GST Caselaw

#GSTCase-25-Supply by way of printing of Bible wherein rights over the printed matter does not lies with the printer is a supply of service.

Swapna Printing Works (P.) Ltd.,[2018] 100 448 (AAR-WEST BENGAL)


  1. Query

 Query 1: Whether activities undertaken by procuring orders from a foreign party to print religious texts and thereafter deliver them to various places in India can be classified as “supply of goods” or “supply of services”.


Query 2: Whether the activity carried on by the applicant be classified as “export”.



  1. Facts:

 The applicant was in the business of printing books and binding them. He had received a specific order from a foreign customer, namely Gideons International, for printing and binding Bibles. The version of the Bible was specified by the customer under the Evangelistic version of the text. The Purchase order and Invoice were being raised by the applicant in INR and the payment was being received in US Dollars.


The Gideons International uses the King James’ version of the Bible and distributes various editions of the same. In United Kingdom, King James’ Version of Bible is covered by a Crown Copyright. The versions applicant printed for The Gideons International mentioned name of organization and established their rights on those versions.


  1. Observations:


Query 1: The rights of content of printed matter did not lie with the applicant. Therefore, supply of service by way of printing of content (owned by the recipient) is the principal supply and physical inputs, such as paper, ink, binding material, labour etc., are ancillary to this principal supply.


Query 2: The printed copies of Bible were required to be delivered to the recipient’s branch in India on behalf of The Gideons International. Such persons, who receive the supply on behalf of the recipient, were considered to be the recipient under section 2(93) of the GST Act. It was observed that applicant is supplying service of printing Bible to the recipient located in India. It was therefore held that applicant’s supply is not the export of service, as the recipient of the service is located in India. It violates clause (b) of section 2(6) of the IGST Act.


AAR also observed applicant has neither clarified and nor produced any evidence of how payment for purchase orders and tax invoice raised in INR are made in foreign currency by The Gideons International. It raises doubt about violation of condition under clause (d) of Section 2(6) of the IGST Act as well.


  1. Held

Query 1: Applicant’s activity fits this description and to be classified as “supply of services” leviable to GST @ 12% under Serial No. 27(i) of Notification No 11/2017-CT (Rate) dated 28.06.2017, as amended by Notification No 31/2017-CT(Rate) dated 13.10.2017.


Query 2: Service is being supplied to recipient located in India and consideration is apparently being received in INR. Therefore, applicant is liable to pay GST under the appropriate Act on such supplies and supplies are not in the nature of export of services.


  1. Comment

Query 1:  The judgement is in line with the issued vide F. No. 354/263/2017-TRU dated 20th October 2017 by the Ministry of Finance, Department of Revenue, Government of India which at Serial no. 4 states that:-

In case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belongs to the printer, supply of printing [of content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of classification of services.”

Query 2: It’s the second conclusion by the AAR wherein alternative view is possible. AAR has held that supply in question is not export of service since recipient is located in India and Payment is being apparently being received in INR. The case is unique because although goods are being supplied but on account of being composite supply, its being considered as supply of service. The two issues which played pivotal role in the decision are as follows:


  • Issue 1: Recipient Located in India: AAR reached to this conclusion on account of the fact that Bible is required to be delivered to recipient’s branch in India on behalf of The Gideons International. It further observed that persons, who receive supply on behalf of recipient, are also considered recipient, as defined under section 2(93) of the GST Act.

It is humbly submitted that for determining the location of recipient, it has to be identified who is the recipient of the service and for that Section 2(93) of CGST Act, 2017 explains who a recipient is and tries to lay down who would be held as a recipient in case of goods or services or both. It says,


recipient” of supply of goods or services or both, means-


 (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration…”


The person to whom services are rendered would not always be the person who is liable to make payment. They can be two different persons as well and law treats the person liable to make payment as recipient in case where consideration is involved. The conclusion also gains strength from the fact that (c) of Section 2(93) of the CGST Act, 2017 creates a separate category of recipient of supplies where no consideration is payable and in such case recipient is the person to whom services are rendered. Thus, the law itself has categorized two person separately i.e. Person to whom services are rendered and the person who is liable to make the payment. The provision also further lays down the fact that any reference in the law as a person to whom supply is made shall be construed as reference to the recipient of supply as provided under this section. The Explanation added to the section provides that word recipient shall include an agent acting on behalf of the recipient in relation to the goods and/or services supplied.


Therefore, in the given instance although delivery is being made to recipient in India who is acting as an agent on behalf of the foreign recipient but the twin facts that consideration is payable against the supply of services and person residing outside India is liable to pay the consideration; would make person residing abroad as the recipient rather than the person receiving the delivery of the Bible.


Once recipient is identified then location of recipient would be determined. In this case, as recipient is situated outside India, therefore location of recipient would be outside India. Therefore, view taken by AAR has an alternative view.


  • Issue 2: Consideration being received apparently in INR: AAR still came to the conclusion about consideration being received in INR on account of the fact that purchase order was placed in INR, Bill was raised in INR even though payment was being received in USD. AAR was apprehensive about purchase order and bill being raised in INR and merely because bill and purchase orders was raised in INR, therefore held that consideration is being apparently received in INR.One of the conditions specified in Clause 2(6) of IGST Act, 2017 pertains to payment for service being received by supplier of service in convertible foreign exchange and nowhere is stipulates about the bill and purchase order. This condition was duly fulfilled by the supplier in the instant case. Therefore, alternatively concluding the fact that apparently consideration was received in INR purely based upon apprehension might require an alternative view.
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