2018 (9) TMI 1769 - AAR - GST

Classification of Supply - supply of goods or services - Levy of GST - Supply of printed question papers for various examinations conducted by the Government/Government aided Educational Boards/ Councils/Universities etc - Input Tax Credit on inputs used for provisioning the supply. Whether GST is to be charged on such supply and if so at what rate and under what HSN or SAC code is the GST to be charged? Whether credit of the GST paid on the inputs used for provisioning the supply can be availed? Held that - No Notification has been issued regarding the status of supply of Question Papers. Hence Section 7(3) of the GST Act is not relevant for consideration. The Applicant has neither been notified to be an authority under Section 7(2) of the GST Act nor is the activity of supplying printed question papers listed in the said Schedule III. Section 7(1) along with the relevant portions of Schedules I and II clearly state that transfer of title in goods is a supply of goods and in the absence of such transfer even in the future is to be considered as supply of services. Question Papers are not the property of the Applicant - the Question Papers supplied by the Applicant to their customers are not marketable commodities in the open market and as goods they have no legitimate value to persons other than the specific customer who provides the input content. The Applicant therefore cannot be said to be supplying Question Papers as goods under the GST Act but to be supplying the service of printing. Hence the SAC is to be determined and not the HSN. Again every transaction is a contract but open market transactions in Question Papers as goods being illegal are not enforceable by law and void contracts in terms section 2(g) of the Indian Contract Act 1872 and therefore beyond the ambit of the GST Act. It follows that classification under the Tariff Act for the purpose of the GST Act is also not applicable in such cases - The service is taxable under serial no. 27 of Notification No. 11/2017-CT (Rate) dated 28/06/2017 as amended from time to time provided the materials being printed are goods classifiable under Chapter 48 or 49 of the Tariff Act and taxable under the GST Act. As transactions in Question Papers as goods is beyond the ambit of the GST Act they are neither classifiable under Chapter 48 or 49 nor taxable under the GST Act. Service of printing Question Papers is not therefore classifiable under Heading 9989. Explanation (iv) to Notification No. 12/2017-CT (Rate) dated 28/06/2017 inserted vide Notification No. 14/2018-CT(Rate) dated 26/07/2018 clarifies that the Central and State Educational Boards shall be treated as Educational Institution for the limited purpose of services by way of conducting examinations. Serial No. 66(b)(iv) above therefore includes services provided to such Boards relating to the conduct of examinations. The Applicant is therefore not liable to pay tax on the service of printing question papers provided to the Educational Boards/Councils/Universities/Institutions relating to the conduct of examination. Input tax credit - Held that - Since the supply of Question Papers to Educational Institutions if provided for a particular examination is an exempt supply under Serial No. 66(b)(iv) of Notification No. 12/2017-CT (Rate) dated 28/06/2017 as amended as applicable the Applicant is not eligible to avail of Input Tax Credit. Ruling - Service of printing Question Papers for Educational Institutions as defined under clause 2(y) read with Explanation (iv) to Notification No. 12/2017-CT (Rate) dated 28/06/2017 for specific examination is classifiable under SAC 9992. Service to such Educational Institutions relating to conduct of examination as described in 66(b)(iv) of Notification No.12/2017-CT(Rate) dated 28/06/2017 includes supply of the service of printing question papers and is exempt under the GST Act. Being an exempt supply the Applicant cannot claim credit of the GST paid on the inputs used for provisioning the service of printing question papers provided to the Boards / Educational Institutions relating to conduct of examination.

Summary

Issues:
1. Determination of whether GST is applicable on the supply of printed question papers for examinations.
2. Classification of printed question papers as goods or services.
3. Applicability of Input Tax Credit on the inputs used for printing question papers.
4. Determination of SAC code for GST classification.

Analysis:
1. The Applicant sought an Advance Ruling on the applicability of GST on the supply of printed question papers for examinations. The Applicant also inquired about the eligibility for Input Tax Credit on the inputs used for the supply. The Authority admitted the Application for consideration under Sections 97(2)(a),(d)&(e) of the CGST/WBGST Acts, 2017.

2. The Applicant provided details of supplying printed question papers to various educational institutions for examinations. The question papers were printed based on the content provided by the institutions, and the Applicant did not have ownership rights over the content. The Authority analyzed whether the question papers should be classified as goods or services under the GST Act based on relevant definitions and provisions.

3. The Authority examined Section 7 of the GST Act to determine the scope of supply for goods and services. Since no specific notification was issued regarding the status of supply of question papers, the Authority concluded that the transfer of title in goods is essential for classification as goods. As the question papers were specific to the customer and not marketable commodities, the Authority classified the supply as a service of printing rather than goods.

4. The Authority further analyzed the classification under the GST Tariff-Services and determined that the printing of question papers for educational institutions falls under Heading 9992 for Education Services. The Applicant was found not liable to pay tax on the service of printing question papers related to the conduct of examinations based on relevant notifications and exemptions.

5. Considering Section 17(2) of the GST Act, the Authority ruled that since the supply of question papers for examinations was an exempt supply under the relevant notification, the Applicant was not eligible to claim Input Tax Credit on the inputs used for printing the question papers. The ruling provided clarity on the classification, tax liability, and Input Tax Credit eligibility for the supply of printed question papers for educational examinations.