Telangana Authority For Advance Ruling (AAR) has recently ruled that 5% Goods and Service Tax (GST) is applicable on printing services if content supplied by recipient along with raw materials.
The applicant M/s. Dachepalli Printers are in the business of printing text books for the Government of Telangana as well as other private organizations where the content is supplied by the recipient of the service.
Applicant sought the application for clarification regarding the percentage of Centeal Goods and Services Tax and State Goods and Services Tax applicable for the supply of service of the printing in cases where content is supplied by the recipient along with raw materials such as paper & cover board.
The Authorized representatives of applicant D. Vinod Kumar and B. Venkat Reddy submitted that the applicant is in the business of printing books and receive two types of contracts where the content is supplied by the recipient of services:
a. The recipient of service supplies paper.
b. The recipient does not supply paper
They are desirous of a clarification regarding the rate of tax in these two types of printing contracts as they have participated in a bid offered by the Telangana Government text book press.
The authority observed that “Where content as well as physical inputs are supplied by the recipient of printing services, i.e., Government of Telangana, this would amount to a job work in which the applicant provides the manufacturing services on the physical inputs (goods) owned by recipient and is covered under Entry No. 26 of the Notification No. 11/2017 – Central Tax (Rate).”
The classification of service of printing at Sl.No.26 of Notification 11 of 2017 enumerates ‘Manufacturing services on physical inputs (goods) owned by others’ under Heading 9988 of SAC. At Entry No.(i)(d) of Sl.No.26, ‘Service by way of job work in relation to printing of books (including Braille books), journals and periodicals’ is enumerated.
Similarly at Entry No.(ii)(b), ‘Service by way of any treatment or process on goods belonging to another person in relation to printing of books (including Braille books), journals and periodicals’ is enumerated. For both these entries the rate of tax prescribed is 2.5% Central Goods and Services Tax & State Goods and Services Tax respectively.
Therefore where the content and physical inputs are supplied by the recipient of printing service the rate of tax on the consideration received for supply of such services is 2.5% Central GST & State GST respectively.
Hence the two member authority of S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) and Sahil Inamdar, Additional Commissioner (Central Tax) ruled that “Where content as well as physical inputs are supplied by the recipient of printing services the rate of tax is 2.5% under CGST & SGST respectively”.
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