article is printed with text or material and such printing is not merely incidental to the primary use of such goods, such plastic material would be ousted from Chapter 39 and they would travel to Chapter 49 as product of printing industry. They contended that the above is also supported by Chapter Note 5 to Chapter 49 which provides that publications essentially devoted to advertising are to be classified in heading 4911; that according to the HSN Explanatory Notes, tariff heading 4911 covers self-adhesive printed stickers designed to be used, for publicity, advertising or mere decoration; that their products are specifically covered under Heading 4911 10 by nomenclature, under the description "trade....
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.... printing brings a new product into existence, printing is ancillary to the main activity of making the new product; that supplying a product emerging from the activity of printing would amount to a "supply of goods". 7.6. Without prejudice to the above contentions, the Appellant submitted that even if the transaction undertaken by them is considered as a composite supply, supply of goods is the principal supply as the customers intend to procure goods in form of trade advertisements from the Appellant and not receive printing services per se. They also submitted that it has been held by many judicial decisions that the only test to determine dominant component of supply is to have regard to the terms and conditions of the contract; that in their case, the scope of the purchase orders placed by the customers has always been for supply of the trade advertisements, including both PVC material and printing as none of these elements can stand alone to serve the purpose of the trade advertisements and together they constitute as on unified economic supply. Therefore, the predominant supply in their case is a supply of goods to its customers and printing is ancillary to the domina....
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....by the Appellant results in the emergence of a new and distinct product and hence it would be considered as a manufactured product under the earlier regime; that the activity of printing is ancillary to the emergence of the printed trade advertisement material. He also explained with the purchase orders placed by some of the customers of the Appellant that the purchase order is for the supply of a product; the rate of the product is on the basis of the unit of measurement of the finished final product and the risk and title of the goods are transferred only when the finished product is supplied to the customer. 8.4. He also drew reference to the AAR rulings given by the authorities at AP and Telangana in his own case, wherein they have both held that the supply of printed PVC trade advertisement material is a supply of goods. However, he submitted that the decision of the West Bengal Appellate Authority for Advance Ruling in the case of the Appellant's Company is rendered per incuriam. 8.5 The authorised representative reiterated the submissions made in the grounds of appeal and pleaded that the order of the lower Authority may be set aside. DISCUSSIONS AND FINDINGS 9. &n....
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....ments involves cutting the blank PVC material to the shape and size as requested the customer and then printing the content onto the PVC using a digital printer. The activity of printing the content provided by the customer is what transforms the PVC material from being just a blank PVC material into a trade advertisement. It is this finished product (i.e. either in the form of a Billboard, banner, free-standing display unit, etc) which is supplied by the Appellant. Without the printing activity, the process of making the trade advertisement is incomplete. Therefore, printing is an activity which is integral to the emergence of the trade advertisement. The printing activity undertaken by the Appellant is for the purpose of bringing into existence the trade advertisement which is used by the customer for advertising their products/services. What the customer requires is either a billboard or banner or display unit which advertises his product or service. The requirement of the customer is met by the Appellant through the activity of digital printing on PVC material. We have also seen a few invoices raised by the Appellant on his customers. We find that the charges for the supply of ....
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....ter, 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. 14. The lower authority has interpreted the above Circular to state that the ownership of usage rights of intangible inputs is the deciding factor in holding a particular supply as a supply of goods or supply of service. Accordingly, the lower Authority has relied on Para 4 of the said Circular to hold that since the Appellant does not own the usage rights to the content supplied by the recipient, the principal supply is the printing service and hence the activity is classifiable as a supply of service. We disagree with the reasoning by the lower Authority. For the creation of any item where printing is involved, the 'content' will always be given by the owner/customer and it is the customer who will have the usage rights to the content. In our view, the Circular No 11/11/2017 GST dt 20-10-2017 will not be applicable to the case of this Appellant since the contract given by t....
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....y of such products by the Appellant is a supply of goods. We therefore set aside the ruling given by the lower Authority. 15. Having held that the supply of trade advertisements is a supply of goods, we come to the question of classification of the said products and its applicable rate of GST. Chapter 49 of the Customs Tariff covers products of the printing industry. Heading 4911 of the Customs Tariff covers Printed Books, Brochures, Leaflets and similar printed matter, whether or not in single sheets. The entry 4901 of the Customs Tariff is reproduced below: 4911 OTHER PRINTED MATTER, INCLUDING PRINTED PICTURES AND PHOTOGRAPHS 4911 10 - Trade advertising material, commercial catalogues and the like : 4911 1010 --- Posters, printed 4911 1020 --- Commercial catalogues 4911 1030 --- Printed inlay cards 4911 1090 --- Other - Other : 49119100 -- Pictures, designs and photographs 491199 -- Other: 4911 9900 --- Hard copy (printed) of computer software 49119920 --- Plan and drawings for architectural engineering, industrial, commercial, topographical or similar purposes reproduced with the aid of computer or any other devices 49119990 --- Ot....