TMI Blog2024 (1) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... session 2023-24. The notebooks are meant for free distribution among the children under School Kit Scheme of State Government. The acceptance letter issued by JEPC speaks that the multicolour matter for printing on inner and front cover pages of the notebooks will be provided at the time of work order in soft copies. On due consideration of the nature of contract, in the instant supply, 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. Whether the printing activities undertaken by the applicant are eligible for exemption under Serial No. 3/3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended? - HELD THAT:- The term pure services has not been defined under the Act. However, a bare reading of the description of services as specified in serial number 3 above denotes that supply of services which does not involve any supply of goods can be regarded as pure services. The said entry serial, therefore, sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books and other items. The applicant submits that Jharkhand Council of Educational Research and Training, Ranchi (the JCERT, for short) has awarded contracts to him for printing and supply of text books under State Plan for academic session 2023-24 on the basis of content provided by the JCERT, printing and supply of Atlas, Dictionary, Grammar and General Knowledge Book. It is submitted that the applicant will have temporary copyright over the content of the text books against consideration to be paid in the form of royalty. The applicant has also received contracts for printing and supply of Notebooks under School Kit Scheme of State Government for 2023-24 and printing and supply of Bilingual Parental Calendar from Jharkhand Education Project Council. Another contract for printing and supply of Pupils Comprehensive Report Progress Card has been awarded to the applicant by the Office of the Mission Director, Axom Sarba Siksha Abhiyan Mission, Assam. 1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01 as to: (i) Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... content of the books. By virtue of the copyright, the applicant shall be authorized to print and supply books meant for Free Distribution (that will be purchased by JCERT under the contract). Further, in case of excess sale of books, additional amount of royalty will be deposited by the applicant. 2.3 The applicant has relied on the judgement of Hon'ble Supreme Court in the case of Tata Consultancy Service v. State of Andhra Pradesh, (2005) 1 SCC 308 wherein it was held that once the copyrighted material, is put on an physical media such as books, floppies, CDs, etc., it acquires the nature of goods and transfer of such goods, amount to sale of goods inviting sales tax. Relevant portion of the order is as follows: In our view, the term goods as used in Article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (In case of painting) or computer discs or cassettes, and marketed would become goods . We see no difference between a sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il all such rights such as printing, publishing of copyright works which are available to the copyright owner, if they have been granted such rights pursuant to the assignment/agreement. According to the agreement, title of the books printed out of the copyrighted material would automatically stand transferred to the Government. Moreover, it is agreed between both the parties that the title to the books printed out of such copyrighted work, lies with the applicant only. Such title is transferred only pursuant to a sale by the applicant. Even though the sale price is pre-decided, no transfer of title happens without such sale. The applicant is not inclined to define its activity of printing books as job work, defined under section 2(68) of the GST Act, 2017 as it is not performing any treatment or process on goods belonging to another registered person. The content, paper, ink and any other material required for the supply, is belonging to the applicant. The applicant differentiates its activity as supply of goods from supply of service as indicated in 5(c) of Schedule II of the GST Act 2017 where permission is given by the owner of intellectual property to someone el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant. The relevant part of the agreement is reproduced herein under: The printer will have temporary copyright over the content of the text books to be printed by him under this contract. By virtue of this copyright, the printer shall be authorized to print and supply books meant for Free Distribution (that will be purchased by JCERT under this contract). This supply/ sale shall be made by the printer on his own account to JCERT. This copyright shall only be valid for Academic Year 2023-24. In consideration of the copyright, the printer is depositing royalty as per details mentioned below: 5% royalty on Free Distribution Books 4.3 The applicant submits that as per the agreement, printing is to be carried out strictly adhering to the standards, quality, design, syllabus and content stipulated in the tender. Stitching, binding, packeting, packing etc. is also to be carried out strictly as specified in the bid document. The production quality of printing, colour, illustrations, lay out, font size etc. should be conforming strictly to NCERT standards as well as similar to the matter provided in CD. According to the applicant, the books supplied by him to JCERT are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.6 In this context, we are in agreement with the view taken by the applicant that the aforesaid clarification denotes that the person who owns copyright and the person who prints are separate persons. However, in the case in our hand, by virtue of temporary transfer of copyright by JCERT against payment of royalty which enables the applicant to supply books on his own account, the applicant plays the role of copyright holder as well as the printer. Therefore the activities being undertaken by the applicant cannot be classified in the manner as clarified in para 4 of the said circular. 4.7 On due consideration of the submissions made by the authorized representative of the applicant along with documents produced before us, we observe that that the applicant, being engaged in printing of books, supplies such books to JCERT on his own account. Printing of books using the inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal hearing, we find that the calendar aims to provide parents with a simple and easy to access repository of resources and daily activity plans to promote meaningful and sustained engagements between parents and children. Undisputedly this calendar is meant for a specific group of people. But this very purpose cannot qualify the calendar to be a booklet, as contended by the applicant. 4.10 It has been clarified in para 2 of Circular No. 11/11/2017-GST dated 20.10.2017 supra 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. Here the recipient namely JEPC provides the content for printing and the applicant undertakes the printing work using the paper and ink purchased by him and thereafter supplies the calendar to the recipient. We thus find the supply to be a composite supply where predominant element is printing of the calendar. The supply of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as services relating to conduct of examination. However, in the instant case, the supply is provided to Education Department, Government of Assam and not to an educational institution. We are therefore of the opinion that the instant supply shall not be covered under the aforesaid entry for exemption. 4.14 In regard to supply of notebooks, the applicant submits that it is a fundamental element of JCERT's curriculum, directly benefiting students, and featuring all the designs and logos of the Jharkhand Government. From the documents as produced, we find that the applicant has been awarded a contract by Jharkhand Education Project Council for printing/supply of 80 pages notebooks (including cover) for the academic session 2023-24. The notebooks are meant for free distribution among the children under School Kit Scheme of State Government. The acceptance letter issued by JEPC speaks that the multicolour matter for printing on inner and front cover pages of the notebooks will be provided at the time of work order in soft copies. On due consideration of the nature of contract, we hold that in the instant supply, predominant supply is that of goods and the supply of print ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any goods. On the other hand, to qualify to be a supply under serial number 3A above, a composite supply, subject to fulfilment of other conditions as specified in the said entry, would be such that the maximum value of involvement of goods is less than 25% of the total value of the said composite supply. 4.17 As the supplies of printed text books, notebooks, activity calendar and comprehensive progress report card involves supply of paper, ink, binding and packing materials etc., such supplies would not come under serial number 3 of the notification supra. Further, the applicant has not furnished any documents wherefrom the value of goods involved in the supply can be ascertained. We, therefore, refrain to pronounce any ruling on this issue. In view of above, we rule as under: RULING The items supplied by the applicant shall be treated as follows: (i) Printing and supply of text book to JCERT shall be treated as supply of goods. (ii) Printing and supply of Bilingual Parental Calendar to JEPC would be treated as supply of services. (iii) Printing and supply of notebook would be treated as supply of goods. (iv) Printing and supply of Compreh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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