Dismissed

12/WBAAAR/APPEAL/2019 of M/S Macro Media Digital Imaging Pvt. Ltd.

GST AAAR19 Sept 201912/WBAAAR/APPEAL/2019

Case brief

AI extract

What is this about?

The West Bengal Appellate Authority for Advance Ruling dismissed the appeal filed by M/s Macro Media Digital Imaging Pvt. Ltd. against an Advance Ruling that classified their printing of trade advertisement material as a supply of service. The Authority held that since the content is owned by the customer and holds no secondary use, the supply of service is predominant.

What did the court decide?

The appeal was dismissed and the impugned Advance Ruling was affirmed.

12/WBAAAR/APPEAL/2019 of M/S Macro Media Digital Imaging… — GST and Indirect Tax | GST AAAR (2019)

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WEST BENGAL^{APPELLATE AUTHORITYFOR ADVANCE RULING}

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AT I4,BELIAGHATA^{ROAD, KOLKATA-700015}

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Before:

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Sri. A.P.S Suri, Member

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Sri. Devi Prasad Karanam,^Member

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ln the matter of

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Appeal Case No . I}IWBAAAR/APPEAL1}}L9^{dated 19.09 .2019}

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-And-

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In the matter of:

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An Appeal filed under Section^{100(1) of the West Bengal Goods and ServicesTax Act,2017l} Central Goods and Services Tax^{Acq2017, by M/s Macro Media DigitalImaging Pvt. Ltd.,55} Canal East Road, Kolkata-700085^{against the Ruling passed by the WestBengal Advance Ruling} Authority vide Order No.^{15/WBAA22019-20 dated 19.08.2019.}

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Present for the Appellant:^{Sri. Rahul Tangri, Advocate}

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Sri. Akash Agarwal, CA

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Present for the Respondent: Sri.^{Jaydip Chanda, Assistant Commissionerof State Tax,} Beliaghata Charge

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Matter heard on: 10.12.2019 Date of Order: 17.122019

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l. This Appeal has been filed by M/s Macro^{MediaDigital Imaging Pvt. Ltd. (hereinafter} referred to as "the Appellant") on 19.09.2019^{against AdvanceRuling Order No.} I 5/WBAAR/2019-20 dated 19.08 .2019,^pronounced by the^{WestBengal Authorityfor} Advance Ruling (hereinafter referred to as the "WBAAR")

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The Appellant holding GSTIN No. 19AABCM9451FIZB is engaged^{in thebusiness} of printing trade advertisement material. It^prints the content^provided by the recipient

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Page 1 of 5

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on the base material^{of polyvinyl chloridecloth (hereinafter referred to as the "PVC"),} paper, etc. The Appellant^{provides the printing ink and the base material'}

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a1 The Appellant sought^{an advanceruling under section 97 of the West BengalGoods} and Services Tax Act,20l7l^{the Central Goods andServices Tax Act,2017,} (hereinafter collectively^{referredto as "the GST Act") on the following questions:}

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a) Whether the^{job of printingof contentprovidedby the customeron polyvinyl} chloride banners^{and supplyingsuch printed trade advertisement materialamounts} to supply ofgoods,^and

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b) What is the classification^{of such trade advertisementmaterial under GST Tariff if} the transaction is^{a supply of goods.}

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The WBAAR in^{its Ruling No. 15/WBAAR/2019-20 dated 19.08.2019, observedinter} alia, that the transaction^{involvesa composite supply} -^{a transactioninvolving both} supply of goods in the^{form of printed PVC materialand of the serviceof printing the} content provided by the^{recipient,which are inseparablein the executionof the} contract. According^{to the WBAAR,the printed trade advertisement materialhas no} utility other than^{displaying the printed content. It held thatthe service of printing is} the predominant^{element of the composite suppliesthe Appellantis making.Thus, the} WBAAR held that the^{goodsclassifiable under Chapter 39 and49 of CustomsTariff} Act, 197 5 (hereinafter^{referred to as the "Tariff Act") are supplied by the appellantbut}

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the supply of the said^{itemsare ancillary to the principalsupply of printingservice.}

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The Appellant has^{filed the instant Appealagainst the above AdvanceRuling with the} prayer to set aside/modify the^{impugned AdvanceRulingpassed by the WBAARor} pass any such further orders^{as maybe deemedfit andproper in the factsand} circumstances of the^{case on the followinggrounds:}

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(i) The WBAAR did not appreciate^{the legal position of the caseand did not give} cognizance to Ruling of^{Telengana AAR in the matter ofTSAAR/4/2018} dated 30.05.2018 where^{the TelenganaAAR opined that the supplyof printed} trade advertisement is to^{be treatedas supply of goods} '

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(iD The Appellant argued that the^{WBAAR did not determinewhether the} transaction was a supply^{of goods.The Appellantarguedthat the printedtrade} advertisement being^{movableproperty falls under the ambit of 'goods'under} section 2(52) of the GST^Act.

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(iii) The Appellant referred to serial^{no. 59 of the Table providedin the CircularF.} No.3321212017-TRU dated^{December,2017 and argued that oncethe Board} has clarified that printing on^{other synthetic mediaqualifies under HSN 4911,} which is for goods, the^{present transaction cannot be held as supply of service.}

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Page 2 of 5

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(iv) The Appellant^{referred to para5 of CBICCircularNo. I lllllz}l7-GSTdated} 20ll)l2}l7, wherein^{it has beenclarified that in the case predominant supply is} that of goods^{and the supply would constitute supply of goods.}

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(v) The Appellant also^{arguedthat their supplywould qualify as goods under} ,,Trade advertisement material, commercial catalogue and the like" under subheading 4911 10.

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During the course of^{hearing the Appellant reiteratedthe points as statedin the} Grounds of Appeal^{and alsotendereda written submission'}

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The Appellant submitted^{that its activityinvolvesprocurement of PVC material} (blank) and printing of branded^{advertisement on the saidPVC material (blank) with} designs and^{graphicsprovidedby the customer.This is an activity constitutinga} composite supply^{where principal supply is that of 'goods'and hence,in termsof} Section 8 of the GST^{Act, the saidsupply is of supplyof ogoods'.According to them,} their supply qualifies^{for classificationundersubheading491Iin the First Schedule to} the Tariff Act, which^readsas:

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"Other printed matter, including printed^{pictures and photographs; such as Trade} advertising material,^{......reproducedwith the aid of computer or ony other devices".}

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The Respondent submitted^{that the PVC material supplied to the customerhas no use} unless it has the content^{printed on it.}

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The matter is examined^{and written and oral submissions made before us are} considered.

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The Appellant^{placed reliance on para 5 of CBIC Circular No. 1 lllll20l7-GSTdated} 2O.lO.2Ol7. For the sake of clarity^{para 5 of the Circularis reproducedhereas} following:

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In case of supply of printed envelopes,^{letter cards, printedboxes, tissues, napkins,} wall paper etc. falling under Chapter^{48 or 49, printed withdesign,logoetc. supplied} by the recipient of goods but^{made usingphysicalinputs includingpaper belongingto} the printer, predominant supply^{is that of goods and the supply of printingof the} content [supplied by the^{recipientof supplyJis ancillaryto the principal supply of} goods and therefore such supplies would^{constitute supplyof goods} falling^under respective headings of Chapter 48 or^{49 of the CustomsTarff.}

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The Appellant submitted that their^{customer'sintentionwas to purchasetrade} advertisement as a whole and not merely^{get the printingjob done.}

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Page 3 of 5

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ll.The WBAAR on the other hand relied on para 4 of the said CBIC Circular No. ll/lll2}l7-GsT dated 20.10.2017. For the sake of clarity para 5 of the Circular is reproduced here as following :

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In the case of printing of bool<s, 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 supplyJ is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services.

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We find that the Circular No. I ll11l20l7-GST dated 20.10.2017 clarifies the issue clearly. It is a fact that both the Appellant and the WBAAR have taken recourse to the said Circular to reach opposite conclusions. So, examination of paragraphs 4 and 5 of the said Circular is essential before arriving at any conclusion. On careful reading of the said paragraphs, it is seen that the only difference between the two paragraphs is that under paragraph 4, the usage right is owned by the supplier of the content, whereas in the case described under paragraph 5, no such usage right is owned by the supplier of the design or logo.

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On reading paragraphs 4 and 5 of Circular No. 1l/ll/2017-GST dated 20.10.2017 it can be concluded that items mentioned in para 4 have no secondary use other than carrying the printed content whereas the articles mentioned in para 5 have secondary usage. Though wallpaper displays designs printed or embossed on its body, it has another use that of protecting the wall. In the instant case the PVC sheet does not have any other usage other than displaying the advertisement content.

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In the present case, the Appellant prints the content provided by the recipient on the base of PVC, paper, etc., where it provides both the printing ink and the base material. There cannot be any doubt that the content that is printed on the base material is owned by the customers of the Appellant only and the Appellant has no right of usage on the content. The Appellant produced at the time of hearing a few samples of their products, for example, advertising materials for "Hero Glamour" motorbikes, "Hyundai venue" car, "vivel cool Mint" soap and "Brides India". The said advertisement materials carry specific messages meant for customers and the contents are very specific to the product for which the advertisements are made. The advertisement meant for Hyundai cannot be used by Hero or any other company. Thus the content is exclusively the property of the client who entrusts the job to the

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Page 4 of 5

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;\ppcllani ancl the usagc right r:f'thu'(ontcrlt remains rvith the client f the Appcllnr. Ilorvevcr rhis is not the casc ciescrihed Lrr:rler p.'rr;lgrapl"r 5 o1'the ['ircular I!r"i. llillil{117-Csl.'{'hus, in our consiclred opinion, in the instant csse, rvhich is a ctnposite suppl.v, suppiy'o{'service is prcdominant ar:cl the c.tse rtl'the,4ppellant is more akin tr: lhe case representerl in paragraph 4 ol'Circular l\o. lill lil0l7-CST ciat*d 20.1{}.2t}l7.

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lS"l-he Appcllant argued that the procluct description in ti:reir in,'.,oice is nlentionrd as "'llrintins, ar:ci $uppl1" of Trade Arlvertisemenr lV{arerial }lshl#4g11", becalrse vr,,hat the,r'supply are primarily goocls. Ilowever. rve tincl that in the purchase orcler n*. 50{1006i}092 datecl I 2.t}4"2{}19. ITC l,inlited has nrcntioneel the r:rcler clescriprir:ri as scrvicc "Digital Printing - OLrtdor". Also in purchase oriler issuerrl tr; the ;\ppcllarrt under no' 0lS,rliMPlilS-19 clatecl 24.05.?018 issued b3..'Eden l,ledia Ilvt. Lrci. the par:ticular 0f"charges has Lrcen mentioned as "Printing charges 1or I no. ai, Blackl"rack tlex". Tl:us. it is clear beyoncl doubt that rvhal rhe Ap;rcllanl supplies is nothing but service. Hece" rve firrd no basis in the irgument of'the Appellant rhat it suppli*s goads *nl-r,.

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ln vierv C,f ahove dis*ussion rve fir,<j no inflrnrilrv in the nrling pronounced bt,rhc WI]AAII"

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'l'he appeal thus fuils ancl st*nds disposed accoxtingly.

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Send a ci:prr"of'this order tc thc Appellarrt an<i the Responr{ent {br inlorrxatiorr.

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^il .-. I I {^[.]r,i PrsiJ Kirriurierr-: ] {A"f"'.9^Suri } h'f nt hcr fo'1u,n: l:" & st trdilgfi X App llat* A u{hc:rit v \L/st^"t ts gx} AppI tr ate i\ utl"rorii_v fr:r Ad',,rrncr It uiiltg f br A dv anr,e l{. u I lr"r u

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12/WBAAAR/APPEAL/2019 of M/S Macro Media Digital Imaging Pvt. Ltd.

Case brief

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12/WBAAAR/APPEAL/2019 of M/S Macro Media Digital Imaging Pvt. Ltd.

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