Whether printing service supplied locally is export when a foreign buyer is paying the consideration in US dollars?

PJ/Case Law/2020-2021/3561

Swapna Printing Works Private Limited 454/VBAAR/2019-20 dated 06/03/2020

Brief Facts:-The Applicant is engaged in the business of printing. The Applicant has secured an order from a foreign company for printing booklets in various Indian languages. The content is provided by the recipient and the physical inputs like paper, ink and other physical inputs, are purchased by the applicant to prints the content and binds the printed material into booklets. It receives consideration in US dollars.The applicant after printing and binding delivers the said booklets to various places in India to the recipient.
Issue: -Whether printing service supplied locally is export when a foreign buyer is paying the consideration in US dollars?
Applicant Contention:-The contention of the Applicant is that since the consideration is paid by the foreign buyer and that too in the Foreign currency the said buyer will be considered as the recipient in terms of Sec2(93)(1) and not those persons to whom the booklets are supplied within India after the printing is being done.Thus according to the applicantthe place of delivery of the service, is not relevant for determining the recipient.
The applicant further submits that the place of supply should be determined as per section 13(2) of the IGST Act, 2017 i.e. the recipient being located outside India and not be determined as per Sec 13(3)(a) which is for performance services where the recipient provides any goods for performing the printing service and hence the supply should be considered as export of service.
Reasoning of the Judgement:-The Authority first decides whether the said supply is supply of goods or supply of service. After 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 recipient is the principal supply and therefore such supplies would constitute supply of service, provided The content is supplied by the publisher or the person who owns the usage rights to the intangible inputs and The physical inputs including paper used for printing belong to the printer.
In the instant case Applicant prints the content on physical media, binds them into booklets and supplies the printed material.Service of printingis the principal element of the composite supplies.The place at which the printed booklets are delivered is the place of supply of the composite printing service.
The Authority also states in their judgement that the recipient need not only be the person who pays the consideration but also includes the person to whom a supply is made as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient.
The person who receives the supply in India should, be considered as the recipient, being inseparable from the foreign buyer.
Decision:-The Authority for Advance Ruling has held that the Applicant supplies the composite printing service to the recipient located in India. Such supplies shall not, be treated as export of services and the same is taxable.
Comment:-Supplies of Composite Printing Services to recipient located in lndia are Taxable under GST even if consideration is received in US dollars. And From the above it is not clear whether the ruling is based upon delivery of goods or the provision of service which can be based as an opinion that the POS shall be India. The interpretation ruled by the authority can be challenged. In our View the recipient cannot be interpreted to mean the beneficiary of the service.

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PJ/Case Law/2020-2021/3561

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