The Maharashtra Authority for Advance Ruling ( AAR ) has ruled that sale of advertisement space on print media for Health and Education to municipal corporations are exempt from Goods and Services Tax ( GST ).
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 by M/s. LOKMAT MEDIA PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the following question. “Applicability of GST rate and classification of supply of goods/services in case of sale of space in print media.”
The applicant, represented by submitted that, he is charging GST, as per the Notification No.11/2017 — Central Tax (Rate), under Chapter Heading 9983 “Selling of Space for advertisement in print media” GST rate applicable is 5% for the same.
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Whereas all its customers are releasing payment with GST except “Pune Municipal Corporation” and “Pimpri Chinchwad Municipal Corporation” PMC and PCMC on the other hand are of the view that GST will not be applicable on the advertisement services provided to the Municipal Corporation, under the reference of “Pure Services” provided to the Local Authority. As per the Notification No.12/2017-Central Tax (Rate), Under Chapter 99, “Pure Services”. PMC/PCMC are local authorities.
To answer the question raised by the applicant following issues were to be decided by the ,
Whether the supply of selling space for advertisement in print media is composite supply of goods and services in which the value of supply of goods constitutes not more than 25%, for the purpose of Entry at Sr. No.3Aof the Exemption Notification?
Decision- Considering the content of the Circular, we have no hesitation to hold that “the activity of publishing advertisements for recruitment of Doctors for various posts by the Corporations is “in relation” to its constitutional function stated in Article 243G and 243W of the Constitution.
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The officer, in representation of revenue submitted that, “‘Selling of space for advertisement’ is taxable at the rate of 2.5 percent CGST and SGST each.”
It was also added that, “Selling of space for advertisement is pure services supplied to Municipality. However, this service is not in relation to the functions entrusted to Municipality by Article 243W. The exemption as per CGST Notification No. 12/2017- Central Tax (Rate), serial no 3, chapter 99 is applicable only when the activity is pure service supplied in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.”
It was submitted by the Officer, that the advertisement for recruitment of Medical Officers and Professors for Hospital of Medical College are not in relation to the said constitutional functions, and hence not eligible for exemption as per Entry at sr. No 3 of the Exemption Notification.
The Authority bench of Ajaykumar V Bonde and Priya Jadhav noted that the words “any activity in relation to any function” used in entry at Sr. no 3 are very broad and shall not be confused with the words “directly in relation to”, which are used for direct and proximate relationship.
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It was observed that, “it is mandatory to issue advertisements for recruitment, and therefore publication of such advertisements is ultimately mandatory for recruitment of doctors for constitutional functions, who in turn are necessary for providing health services. Government has used words “any activity’ in the notification, which also means that “the activity of Selling of space for advertisement in print media’ is also covered in the entry.
The Activity of placing Advertisement in Print Media for recruitment of Doctors for post of Medical Officers and Professors for Hospital and Medical College, is mandatory as per Recruitment Rules of the Corporations and hence though it is not directly related to the constitutional function, it is held to be in relation to an activity in relation to the function stated in Article 243G and 243W, as the words used in the entry are “in relation to” not “directly in relation to”.
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It was thus ruled that, “As the content of advertisement is in relation to the function of Education, including primary and secondary schools and Health and sanitation, including hospital, Primary health centres and dispensaries; it is decided that being pure services provided to the Municipal Corporations are covered by Entry No. 3 of the Notification 12/2017- Central Tax (Rate ted 28th June 2017, and exempted from tax.”
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