Authority for Advance Ruling, Karnataka: In a case relating to whether printing of stationery items for conduct of examinations would amount to supply of service or supply of goods, the two-member bench of M.P Ravi Prasad (State) and T. Kiran Reddy (Central) has stated that the provisions of Central Goods and Services Tax Act ,2017 (CGST Act) and Karnataka Goods and Services Tax Act, 2017 (KGST Act) are in pari materia, which means they have the same provisions but differ only on specific provisions, and held that if the activity of printing gives essential character to the printed product, it will be a supply of service and if the usage of product gives essential character, it will be supply of goods.

The issues before the Court were whether the printing of stationery items such as question papers, admit cards, answer booklets cards, ID cards and other formats used for and during examinations, envelopes for packing answer booklets, on contract basis for Karnataka Secondary Education Examinations Board and utilised for the conduct of examinations, would constitute a supply of service or supply of goods to an “educational institution” and if this is true, whether there will be no tax on supply of such service or good by the applicants.

The authority noted that the material for printing the question papers, answer booklets etc. relating to the examinations are supplied by the board and the usage rights of the material are owned by the board, only physical inputs used for printing are provided by the applicant. In the present case, the applicant is supplying printed question paper, admit cards ,circulars, ID cards etc., printed with the content supplied by the recipient, hence, supply of printing is the principal supply, thus, it would constitute supply of service to an educational institution.

The authority observed that the applicant is also supplying answer booklets, other formats used for and during examinations and envelopes for packing answer booklets printed with the content supplied by the recipient, hence, the usage of products is essential, and printing of content is an ancillary activity, thus, it would constitute supply of goods to an “educational institution”.

Moreover, clause(iv) of the Notification No.14/2018 of the Central Tax Rate, expressly states that the Central and State Boards should be treated as educational institutions for the purpose of providing services by way of examination to the students.

It further held that the services provided by the applicant to educational institutions by way of printing stationery pertaining to the conduct of examinations is exempted from tax as per Entry No.66 of the Notification no.12/2017 of the Central Tax Rate, and supply of answer booklets and other formats used for and during examinations falling under the heading 4802 is taxable as per entry No.112 of the Schedule II of the Notification No.1/2017 of Central Tax rate.

[P.K.S Centre for Learning, In re, 2022 SCC OnLine Kar AAR-GST 12, decided on 12-08-2022]

Advocates who appeared in this case :

Sankari V. Krishnan, Advocate, Counsel for the Applicant.

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