Case Title | Pattabi Enterprises |
Court | Karnataka AAAR |
Honorable Judges | Member D.P.Nagendra Kumar & Member M.S. Srikar |
Citation | 2020 (01) GSTPanacea 24 HC Karnataka KAR/AAAR/Appeal-11/2019-20 |
Judgement Date | 31-January-2020 |
Council for Petitioner | M.S.Nagaraj |
Council for Respondent | NA |
Section | Section 100 |
In Favour of | In Favour of Assessee |
The Karnataka bench of Member D.P.Nagendra Kumar & Member M.S. Srikar has held that the ‘Access Card’ printed and supplied by the Appellant based on the contents provided by their customers is a supply of goods and is rightly classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet. The ‘Access card’ printed and supplied by the appellant attracts GST rate of 5% in case of inter-state supplies and 2.5% CGST and 2.5% SGST in case of Intra state supplies vide SI.No. 201 of Schedule I to Notification No. 1/2017-CT (Rate) & 1/2017-IT (Rate) both dated 28.06.2017.
FACTS OF THE CASE
Appellant is a partnership firm engaged in the manufacture and supply of cartons, corrugated boxes, paper folders, sleeves, other packaging containers, labels, tags, pamphlets, booklets, brochures, leaflets and similar printed matter falling under HSN Code 48 and 49.
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 ‘Access Card’ printed and supplied by the Appellant based on the contents provided by their customers is rightly classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet?
- Whether ‘Access card’ printed and supplied by the appellant based on the contents provided by their customers attracts GST rate of 5% in case of IGST and 2.5% CGST and 2.5% SGST in case of Intra state supplies vide Notification No. 1/2017-CT (Rate) Sl.No.201 & 1/2017-IT (Rate) Sl.No.201 dated 28.06.2017 and SGST/UTGST Notifications.
It was decided by the Karnataka Advance Ruling Authority vide Ruling No. KAR/ADRG 46/2019 dated 17th Sept 2019 = 2019 (11) TMI 156 – AUTHORITY FOR ADVANCE RULING, KARNATAKA that the supply of ‘access cards”, and similar material printed by the applicant with the contents supplied by the recipient of supply are classifiable as a supply of service under SAC 9989 and liable to tax under CGST at 9%, KGST at 9% and at 18% under the IGST Act.
Authority (herein after referred to as ‘impugned order’), the Appellant has filed an appeal under section 100 of the CGST Act, 2017 and KGST Act, 2017.
COURT HELD
Considering the facts as recorded, held that bench set aside the ruling no No.KAR ADRG 46/2019 dated 17/09/2019 = 2019 (11) TMI 156 – AUTHORITY FOR ADVANCE RULING, KARNATAKA passed by the Advance Ruling Authority and answer the questions of the Appellant as follows:-
- The ‘Access Card’ printed and supplied by the Appellant based on the contents provided by their customers is a supply of goods and is rightly classifiable under HSN code 4901 10 20 under the description brochures, leaflets and similar printed matter whether or not in single sheet.
- The ‘Access card’ printed and supplied by the appellant attracts GST rate of 5% in case of inter-state supplies and 2.5% CGST and 2.5% SGST in case of Intra state supplies vide SI.No. 201 of Schedule I to Notification No. 1/2017-CT (Rate) & 1/2017-IT (Rate) both dated 28.06.2017
ANALYSIS OF THE JUDGEMENT
The lower authority has relied on Para 4 of the said Circular to hold that since the content is supplied by the recipient who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the Appellant, the principal supply is the printing service and hence the activity is classifiable as a supply of service. Bench disagree with the reasoning by the lower Authority.
Undoubtedly the contents and the creatives for the Access card have been supplied by the recipient to the Appellant and there is no dispute that the Appellant has used his own paper and inks and machinery to carry out the activity.
However, what has been lost sight of is the fact that the activity of printing brings into existence a specific new product known in trade and common parlance as “Access card”. Printing in this case is ancillary to the main activity of making “Access cards”.
The printing is a service rendered by the Appellant to himself in order to execute the supply of “Access cards”. In other words, the principal supply in the case of the Appellant is not the printing service but a supply of the Access cards which is a product emerging out of the printing activity.
Therefore, bench are of the opinion that the provisions of Para 5 of the Board’s Circular will apply in this case and the printing and supply of Access cards by the Appellant is a supply of goods. Bench therefore set aside the ruling given by the lower Authority.
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