Sonka Publication Pvt Ltd VS Union Of India

The case in question, W.P.(C) 10022/2018, centers around the classification of a set of books titled “Sulekh Sarita Parts I to V” under the Central Goods and Service Tax Act (CGST Act). The crux of the matter is whether these books should be categorized as “Printed Books” under HSN 4901, thus being exempt from tax, or as “Exercise Books” under HSN 4820, subject to a 6% tax rate.

To shed light on this issue, the court refers to a similar case, W.P. (C) No.7198/2016, involving “workbooks” used in the Sarva Shiksha Abhiyan. In that instance, the court directed the Central Board of Excise and Customs (CBEC) to assess the matter comprehensively.

In response, the CBEC issued Circular No.1057/6/2017 – CX on July 7, 2017, offering clarifications. The circular delineated the distinction between “Exercise Books” and “Printed Workbooks.” According to the CBEC, Exercise Books are primarily stationary items with blank pages for writing, sometimes containing printed texts for manual copying. Printing is considered incidental to their main function of writing practice. On the other hand, Printed Workbooks, classified under Chapter 49, feature printed questions or exercises followed by spaces for writing. In these workbooks, printing is not merely incidental but integral to their primary use.

Moreover, the CBEC clarified that children’s drawing books, falling under Chapter 49, include pictures with complementary texts and are classified separately from Exercise Books under Chapter 48.

In essence, the decision hinges on whether the books in question primarily serve as blank writing practice materials with incidental printing or as structured workbooks with printed exercises. This distinction determines their classification under the relevant HSN codes and consequent tax treatment under the CGST Act and Delhi GST Act.

In W.P.(C) 10022/2018, the petitioner sought clarification on the classification of their published books, specifically the “Sulekh Sarita Parts I to V,” under the Central Goods and Service Tax Act (CGST Act). They queried whether these books should be classified as “Printed Books” under HSN 4901 or as “Exercise Books” under HSN 4820. Additionally, they raised the issue of whether registration under the GST Act was mandatory for a supplier exclusively dealing in tax-exempt goods.

The Authority for Advancing Ruling (AAR) ruled on April 6, 2018, that the petitioner’s books were classifiable as “Exercise Books” under HSN 4820. Furthermore, the AAR determined that the petitioner needed to register under the CGST Act if they had any GST liability under the Reverse Charge Mechanism, despite potentially being exempt from tax under Section 23 (i) (a).

The petitioner contested the AAR’s decision solely on the classification issue, not the registration matter. The petitioner’s counsel confirmed that they had registered under the CGST Act regardless of the AAR’s ruling on registration.

The AAR’s rationale for classifying the petitioner’s books under HSN 4820 was based on the distinction between “workbooks” (under Heading 49.01) and “exercise books” (under Heading 48.20). While workbooks contain questions or exercises within the writing space, exercise books primarily feature printed text with space for manual copying. The AAR found that the petitioner’s books predominantly facilitated writing, with printing being incidental. Since the books lacked children’s pictures or drawing content, classification under Heading 49.03 was deemed impossible, leading to their correct classification under HSN 4820.

This summary encapsulates the key points surrounding the classification of the petitioner’s books and the related GST registration issue as addressed in W.P.(C) 10022/2018.

In W.P.(C) 10022/2018, the court heard arguments from both sides represented by Mr. Vineet Bhatia for the Petitioner, Mr. Amit Bansal for the Principal Commissioner, GST, and Mr. Satyakam, Addl. Standing Counsel, GNCTD. The court also reviewed the petitioner’s printed books, particularly focusing on “Sulekh Sarita Part V” as illustrative.

Examining the content of “Sulekh Sarita Part V,” the court noted that while the initial part involves practice exercises where students copy printed text, this aspect represents only a fraction of the book’s content. Subsequently, the book includes sections where students are expected to answer questions, define Hindi words, and write short essays, indicating a broader scope beyond mere copying exercises.

The court highlighted portions of the book that test students’ listening, retention, and comprehension skills. For example, on page 16, students are tasked with listening to and writing down difficult words spoken by the teacher, demonstrating more than rote copying. Additionally, there are exercises where students must find word meanings in a dictionary, join Hindi words to form new ones, and demonstrate comprehension by applying their understanding.

These detailed examples from “Sulekh Sarita Part V” suggest that the book goes beyond simple copying exercises and serves as a comprehensive tool for language learning, engaging students in activities that require active participation, comprehension, and application of knowledge. This broader educational approach supports the contention that the books should not be classified solely as “Exercise Books” under HSN 4820 but rather as educational materials falling under a different classification.

In continuation of W.P.(C) 10022/2018, the examination of “Sulekh Sarita Part V” continued with a closer look at its contents. On page 54, the book instructs the teacher to dictate either 40 difficult words or a paragraph for students to write down, emphasizing listening skills and transcription. Towards the end of the book, on pages 61 and 62, students are prompted to write short pieces on suggested topics, encouraging independent thinking and composition.

The court disagreed with the AAR’s assessment that the book primarily involved copying exercises, emphasizing that it progressively encourages independent thought and expression. It characterized the book not as a mere “workbook” but as a “practice book” aimed at enhancing educational value by fostering critical thinking and evaluating students’ output.

Addressing the HSN note excluding “children’s workbooks consisting essentially of pictures with complementary text,” the court argued that the books in question surpassed mere exercises by stimulating creativity, testing listening and comprehension skills, and reinforcing classroom learning.

The court cited the Supreme Court case of C.C. (General), New Delhi v. Gujarat Perstorp Electronics Ltd. to illustrate the approach to classification. In this case, the Supreme Court defined a “book” functionally, emphasizing both its physical form and its utility as a tool of trade or profession. The court implied that the petitioner’s books, fulfilling the dual test of physical and functional characteristics, should not be narrowly categorized as mere exercise books.

This analysis suggests that the petitioner’s books serve a broader educational purpose beyond simple exercises and should not be classified solely as “Exercise Books” under HSN 4820, but rather recognized as educational materials with distinct characteristics deserving a separate classification.

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