TMI Blog2022 (3) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... record to accept that in the instant case there is a supply which comprises of goods as well as that of service. 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 - Another condition is that the supplies should be made in conjunction. As per the Cambridge dictionary meaning the noun 'Conjunction' is a situation in which the events or conditions happen together. In the instant case, the supply of goods as well as the service happens at the same time hence the supply can be considered to be in conjunction - it can be safely deduced that the supply made by the applicant is a composite supply, the same has also be accepted by the appellant in their grounds of appeal. The appellant, as a part of their defence, has also put forth their practical difficulties while discharging their legal obligation under EPCG/ Advance License Scheme or under supplies to SEZ, they have also shown their inability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1 st July 2017 and started supplying the same as supply of goods on payment of 5% GST levied at Sr. 201 of Schedule-I of Notification No. 1/2017-CT(Rate) dated 28.06.2017. The Delegation of the federation of Master Printers, to which the appellant is a member. met with the officials in Ministry of Finance in New Delhi on 21.07.2017 to seek clarification on GST rates applicable to various printed products and during the course of meeting it was made to understand that when the printed products are made by using content supplied by the customer, then it will have to be classified under the category of service and will fall under the SAC 9988. In view of the clarification provided by the federation. most of the members started clearing the goods under the category of service instead of goods and the appellant also started cleating the goods under the category of service SAC no. 9989 by paying 18% GST. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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: Leaflet is manufactured on the basis of contract given by the client which is not a printing contract but for supply of printed leaflets (for supply of goods) on agreed consideration and specifically covered under 4901. Supply of goods is made on the basis of purchase order issued by the clients for supply of goods under HSN code no, 4901 (specimen copy of purchase order issued by M/s, Mylan Laboratories Ltd. (EOU) and M/s, Par Formulations Pvt. Ltd were attached along with the submission). Chapter note no. 2 of Chapter no. 49 specifically covers the terms -printed- and 49011120 covers printed leaflet whether or not in a single sheet. therefore, printed leaflets fall under chapter 49. HSN Explanatory note to heading 4901 covers printed leaflet and HSN note read as under: This heading covers virtually all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 property and therefore falls under the category of supply only. 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.)] where the Honourable Supreme Court in relation to sale of software held that: In our view, the term goods as used in Article 366(12) of the constitution and as defined under the said act is very wide and include all types of movable properties. whether those: properties be tangible or intangible. The term 'all materials, articles and Commodities' includes both tangible and intangible/incorporeal property which is capable of abst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 publishing matters. The disputed issue is duly decided in nine pronouncements of Advance ruling authority by holding classification under the category of supply of goods and includes two pronouncements of Appellate Authority of Advance ruling annexed with the grounds of appeal. For the purpose of GST, custom tariff is applicable, it is not possible to treat the imported printed leaflet manufactured by overseas entity out of content supplied by Indian entity as supply of service and Indian importer has to invariably pay custom duty under the category of import of goods. It is not legally permissible to give the different treatment of Customs Tariff. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable 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 transaction between the appellant (supplier) and the clients (recipient) is that the client (mostly from the pharmaceutical sector) approaches the appellant (supplier) with the content/instructions that is required to be printed in the form of leaflet. The paper and the ink used in printing is owned by the appellant. The transaction is considered to be completed only when the desired content/instructions is printed in the desired format by the appellant (supplier) and handed over to the customer. Thus, in this transaction. there is an element of supply of goods as well as supply of service. The appellant is also on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 industry, hence the supply of leaflet i.e., goods and printing i.e. service qualifies as being naturally bundled in the ordinary course of business. Another condition is that the supplies should be made in conjunction. As per the Cambridge dictionary meaning the noun 'Conjunction' is a situation in which the events or conditions happen together. In the instant case, the supply of goods as well as the service happens at the same time hence the supply can be considered to be in conjunction. From the above discussion it can be safely deduced that the supply made by the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 constitutes the principal supply. 3. Principal supply has been defined in Section 2(90) of the Central Goods and Services Tax Act as supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em 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, this can be observed from the fact that the term and the like has been used after mentioning the items. The dominance in the items mentioned in Para no. 4 is of the printing of content/instruction. Now let us have a look at Para no. 5 of the circular, which the appellant claims their case is to he correctly covered on-going through the said Para, it is very evident that the items mentioned therein are those who have their own utility whether or not a design or a log is printed on it. With or without the logo or design, these items will still retain their identity or utility, the logo or design is generally printed either for a cosmetic purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification 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 service to himself and that the supply is of the goods. We choose to differ with the contention made in the said orders. The client had not approached the supplier (the appellant) merely for procuring leaflet: the intention of the client was to get the content/instruction printed on a piece of paper (leaflet). The printing was done as per the instruction of the client and hence it cannot he construed that the appellant was providing service of printing to himself. the printing was done as per the direction and demand of the client on the goods (leaflet) owned by the appellant. Hence, we find the citations put for by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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