Whether activity of fulfilling various printing and stationery requirements of the Government Departments is supply of goods or supply of services and whether it is liable to GST?

Department of Printing, Stationery and Publications (GST AAR Karnataka) KAR ADRG 11/2020

Brief Facts: - The applicant is an organization, established by Govt. of Karnataka to cater to the Printing and Stationery requirements of the requirements of the State Government offices namely Governor’s Office, Legislature, Government Secretariat, High Court, and other Government Departments. Applicant also engaged in selling of the Government Publications to General Public through a network of Book Depots. The Applicant has also extended its technical assistance to various other Departments whose printing works, are being executed by the private. Besides this they also undertake the Printing works and supply of Stationery to Government of India Departments namely Chief Election Commissioner Office, Census Department etc., on chargeable basis.

Issues: - The applicant has raised various issues before the authority in respect of each of its supplies

Supply of Printed materials & printing of text booksto various Government Departments where the content is provided by recipients. It requested to clarify whether this activity is exempt under the CGST & KGST Acts or not. If the text books are supplied to public or recognised book stalls, whether it is treated as taxable /exempted goods or services. If it is goods, exemption under Sl. No.119 of the Notification No.2/2017 is available or not.
Supply of printing of Karnataka Gazettesfrom the contents provided by the recipient. Since this service is provided by one Government Department to another Government Department it is exempted as per entry No. 8 of the notification No. 12/2017 dated28/06/2017. It may be clarified. Moreover, If the said Gazettes are sold to public or recognised bookstalls whether it is treated as printed books falling under Sl.No.119 of Notification No.2/2017 and claim exemption on such sales or if treated as goods only whether it is taxable under entry No.201 of the schedule I of Notification No.1/2017 dated 29/06/2017 or exempt under SL.No.119 of notification No.2/2017 dated 28/06/2017 under the KGST & CGST Acts.

3.   Supply & printing of Annual Reports to Government Departments, Autonomous      undertakings and Zilla Panchayats where the content is provided      by therecipients. When such annual reports are sold to Government            Departments is it an exempted service under SL.No.8 of notification 12/2017. If such annual reports are sold to Government undertakings and       autonomous bodies, whether such sales exempted sales under entry           No.8 of notification No.12/2017.
4.   Supply related to printing of Answer Booklets, Visiting cards, letter            heads, forms, covers, file wrappers, invitation cards, writing pads,& rubber     stamps-Whether they are exempted under SL. No. 150 of the Notification       2/2017 dated28/06/2017.
5.   Supply of the paper waste where the sale is on a condition through the public auction only and charge 5% of GST on this supply. Whether the understanding of the rate of tax is correct or not may please be clarified.
6.   Supply of old machinery is sold as scrap, what is the rate of tax and the entry and notification may please be clarified.
7.   The applicant purchases stationery from the registered dealers and supplied as it is to the Government Departments against the orders at no profit or no Loss, whether such transactions are exempted as the applicant is acting like a pure Agent or is taxable under the act.
8.   The applicant also pays tax @5% on the transportation paid to the private party. Whether it is liable to pay tax on the transportation charges paid to the service provider or Can we deduct the tax element on the transportation paid as TDS and deposit at the time of filing returns.
9.   Supply relating to preparation of the Economic Survey books as per the    requirementsof the Finance Department. The contents of the material is provided by the Government. Hence, this product is categorised as Service of printed materials. Whether the supply is eligible to claim exemption           vide Entry 8 of the Notification No.12/2017 dated 28th June 2017. Pl clarify.       Moreover If these printed materials are sold to the public directly by the     Applicant, whether, the same is exempted or taxable under the GST Act.
10.       Supply related to printing the receipt books where content is provided byRecipients and the printed Receipt books are supplied to Government       Departments & autonomous          bodies. Hence, the same is treated as supply        of service and            eligible for exemption          vide entry no. 8 of the    Notification No.12/2017     dated 28/06/2017. Whether this   item is eligible           for exemption under the GST Act or not?
11.       Supply of measurement books to zila parisad, karnatka nigama, panchayat and other govt departments qualifies to be a as service vide entry No.8 of the Notification No.12/2017 Dated 28/06/2017. Is it exempted from the levy of GST as the same is supplied by one Government Department to another Government Departments?
12        Supply related to printing of Law reports where content are provided by the High Court of Karnataka. These materials are provided to them at Free of cost. Whether we are eligible for exemption on the supply of these services vide entry No.8 of the Notification No.12/2017 dated 28/06/2017.
13        Supply related to giving the NOC to private persons at a price of Rs.100 we are not charging any GST at present. In this case the contents are provided by the       recipient. whether these are goods / services exempted or taxable under the Act
14.       Supply related to Printing of Text books where The contents of the text book is provided by the Government. Since the text books are supplied to Karnataka Text Books suppliers to sell them on behalf of the Government, we are charging GST @ 12%. As per entry No.8 of the notification No.12/2017 dated 28/06/2017, the printing & supply of text books by one Government Department to another Government Departments is exempted under the CGST             Act and KGST Acts. Whether this activity is exempt under the CGST & KGST Acts or not. The text books are supplied to Recognised book stalls to sell them to the     public on behalf of             the Government whether it is treated as taxable or /exempted goods or services. If it is goods, is it eligible for exemption under Sl. No.119 of the NotificationNo.2/2017? or If these services are taxable services, what is the rate of tax?
15        Supply related to Printing of the Logo and the content of bus tickets are provided by the recipient. Since the content are negligible compared to materials, it is treated as goods and the tax is collected @12% under GST Act. whether it is taxable goods or service?
16        Supply related to printing of the Log books are supplied to various Government            Departments and the contents are provided by Government Departments. Since the contents are negligible compared to        the materials used, these are treated as goods. And claiming exemption on the supply of these goods to KPWD. However, we are collecting tax @12% on the sale made to autonomous bodies. Whether these are taxable or exempted goods/services. Moreover   Since these materials are supplied by one Government Department to another Department or autonomous bodies controlled by the Government, can we claim exemption on the supply of these materials?

Reasoning of Judgement

The Authority for Advance Ruling has provided their reasoning before considering the taxability on the pertinent issues

1. Whether Supply of Goods/Service -Referring to the Circular No. 11/11/2017-GST dated 20.10.2017, wherein clarification on taxability of printing contracts has been issued. 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 Govt. is the principal supply and therefore such supplies would constitute supply of service, , 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
Moreover the circular specifies that in the case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, printed with design, logo etc., supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, 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

2. Whether Supply is between two Distinct person -Since the Govt press is established by the Government of Karnataka and does not have an independent existence, what so ever, from the Government of Karnataka becomes part of Government of Karnataka. Further the provider of the content is also another Department of same Government of Karnataka. Therefore the activity is between the two/more departments of the same Government of Karnataka and hence there is no distinct supplier.

3. Whether supply or not-Activity of printing and supply to other departments of same Government of Karnataka, who have not obtained separate registration under the GST Act, amounts to supply in terms of Section 7(1)(a) of the CGST Act 2017 for which 3 conditions needs to be fulfilled.

i. The transaction must involve a supply of goods or services or both, such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made- Yes the transaction involves supply.

ii. The transaction must be for a consideration by a person-For this Sec 15 needs to be referred, where “The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply” In the present case the applicant as well as the recipient are both different part of the Government of Karnataka, which is a single entity. Therefore in the absence of distinct supplier and recipient , the instant transaction does not qualify to be a supply.

Nevertheless, If the activity of printing and supply is done to the Departments of same Government of Karnataka who have obtained separate registration under the GST Act, then the said activity amounts to supply and chargeable to tax.

Ruling in respect of all the issues raised before the authority after considering all the relevant provisions.

Issue No.	Items involved	Supplied to	Supply of Goods/Service	Whether Taxable/Exempted	Relevant Notf.	Tax rate
1	Printing & Supply of Text Books, Printed materials, Karnataka Gazzettes, Annual reports, Receiptbooks ,Measurement books & Log books	Unregisted Govt dept. Registered Govt Dept.	Service	Exempted, since not amounts to supply Taxable	NA Entry 27 of Ntf 11/2017	NA 12%
2.	Printing & Supply of Answer Booklets, Visiting cards, letter heads, forms covers, invitation cards, rubber stamps, witing pads	Unregisted Govt dept. Registered Govt Dept.	Goods	Exempted, since not amounts to supply Taxable	NA Entry 152 -154 OF SCH III of Ntf 01/2017	NA 18%
3.	Printing & supply of Annual Reports & Receipt Books	To all the Autonomous Bodies of the Govt of Karnatka	Service	Taxable	Entry 27 of Ntf 11/2017	12%
4.	Printing & supply of Log Books	To all the Autonomous Bodies of the Govt of Karnataka	Goods	Taxable	Entry 152 -154 OF SCH III of Ntf 01/2017	18%
5.	Printing & Supply of Text Books, Printed materials, Karnataka Gazettes,& Economic Survey of Govt	Public & Recognised book stalls	Goods	Exempted	Entry 119 of Ntf 02/2017	NA
6.	Supply of waste	Public	Goods`	Taxable	Entry 198B of Ntf.No. 01/2017	5%
7.	Supply of old machinery as scrap	Public	Goods	Taxable	Entry 199 of Ntf.No. 01/2017	18%
8.	Supply of Stationery items	Unregistered Govt dept. Registered Govt Dept.	Goods	Exempted, since not amounts to supply Taxable	NA As applicable to respective goods	NA
9.	Transportation service received by applicant from GTA & if Received form other than GTA	Applicant	Service	Taxable Exempted	Not 13/2017 under RCM Entry 18 of ntf.12/2017	5%
10.	Printing & Supply of Law reports	Hight Court of Karnataka	Service	Exempted, since not considered as supply as there is no consideration	NA	NA
11.	Issue of NOC	Public	Service	Exempted Since the consideration is less than Rs.5000	Entry 9 of ntf.12/2017	NA
12.	Printing & supply of Bus tickets	BMTC under govt of Karnataka	Service	Taxable	Entry No. 27 of 27/2017	12%

Comment:- It can be concluded that all the supplies made to those Govt Departments who are unregistered shall not be considered as supply at all as these supplies do not get covered under the definition of Supply as per the Sec 7. Furthermore, for those supplies which are made to the Registered Govt Departments, respective rates have been identified on which the same shall be either taxable or exempted as per the applicable relevant notification. Moreover the applicant cannot avail the benefit of a pure agent in case of supplies made of stationery items as it is to the respective govt departments as he does not procure any other services for the purpose distribution of such items in terms of Rule 33 of the CGST Act.

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PJ/Case Law/2020-2021/3554

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