The Kerala Authority of Advance Ruling (AAR) in its recent ruling in the case of Kerala Books, and Publications Society has held that printing of textbooks for supply by the State Government to its allied educational institutions; printing of Lottery tickets for vending by the State Government to the general public; and printing of stationery items like calendars, Diaries, etc for supply by the State Government is supply under GST Law.
Facts of the case:
The applicant, Kerala Books, and Publications Society was constituted as a society by the Government of Kerala of the Higher Education Department. The society is registered under the Travancore Cochin, Literary, Scientific and Charitable Societies Registration Act, 1955. The said society is running the printing press till date. The Governing body of the society consists wholly of officers from the Government.
They have progressed into the printing of lottery tickets and stationery items like brochures, diaries, calendars, etc in addition to the textbooks for school children. Their customer for the printed textbooks and the lottery tickets is solely the State Government.
In respect of the printed stationery items, the customers vary from the State Government and its allied educational institutions to other departments of the State Government.
The State Government does not charge GST on the school textbooks supplied by it to the end customers; i.e. allied educational institutions. The school textbooks are supplied on a no-profit / no-loss basis to the said educational institutions.
They have been incurring losses on the printing of the said school textbooks. In respect of all the above activity carried out by them the print content and its features that are to be printed is designed solely by the customer; i.e; the Government of Kerala. They only arrange the paper and then print the said content on the paper. They do not own the usage rights to the said content given to them.
Issue on which Ruling was sought:
The applicant has sought the advance ruling on the following issues:
i) Whether their activities namely printing textbooks for supply by the State Government to its allied educational institutions; printing of Lottery tickets for vending by the State Government to the general public; and printing of stationery items like calendars, Diaries, etc for supply by the State Government to its offices and other institutions fall within the ambit of the scope of ‘supply’ under GST.
ii) If above activities are supply, whether exemption as per Notification No. 12/2017-CT (Rate) can be availed.
iii) Whether he is liable to obtain registration if the above activities do not constitute supply.
Order of Kerela AAR:
The coram of Members Sivaprasad and Senil K.Rajan all the activities undertaken by the applicant constitute supply as defined in Section 7 of the CGST Act. The activities constitute a supply of services falling under Heading – 9989 – Other manufacturing services; publishing, printing and reproduction services; materials recovery services – 998912 – Printing and reproduction services of recorded media, on a fee or contract basis of the Scheme of Classification of Services.
Further, the AAR adjudged that the service of printing of Textbooks supplied by the applicant to the State Government is exempted from GST as per entry at SI No. 3 of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended. The AAR however ruled that the service of printing of lottery tickets and stationery items like Diary, Calendar etc supplied by the applicant to the State Government are not exempted under Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended.
Also Read: Printing and Supply of Trade Advertisements is supply of goods: AAR [Read Order]
Relevant CBIC Circular:
In regard to GST on printing contracts Circular No. 11/11/2017 Dated 20th October 2017 is relevant whose relevant paras as given below for ready reference of our readers:
“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 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.“
READ / DOWNLOAD ORDER:
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CA. Mohammad Salim is an ICAI award winning Chartered Accountant having rich experience of more than 20 years in the field of indirect taxes. He is the Member, Indirect Taxes Committee of PHD Chamber of Commerce and Industry. He is author of four successful books on GST published by Taxmann Publication and is also GST expert on taxmann portal.
