Supply of printed flex banners clubbed with designing service shall be considered as supply of goods
M/s Shree & Co. (AAR No. 32/AP/GST/2019 dated 09 December 2019) reported in 2020 (39) GSTL 345 (AAR-GST-AP)
Facts of the matter - The Applicant is engaged in the business of flex banner printing. In some cases, customer bring their own design and Applicant just gets the same printed on a media flex and deliver the flex to customer and in turn, printing charges are recovered from the customer. Whereas in other cases, customer gives an idea and Applicant makes the design and after approval, get the same printed for which both designing and printing charge are recovered from the customer. In both the scenarios, charges are recovered by Applicant on per sq. ft. basis as per the size of banner. The entire material required for printing and delivery, like, flex, ink, etc. are the procured by Applicant only.
Questions seeking Advance Ruling -
- Whether supply of print on flex is classifiable as supply of goods or service?
- If yes, whether falls under HSN 4911 under Entry No. 132 of Schedule-II of N. No. 1/2017-C.T.(R)?
- If answer to question b. is yes, whether supply of print on flex non-commercial purpose (birthday, marriage, political purposes, etc.) is also classifiable under HSN 4911 under Entry No. 132 of Schedule 132 of Schedule II of N.No. 1/2017-C.T.(R)?
Decision of Ld. AAR -
- Ld. AAR while referring to Section 7 of CGST Act, 2017 read with Schedule-II Sl. No. 1(a) held that since there is a transfer in title of goods as printed flex material is being supplied by Applicant to customer, the same shall amount to 'supply of goods' immaterial of the fact that whether content/design is provided by customer or developed by Applicant. The same view was earlier taken by Hon'ble Telangana AAR in Re: Macro Media Digital Imaging Private Limited, reported in 2018 (14) GSTL 97.
- Regarding the rate of tax, Ld. AAR, while relying upon clarification issued vide Circular No. 11/11/2017 - GST dated 20 October 2017 and Sl. No. 59 of FAQs issued vide F. No. 332/2/2017 -TRU dated December 2017, held that the same is classifiable under HSN 4911 under Entry No. 132 of N. No. 1/2017-C.T.(R) and taxable at the rate of 12%.
- Regarding the third question, Ld. AAR held that supply of flex used for non - commercial purposes does not change classification per se and attracts same rate of tax.