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TMI Blog2022 (3) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... & Services Tax Act 2017 (hereinafter referred to the Act') by M/s. Temple Packaging Pvt. Ltd., (herein after referred to as the appellant" for the sake of brevity) The appeal is filed against the Order No.01/Daman/2019-20-AR dated 18.07.2019 passed by the Union Territory Authority for Advance ruling on the application for advance ruling filed by the appellant. The appellant is registered under GST vide GSTIN 25AAACT9039P1ZR. BRIEF FACTS OF THE CASE The appellant is engaged in the activity of printing leaflets (further divided into insert/outsert) and falling under CHS No. 4901, the said product is manufactured out of the inputs namely paper/ink owned by the appellants and content supplied by the clients mainly located in the pharmaceutical sector. The leaflets manufactured by the appellants are sold to the clients on agreed consideration which is entirely based on the manufacturing expenses incurred by the appellants by using inputs owned by the appellants. Under Central Excise regime they cleared the same as excisable goods under CHS No. 4901 as exempted being chargeable to NIL tariff rate, they migrated to GST regime w.e.f. from 1st July 2017 and started supplying the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il the export obligation by delivering as goods under CHS No. 4901. APPLICATION FOR ADVANCE RULING In view of the above uncertainty regarding taxability on supply of leaflets, the appellant preferred an application before the Advance Ruling Authority seeking clarification on the following question: The printed leaflet supplied by the applicant falls under the category of supply of goods falling under CHS No. 4901 and not as a supply of service under SAC No. 9899. ADVANCE RULING PASSED BY Ld. AAR, DAMAN The learned authority on Advance Ruling considered the application made by the appellant and gave a ruling vide Order No. 01/Daman/2019-20-AR dated 18.07.2019 wherein it held as under: "In the present case against application dated 09.03.2018 of M/s. Temple Packaging Pvt. Ltd., behind Olive Healthcare. Hatiyawad, Village, Dabhel, Nani Daman, Advance Ruling is given that printing of Pamphlet/leaflet falls under the category of supply of service falling under SAC No. 9989. The case is disposed off accordingly." GROUNDS OF APPEAL Aggrieved by the decision of the Advance Ruling Authority, the Appellant has tiled the present appeal. The grounds of appeal are as follows: * Leafl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GST rate for SAC 9989 and as per the said entry reproduced below the content of priming job is required to be supplied in publisher (3) (4) (5) (i) Services by way of printing of all goods falling under Chapter 48 or 49 [including newspaper, books (including Braille books), journals and periodicals], which attract CGST @ 6 percent or 2.5 percent of NIL where only content is supplied by the publisher and the physical inputs including paper used for printing belong to printer. 6 * In the instant case, the clients are not the publishers but are from pharmaceutical industry and they are using printed leaflets as part of the medicament package and not using such supply for publication matter. Further it is pertinent to point out that the pharmaceuticals units arc subsequently selling the medicament as supply of goods and under no circumstances the supply of service can become a physical part of the goods. Accordingly, leaflets supplied by TPPL (the appellant) fall under 4901 only. * As per section 2(52) of CGST Act, 2017 "goods" means, every kind of movable properly other than money and securities. The leaflet supplied by TPPL (the appellant) is undoubtedly moveable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section 2(90). principal supply means supply of goods or services which constitutes the pm-dominant element of composite supply and to which any other supply forming part of that composite supply is ancillary. in this case the entire value of the supply is representing supply of goods only and mere content of the leaflet is supplied by the clients. Accordingly, the principal supply is supply of goods only. * AAR illegally observed that applicant's case falls under Para-No. 4 of Circular No. 11/11/2017-GST dated 20.10.2017 which is mainly related to publishing matters and where content is supplied by the publisher as per requirement of the Service Tax Rate Noti No. 11/2017-CT (R) dated 28.06.2017 as amended. * AAR illegally proceeded to decide the case by observing in order that applicants are supplying pamphlet which is covered by para no. 4 of the circular. This appears have to be done as there is no mention of leaflet in para no. 4 of the circular and leaflet is illegally equated with pamphlets for providing coverage of para no. 4 of circular. * Applicant's case is covered by para no. 5 of circular which is for products of Chapter no. 48 or 49, other than publis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d their written submission dated 17.09.2021 and reiterated the facts mentioned therein. The appellant in their written submission dated 17.09.2021 furnished the background of the case. their grounds of appeal and copy of Purchase orders, copy of relevant notifications. Compilation of judgments. copy of Supreme court judgment [(2005) 1 SCC 308 - 2004 (178) ELT. 22(S.C.)] and copy of compilation of pronouncements of various advance ruling authority. DISCUSSION AND FINDINGS We have carefully gone through the submissions made by the appellant. including oral deposition, the impugned order of the appellate authority and the applicable statutory provisions. We find that the issue to be decided by us is regarding the classification of the supply made by the appellant. From the submissions. we find that the appellant is engaged in the activity of printing leaflets (further divided into insert/outsert), the said activity is done on the inputs namely paper, ink owned by the appellant himself and content supplied by the clients mainly located in the pharmaceutical sector. The moot issue to be decided by us is to ascertain the classification of the supply made by the appellant. The basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, following conditions are to be met: i) the supply must consist of two or more taxable supplies of goods or services or both: ii) such supplies should be naturally bundled and supplied in conjunction with each other in the ordinary course of business. The supply made by the appellant consist of the supply of paper i.e. goods as well as the service of printing of the content/instruction provided by the client, thus the first condition is fulfilled. The term "naturally bundled" has not been defined in the act; however, if various elements of supply are naturally bundled in the ordinary course of business, then it is to be considered as being naturally bundled. The concept or ordinary course of business depends on the normal or frequent practice followed in the area of business. There can be more than one indicator to this, the primary indicator being the perception of the recipient of supply, if a large number of recipients of supply reasonably expect such supply to be provided as a package. then such a package can be treated as a naturally bundled supply in the ordinary course of business, The appellant has himself claimed that this is a normal practice in the printing indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is covered by Para no. 5 of the circular which is for products of Chapter 48 and 49, other than publishing matters. Hence, it becomes imperative for us to have a look at the said circular. The same is reproduced below for ready reference. 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 (51 of 1975) or supply of services falling under heading 9989 of the scheme of classification of services annexed to notification No. 11/2017-CT(R). 2. In the above context, it is clarified that supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaflet is not used in the pharmaceutical industry as a goods or inputs but only as a medium of instruction. These instructions can generally be conveyed through a virtual medium (intangible) or through a leaflet (tangible). In the pharmaceutical industry such content/instruction which are mandatory, cannot be attested with the medicine through a virtual medium and hence the leaflets have to be made available with the medicines. The buyers of the medicine arc not interested in the piece of paper but the instructions mentioned in it would be fair to say that the client of the appellant would never accept the leaflet if the content as provided by them is not properly and correctly printed. It is also the fact that the content/instruction is the property of the client and therefore would obviously be holding the right over it. Hence the dominance in this case is of the contend/instruction and not of the paper (leaflet). The argument of the appellant that the circular mentions only books, pamphlets. brochures. annual reports and not a leaflet is not convincing as the content of the circular clearly suggests that items mentioned therein is not an exhaustive list but an indicative list, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This concept for the taxation purpose has come up only during the GST regime. there cannot be any comparison between the two tax regimes on this issue and hence reliance cannot be placed on these citations as the concept of taxability has completely changed under GST. We have gone through the judgment of Constitution bench of Supreme Court in the case of Tata Consultancy Service v. State of Andhra Pradesh report in [2005) 1 SCC 308 - 2004 (178) E.L.T. 22 (S.C.)) put forth by the appellant in their defence submission. We are of the view that we have never denied that leaflet is goods. the issue to be decided before us not the classification of leaflet but it is regarding the dominance of supply of goods or supply of service in the supply. We have observed that the appellant has also agreed that the supply made by them is a composite supply. Hence the judgment of Hon'ble Supreme Court cited by the appellant is not applicable in this case. The appellant has also placed reliance on the order of Appellate Authority of Advance Ruling in the case of M/s. Pattabi Enterprise and M/s. Macro Media Digital Imaging Pvt. Ltd. The crux in both the orders is that the appellant is providing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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