Page 119 - GSTL_26th March 2020_Vol 34_Part 4

2020 ] IN RE : MACRO MEDIA DIGITAL IMAGING PVT. LTD. 629
material, where the content is supplied by the recipient, on the required PVC
material amounts to supply of goods and draws attention to the Circular No.
11/11/2017-GST, dated 20-11-2017, specifically to Para 5, wherein a clarification
has been given on taxability of printing contracts. Hence we proceed to discuss and
analyse the said circular.
11.7 Para 2 of the circular clarifies that supply of books, pamphlets, bro-
chures, 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 com-
posite 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.
11.8 Principal supply, in terms of Section 2(90) of CGST Act, 2017, is
supply of goods or services which constitutes the predominant element of com-
posite supply and to which any other supply forming part of that composite
supply.
11.9 Para 4 of the circular specifies that in the case of printing of books,
pamphlets, brochures, annual reports, and the like, the 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/SAC
9989, subject to the following conditions, namely :-
(a) The content is supplied by the publisher or the person who owns
the usage rights to the intangible inputs.
(b) The physical inputs including paper used for printing belong to the
printer.
11.10 Para 5 of the circular specifies that in the case of supply of printed
envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc., falling
under Chapter 48 or 49, printed with design, logo etc., supplied by the recipient
of goods but made using physical inputs including paper belonging to the print-
er, 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 and
therefore such supplies would constitute supply of goods falling under respec-
tive headings of Chapter 48 or 49 of the Customs Tariff.
11.11 It could be inferred, on combined reading of Paras 4 & 5 of the
aforesaid Circular, that the ownership of usage rights of intangible inputs places
crucial role in deciding the supply as that of goods or services, though there exist
two common points in both the cases i.e.
(a) The content is supplied by the recipient of goods/services.
(b) The physical inputs including paper used for printing belong to the
printer.
Further, on careful reading of Para 5, it could easily be inferred that the nature of
physical inputs, on which printing activity is carried out, does not change after
the process of printing i.e. the napkin, tissue etc., are the same before and after
the printing and hence the printing activity is ancillary and hence the supply of
the same is that of supply of goods. The classification of the said goods prior or
after the printing is same and is either Chapter 48 or 49.
11.12 In the instant case, it is an admitted fact that the PVC material is
classified under Chapter 39 prior to printing and after printing it would become
Trade Advertising Material & falls under Chapter 49. Therefore the activity of
printing makes the PVC material into Trade Advertising Material i.e. ban-
GST LAW TIMES  26th March 2020  215