Cheque-books printed on job-work basis on paper belonging to recipient constitutes ‘service’; but supply of printing along with PVC cards are taxable as ‘goods’: AAR

Categories: Advance Ruling
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Facts: M/s. K L Hi-tech Secure Print Ltd. is engaged in the business of providing the services of printing of security documents to its clients, who vary from Government Authorities and agencies (like printing of Aadhaar Cards for UIDAI), Banks (like printing of cheque books), Educational Board/Institutions (like Printing of Pre and Post Examination items viz. OMR sheets, question papers etc) and Private Companies (printing on PVC cards).

Issues involved:

1. Whether supply of printing services to Educational Board/Institutions like pre-examination items viz. question papers, OMR sheets, Answer booklets for conducting of an examination by the educational boards, printing of Post-examination items like marks card, grade card, certificates to the educational boards of up to higher secondary and Scanning and processing of results of examinations be treated as exempted supply of service by virtue of S. No. 66 of the GST services Exemption Notification No. 12/2017 – Central Tax (Rate) dated June 28, 2017 (“exemption notification”)?

2. What would be the classification and the GST rate, for the supply of services in the nature of printing of cheque books in two situations – where the physical inputs of paper belong to (i) the customer banks; (ii) the applicant?

3. What would be the classification and the GST rate for, printing and supply of Aadhaar cards on paper to the Unique Identification Authority of India (UIDAI)?

4. What would be the classification and the applicable GST rate, for the printing and supply of PVC cards.

Held: The Hon’ble AAR of Telangana vide TSAAR Order No. 10/2018 dated July 26, 2018 held as under:

1. The supply of services to ‘educational institutions’ for conducting of examinations are eligible for exemption under S. No. 66 of the exemption notification as these services are normally not carried out by the educational institution by themselves but has to be outsourced to other service providers due to lack of infrastructure for printing, administrative convenience, confidentiality, volume etc. Accordingly, when such services are procured by the educational institution they tantamount to the services relating to conduct of examination, which will aptly fall within the ambit of exemption.

2. The supply of cheque books (where the printing paper and inks are being borne by the applicant) are classifiable under heading 4907 of GST Tariff as goods, but the same would not attract any GST as they are exempted supply in terms of Serial No 118 to the Notification No. 2/2017-Central Tax (Rate) dated June 28, 2017.

In respect of the situation, where the paper is being supplied by the banks, and the applicants are undertaking job work of printing the cheque and converting them as cheque books, the predominant supply in the instant case is supply of service. Hence, the same is classifiable under heading 9988 and attracts GST @ 5% (2.5% CGST + 2.5% SGST).

3. As regards supply of Aadhar Cards, the applicant is rendering various supplies like conversion of data to the required file format, printing of aadhaar cards, lamination, franking and dispatching etc. In the entire gamut of things being undertaken by the applicant, all the supplies made by them, are naturally bundled and supplied in conjunction with each other. Hence, the services can be considered as composite service in terms of Section 2(30) of CGST Act, 2017. Accordingly, the supply of Aadhaar Cards are classifiable under heading 9989 of GST Tariff and attracts GST @ 12% (6% CGST + 6% SGST) in terms of S.No.27 of Notification No.11/2017-Central Tax (Rate) dated June 28, 2017 as amended.

4. The printing and supply of PVC cards are classifiable under heading 3920 i.e. “Other plates, sheets, film, foil and strip, of plastics, non-cellular and not reinforced, laminated, supported or similarly combined with other materials d with other materials” of GST Tariff and attracts 18% GST (9%CGST + 9%SGST) in terms of S.No.106 of Schedule III of Notification No.1/2017- Central Tax (Rate) dated June 28, 2017, as in the instant case the PVC cards are belonging to the applicant, hence 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 of goods.

Citation: [TS-523-AAR-2018-NT]