Case Title | Micro Media Digital Imaging Pvt Ltd |
Court | Karnataka AAAR |
Honorable Judges | Member D.P. Nagendra Kumar & Member M.S. Srikar |
Citation | 2020 (9) GSTPanacea 20 HC Karnataka (AAAR-KAR):(2020) 33 TLC (GST) 003 |
Judgement Date | 28-September-2020 |
Council for Petitioner | Sayed Peeran |
Council for Respondent | NA |
Section | Section 101 of the CGST Act |
In Favour of | In Favour of Assessee |
The Karnataka bench of Member D.P.Nagendra Kumar & Member M.S.Srikar has held that the activity of printing brings into being an advertisement product and it is this product which has been ordered by the customer. Printing by the Appellant in this case is ancillary to the main activity of making such advertisement materials. The digital printing on PVC material gives rise to a distinct trade advertisement product and supply of such products by the Appellant is a supply of goods.
FACTS OF THE CASE
The Appellant is a Private Limited company engaged in manufacturing of Billboards, Building Wraps, Feet Graphics Fleet Graphics, Window Graphics, Trade Show Graphics, Office Branding.
The customers place purchase orders on the Appellant for supply of trade advertisements and the same are printed by the Appellant on Poly Vinyl Chloride (PVC) material such as Vinyl, Back Lit Flex, Blockout Flex and Foam Board which is procured by them.
The design and graphics of the advertisements are provided by the customers themselves. The Appellant merely undertakes the activity of printing on the material. Further the Appellant, in the bill, charges on two accounts i.e. ‘printing’ and ‘supply’, wherein the former represent the service activity of printing and the latter represent the physical supply of printed trade advertisements on the PVC material.
The appellant filed an application for Advance Ruling under section 98 of the CGST Act, 2017 and KGST Act, 2017 on the following questions:
- Whether the transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material is supply of goods.
- What is the classification of such trade advertisement material if the transaction is supply of goods?
- What is the classification and applicable rate of CGST on the supply of such trade advertisement material if the transaction is that of supply of service?
It was decided by the Karnataka Advance Ruling Authority vide Ruling No. KAR/ADRG 06/2020 dated 17th Feb 2020 that:
- The transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material is a supply of service.
- The classification of the aforesaid supply of service is 9989 of the scheme of classification of services.
- The applicable rate of GST on the supply of aforesaid service is 18% up to 30.10.2017 & 12% effective from 31.10.2017, as per Entry No.27 of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended.
Aggrieved by the said Ruling of the Authority (herein after referred to as ‘impugned order’), the Appellant has filed an appeal
COURT HELD
Considering the facts as recorded, held that the activity of printing brings into being an advertisement product and it is this product which has been ordered by the customer. Printing by the Appellant in this case is ancillary to the main activity of making such advertisement materials.
The digital printing on PVC material gives rise to a distinct trade advertisement product and supply of such products by the Appellant is a supply of goods.
ANALYSIS OF THE JUDGEMENT
The Appellant is not merely printing the images or reproducing the content given by the customers on to the PVC material. The Appellant is making a product which serves as an advertising material for the customer. Without the activity of printing the content given by the customer, the PVC material is of no use to the customer as it does not serve the purpose of any advertisement.
The activity of printing brings into being an advertisement product and it is this product which has been ordered by the customer. Printing by the Appellant in this case is ancillary to the main activity of making such advertisement materials.
The printing is a service rendered by the Appellant to himself in order to execute the supply of trade advertising material.
In other words, the supply in the case of the Appellant is not the printing service but a supply of the trade advertisements either as a banner or billboard or free-standing display unit, etc. which are products emerging out of the printing activity.
What the Appellant does is supply a product which it produces to the customer’s requirements and satisfaction. The supply of the product is the predominant activity.
Further, as observed by us, the cost of the product supplied by the Appellant is charged on the basis of the sqft. This also substantiates our view that what is supplied by the Appellant is goods which have been produced by the activity of printing.
Therefore, we are of the opinion that the digital printing on PVC material gives rise to a distinct trade advertisement product and supply of such products by the Appellant is a supply of goods. We therefore set aside the ruling given by the lower Authority.
Download PDF:
For Reference Visit:
Read Another Case Law: