In Re: M/s. KL Hi-tech Secure Print Ltd.
GST
2018 (10) TMI 445 – AUTHORITY FOR ADVANCE RULINGS, TELANGANA – 2018 (18) G. S. T. L. 112 (A. A. R. – GST), [2019] 60 G S.T.R. 50 (AAR)
AUTHORITY FOR ADVANCE RULINGS, TELANGANA – AAR
Dated:- 26-7-2018
TSAAR Order No. 10/2018, A. R. Com/13/2018
GST
SRI J. LAXMINARAYANA, AND SRI V. SRINIVAS, IRS, MEMBER
Under Section 100(1) of the CGST/TGST Act, 2017, any person aggrieved by this order can prefer an appeal before the Telangana State Appellate Authority for Advance Ruling, Hyderabad, within 30 days from the date of receipt of this Order.
*******
1. M/s. K L Hi-tech Secure Print Ltd, Plot No.22-23, Anrich Industrial Estate, IDA Bollaram, Sangareddy District, Telangana-502325 registered under GSTIN 36AAACK4241N1ZF has filed an application in Form GST ARA-01under Section 97(1) of TGST Act,2017 read with Rule 103 of CGST/TGST Rules, 2017and sought Advance Ruling on the issues raised in ANNEXURE I enclosed to their applicatio
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
8th June, 2017 and as amended by Notification No.2/2018 – Central Tax (Rate), dated 25th January, 2018; Entry No. 66 of Notification No. 12/2017 – State Tax (Rate), dated 29th June, 2017; and Entry No. 69 of the Notification No. 9/ 2017 – Integrated Tax (Rate), dated 28th June, 2017 as amended by Notification No. 2/2018- Integrated Tax (Rate), dated 25th January, 2018?
2. What would be the classification and the applicable GST rate, for the supply of Printing of cheque book?
3. What would be the classification and the applicable GST rate, for the printing and supply of Aadhaar Cards on paper?
4. What would be the classification and the applicable GST rate, for the printing and supply of Polyvinyl chloride (PVC) Cards?
ANNEXURE-II (Statement of relevant facts having a bearing on the questions raised)
1. KL Hi tech Secure Print Limited (For brevity 'KLHT' or 'The Company') is a company located at Plot No. 22-23, Anrich Industrial Estate, IDA Bollaram, Sangareddy Dist
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
totalmarks, verification of data with the hard copy of counter foils of answer booklets.
ii. Processing the results through computer Submission of the final marks roll in a soft copy (CD) to the educational institutions.
(ii) Printing of Cheque Books for various Customer Banks:
The Company provides the services of printing of cheques to various customer banks and there exists the following two scenarios, where the:-
a) Physical inputs ie., paper alone supplied by the customer banks, however inks which are used for printing belong to the Company itself;
b) Physical inputs including paper and inks which are used for printing belong to the company itself;
In both the above scenarios, the company prints the cheque and then supplies the cheque book to the bank once the final output is ready.
(iii) Printing of Aadhaar Cards for UIDAI:
The Company has entered into contract with Unique Identification Authority of India (UIDAI) for provision of services of printing and despatching of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ve to be franked using the digital franking machine with applicable postage rate. In order to frank the envelope the required denomination is preloaded by UIDAI in to the franking machine. The amount of such credit is directly credited by UIDAI to Department of Posts.
F. Despatching – The Company has to despatch the franked Aadhaar card envelope through first class mail by using the services of Department of Post.
The aforesaid activities of printing of Aadhaar card is done on paper.
Printing on Polyvinyl chloride (PVC) Cards
The Company provides the service of printing on Polyvinyl Chloride (PVC) cards of contents provided by customers. These PVC cards are plain plasticcards without any magnetic stripe.
ANNEXURE-III
(Statement containing the applicant's interpretation of law and / or facts, as the case may be, in respect of the aforesaid questions)
1. Question -1:
1.1 Whether, in the facts and circumstances as explained in Annexure II, supply of service of:
(i) Printing o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Description of Service
Rate
(Per Cent.)
Condition
66
9992 (Education Services)
Services provided –
(a) by an educational institution to it's
(aa) by an educational institution by way of
(b) to an educational institution, by way of-
(i) transportation
(ii) catering
(iii) security or cleaning
(iv) Services relating to admission to, or conduct of examination by, such institution;
(v) supply of online educational journals or periodicals:”
'Provided that nothing contained in subitems (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution PROVIDING providing services by way of pre-school education and education up to higher secondary school or equivalent.
Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ials will not be liable to Goods and Service tax.
(ii) the services provided by the applicant to the educational boards by way of printing of marks card, grade card, certificates etc. which acts as a medium for communication of examination results to students. The said activity acts as a last leg towards completion of the activity of conducting the examination process by the educational institution. Hence, the applicant submits that the aforesaid exemption as outlined in the notification will be applicable to the applicant's case. Thus, the services provided by the applicant to the educational institutions by way of supply of post-examination materials will not be liable to Goods and Service tax.
(iii) The services provided by the applicant to the educational boards by way of scanning and processing of results is more an outsourced activity which otherwise would have been done and undertaken by the educational institution itself. This is an integral part of the conduct of examina
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r correction in consultation of Board; statistical reports as and when required by the board;
* Validation and preparation of data base for regular student;
* The aforesaid details will be transmitted into high quality soft copy (CD/DVD) and excel format and the data will be submitted to the educational institutions;
* Result processing after re-verification of marks/re-evaluation of answer books
* Development of software for printing of duplicate certificate cum marks sheet.
The applicant carries out the aforesaid activities as an agent for Concealed Results Processing through Barcode systems for examination conducted by the educational institution. Upon completion of this activity, action is taken by the educational institution for communication of results. These services provided by the applicant are directly related to conduct of examinations by the educational institution. Hence, the applicant submits that the aforesaid exemption as outlined in the notification will be ap
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
No.2/2018 – Central Tax(Rate), dated 25th January, 2018; Entry No. 66 of Notification No. 12/2017 – State Tax(Rate), dated 29th June, 2017; and Entry No. 69 of the Notification No. 9/2017 – Integrated Tax (Rate), dated 28th June, 2017 as amended by Notification No. 2/2018- Integrated Tax (Rate), dated 25th January, 2018. Hence, the said exemption notification has to be applied to the applicant's case.
QUESTION : 2
As per the facts and circumstances as explained in Annexure II, what would be the classification and the GST rate, for the supply of services in the nature of printing of cheque books in the below mentioned two situations where the physical inputs of paper belongs to (i) the customer banks; (ii) the applicant?
4. Applicant's interpretation of Law: Classification of supply
4.1 The applicant carries out the activity of printing on the cheque paper in the above mentioned two situations i.e., input (paper) belonging to the customer banks and the Company.
Hence the pr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e case, it is the printing on the cheque paper, which communicates the message to the buyer that the product supplied to him is “Cheque” and not “Cheque paper”. The printing of the cheque communicates to the customer bank about the product and this serves a definite purpose of the customer bank.
Thus, the applicant based on the above would prefer to the classification of the product which is printed by the applicant under the following Chapter heading as provided in Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017; Notification No. 2/2017- State Tax (Rate), dated 29th June, 2017 and Notification No. 2/2017-Integrated Tax (Rate), dated 28th June, 2017.
SI. No.
Heading
Description of Goods,
118
4907
Cheques, lose or in book form
Accordingly, the rate of tax applicable to the product is NIL (i.e., NIL – Central Tax and NIL – State Tax or NIL – Integrated Tax).
Rate of tax
4.2 The rate of tax that will be applicable for the activity carried out by the applicant w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ply of service.
The applicant submits that the aforesaid activity of “job-work” carried out by the applicant will be taxable at the rate specified in Entry No. 26 with heading 9988(ii)(c) of Notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017 as amended by Notification No. 20/2017-Central Tax (Rate), dated 22nd August, 2017 and Notification No. 31/2017-Central Tax (Rate), dated 13th October, 2017; Notification No.11/2017 -State Tax (Rate), dated 29th June, 2017 as amended by Notification G.O.Ms No.227, dated 05th October, 2017 and Notification No. 31/2017 – State Tax (Rate), dated 23rd November, 2017; Notification No. 8/2017- Integrated Tax (Rate), dated 28th June, 2017 as amended by Notification No. 20/2017-Integrated Tax (Rate), dated 22nd August, 2017 and Notification No. 39/2017-Integrated Tax (Rate), dated 13th October, 2017, which is as under:
Sl.No.
Heading
Description of Service
Rate (Per Cent)
Condition
26
9988 (Manufacturing services on physical
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ng.
The applicant further submits that serial No. 5 of Circular No. 11/11/2017- GST, dated 20th October, 2017 which provides that:
“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” is ultra vires and quod contra legam fit, pro infectohabetur (What is done contrary to law is deemed not to have been done at all) as the Government is only empowered to notify transactions which are to be treated as 'supply of goods and not services' or 'supply of services and n
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
No. 31/2017 – State Tax (Rate), dated 23rd November, 2017; Notification No. 8/2017-Integrated Tax (Rate), dated 28th June, 2017 as amended by Notification No.20/2017-Integrated Tax(Rate) dated 22nd August, 2017 and Notification No. 39/2017-Integrated Tax (Rate), dated 13th October, 2017 which is as under:
SI.No.
Heading
Description of Service
Rate (Per Cent)
Condition
27
9989 (Other manufacturing services; publishing, printing and reproduction services; materials recovery services)
(i) Services by way of printing of all goods falling under Chapter 48 or 49 [including newspapers, books (including Braille books), journals and periodicals], which attract CGST @ 6 per cent or 2.5 per cent, or Nil;
TGST @ 6 per cent, or 2.5 per cent, or Nil; IGST @ 12 per cent or 5 per cent or Nil. where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer.
6
Thus, the applicant based on the above
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cards is carried out on-paper as explained in Annexure II.
There are two limbs in the aforesaid activity carried out by the applicant to UIDAI:-
(a) Printing of Aadhaar cards on paper;
(b) Despatching of Aadhaar cards after duly franking;
Classification with respect to supply of printed Aadhaar cards:-
The applicant carries out the activity of printing of contents of Aadhaar on paper. The product which is generated from the activity will be treated by trade as well as in common parlance as paper, hence the classification that should be applied for the product as per the Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017, Notification No. 01 /2017- State Tax (Rate) dated 29th June, 2017 and further Notification No.1/2017- Integrated Tax(Rate) dated 28th June, 2017 will be :-
SL No.
Heading
Description of Goods
201
4901
Brochures, leaflets and similar printed matter, whether or not in single sheets
Accordingly, the rate of tax applicable to the product is 5% (i.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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” is ultra vires and quod contra legam fit, pro infectohabetur (What is done contrary to law is deemed not to have been done at all) as the Government is only empowered to notify transactions which are to be treated as 'supply of goods and not services or supply of services and not goods'. This power is vested under Section 7(3) of the CGST Act, 2017 and not to specify what the 'principle element in a transaction is'.
It is important to note that this will always be transaction and business specific; it cannot be specified on an all-pervasive basis.Hence, the applicant provides that the activity provided by the applicant is purely a “service” in relation to printing where the content to be printed along with design and logo is provided by UIDAI and the applicant only prints such content on the paper. Accor
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
raille books), journals and periodicals], which attract CGST @ 6 per cent or 2.5 per cent or Nil; TGST @ 6 per cent or 2.5 percent or Nil IGST @12% percent or 5 % or Nil. Where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer
6
Accordingly, the applicant beliefs that the rate of tax for the activity of supply of printed Aadhaar cards on paper to UIDAI will be 12% ie. (6% – Central Tax and 6% – State Tax or 12%- Integrated Tax).
QUESTION : 4
As per the facts explained in Annexure II, what would be the classification and the GST rate, for printing and sale of Polyvinyl chloride (PVC) Cards for various customers?
8. Applicant's interpretation of Law:
Classification of supply
8.1 The applicant carries out the activity of printing on Polyvinyl chloride (PVC) Cards belonging to the applicant itself for various customers. These PVC cards are Plastic cards on which activity of printing is carried out b
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Notification No. 20/2017-Central Tax (Rate) dated 22nd August, 2017, Notification No. 11/2017 -State Tax (Rate) dated 29th June, 2017 and as amended by Notification G.O.Ms No.227, dated 05th October, 2017; Notification No. 8/2017-Integrated Tax (Rate), dated 28* June, 2017 as amended by Notification No. 20/2017-Integrated Tax (Rate), dated 22nd August, 2017 as outlined below, since the goods on which the activity of printing does not fall under Chapter 48 or 49:-
SI.No.
Heading
Description of Service
Rate (Per Cent)
Condition
27
9989
(ii) Other manufacturing services; publishing, printing and reproduction services; materials recovery services, other than (i) above.
9
Thus, the applicant based on the above facts submits that the activity of printing on Polyvinyl chloride (PVC) Cards, the goods being the plastic cards in the given case would fall under within the ambit of Chapter 3920. Hence, the activity of printing on PVC Cards carried out by your applicant wil
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y Notification No.02/2018-Central Tax ( Rate) dated 25.01.2018 .
3.1.2 In terms of Serial No.66 of the impugned notification exemption from payment of GST has been provided to the following supply of services as on date.
66. Services provided –
(a) by an educational institution to its students, faculty and staff;
(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee (b) to an educational institution, by way of,-
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;
(iii) security or cleaning or housekeeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution;
(v) supply of online educational journals or periodicals:”;
Provided that nothing contained in entry sub-items (i), (ii) and (iii) of ite
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rovided to 'educational institutions' for conducting of examinations are eligible for exemption under entry No.66 of Notification No. 12/2017- Central Tax (Rate) dt. 28.6.2017
3.2. What would be the classification and the applicable GST rate, for the supply of Printing of cheque book.
3.2.1 In this case, assessees are undertaking two types of supplies. (i) In respect of paper supplied by the banks, they print the cheque format of respective banks and (ii) physical inputs including paper and ink would be borne by the company and the cheques after printing as per the bank's specifications, would be supplied to them. In both the cases, the unit prints the cheque and then supplies the cheque book to the bank after completion of the printing work.
3.2.2 In respect of the situation, where the paper is being supplied by the banks, and the applicants are undertaking job work of printing the cheque and converting them as cheque books, the predominant supply in the instant case is supply of s
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tification.
3.3. What would be the classification and the applicable GST rate, for the supply of Aadhaar Cards on paper.
3.3.1 As per the information provided by the applicant, they receive the data for printing from UIDAI in Unicode (extensible mark up language) file format. The said file format would be converted into a readable format and the details of aadhaar applicants along with their photographs, would be printed , laminated, enveloped and after franking, the aadhaar envelops would be dispatched to the concerned aadhaar applicant. In the instant case, the applicant is rendering various supplies like conversion of data to the required file format, printing of aadhaar cards, lamination, franking and dispatching etc. In the entire gamut of things being undertaken by the applicant, all the supplies made by them, are naturally bundled and supplied in conjunction with each other. Each of these supplies are not supplied separately and are dependent on other supplies provided by them
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nded and the rate of tax applicable is 12% ( 6% CGST + 6% SGST).
3.4. What would be the classification and the applicable GST rate, for the printing and supply of Polyvinyl chloride cards (PVC).
3.4.1 Assessees are undertaking printing on Polyvinyl chloride (PVC) cards to various customers. PVC cards are plastic cards on which activity of printing is carried out by the applicant.
3.4.2 In terms of GST Circular No.11/11/2017-GSTdated 20.10.2017, it is clarified that, Subject: Clarification on taxability of printing contracts Requests have been received to clarify whether supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc., printed with design, logo, name, address or other contents supplied by the recipient of such supplies, would constitute supply of goods falling under Chapter 48 or 49 of the First Schedule to the Customs Tariff Act, 1975 (51of 1975) or supply of services falling under heading 9989 of the scheme of classification of servic
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r 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.
3.4.3 From the aforesaid clarification, in the instant case since the PVC cards are belonging to the applicant, predominant supply is that of goods and the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =