Page 153 - GSTL_16 April 2020_Vol 35_Part 3

2020 ] IN RE : SWAPNA PRINTING WORKS PVT. LTD. 367
2. Submission of the Applicant :
2.1 Hope Foundation Inc., a foreign entity based in the United States of
America, awards the Applicant a contract for printing booklets in various Indian
languages. Hope Foundation Inc. provides the content. The Applicant arranges
physical inputs like paper, ink and other physical inputs, prints the content and
binds the printed material into booklets and delivers the booklets to the recipient.
It receives consideration in US dollars.
2.2 The Applicant submits that the recipient, as defined under Section
2(93) of the GST Act, means the person liable to pay the consideration. It argues
that the person liable to pay the consideration is not necessarily the one to whom
the service is rendered. The recipient, therefore, might not be the person to
whom the service is rendered. The distinction is apparent from the wording of
clauses (a) and (c) of Section 2(93) of the GST Act. If consideration is payable, as
in the present context, the recipient shall be the person liable to pay the consider-
ation. Otherwise, the recipient of the service shall be the person to whom the ser-
vice is rendered. So, the place of delivery of the service, according to the Appli-
cant, is not relevant for determining the recipient in the present context, where
the foreign buyer is liable for and is paying the consideration in US dollars.
2.3 The place of supply should, therefore, be determined in accordance
with the provisions under Section 13(2) of the IGST Act, 2017, the recipient being
located outside India. The Applicant argues that the recipient is not providing
any goods for performing the printing service. Provisions under Section 13(3)(a)
of the IGST Act, 2017 are not, therefore, applicable.
2.4 The Applicant submits that the recipient being located outside India
and consideration received in convertible foreign exchange, the activity should
be considered as export of service.
3. Observations & Findings of the Authority :
3.1 In its Circular No. 11/11/2017-GST, dated 20-10-2017, the C.B.I. &
C. clarifies the treatment of various composite printing contracts. In all these con-
tracts, the recipient provides the content for printing and the printer supplier the
physical inputs. All the printed goods are classifiable under Chapters 48 and 49
of the First Schedule to the Customs Tariff Act, 1975 (hereinafter the Tariff Act).
The difference, however, lies in the customer contemplating or not of separate
rights and use, arising out of the supply of the goods. In the case of printing of
books, pamphlets, annual reports, etc., the goods have no better utility than car-
rying the printed matter. On the other hand, envelopes, letter cards, napkins,
wallpaper and the like have separate use as goods apart from carrying the design
or logo printed thereon. The service of printing is, therefore, the predominant
element in the contracts for printing of books, pamphlets, annual reports etc.,
whereas, the supply of goods is the dominant nature of the latter category of
printing contracts.
3.2 The Applicant prints booklets that are classifiable under Heading
4901 of the Tariff Act. The recipient provides the content usually on a digital me-
dia and retains usage right on such intangible inputs. The Applicant prints the
content on physical media, binds them into booklets and supplies the printed
material. The goods so supplied have no utility other than displaying the printed
content. Service of printing, therefore, is the predominant element of the compo-
site supplies the Applicant is making.

GST LAW TIMES  16th April 2020  273