(Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act).

At the outset, we would like to make clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act.

The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and APGST Act”] by Principal Commissioner (CT), herein after referred to as the “Appellant” against the Advance Ruling No. AAR No.07/AP/GST/2022 dated 30 05.2022 issued by Authority for Advance Ruling, Andhra Pradesh

1. Background of the Case:

M/s. Universal Print Systems, have their Principal place of business at plot No 113, ALEAP Industrial estate, SuramPalli, Nunna, Vijayawada -521212 bearing the GSTIN 37AACFU2478G1ZZ falling under the jurisdiction of superintendent of Central Tax CGST, Hanuman Junction Range, Vijayawada Division. M/s. Universal Print Systems(applicant) is engaged in the business of printing including high end security printing products from the year 2011. The main products produced by the Applicant include:

a) Bar Coded OMR Answer Booklets, OMR Sheets, Certificates and Marks Memos, etc;

b) Printing of MICR Cheque books, Fixed Deposit Receipts, Tags and Bonds; and

c) Variable/ Digital/ Personalized Printing of books and certificates.

The Applicant claims that complete end to end solutions are provided for the customer right from designing to the delivery in mass quantity. The Applicant uses the paper and ink, that too as per the approval by the customer in respect of quality as required as per the approved design and deliver the products to specific customer and as such the products designed and printed are as per the requirements of a particular customer and the same product cannot be delivered to any other person.

The applicant claims that the printing activity in the present case is also combined with security features in many products like cheque books so as to prevent misuse by forgery/replication by unauthorized persons.

Further, the Applicant is also engaged in printing of cheque books, fixed Deposit Receipts, Policy Bonds, Seed Certificates, which are to be provided by the banks/financial institutions/LIC of India/ Government Seed Organization strictly to their customers and thus, this activity is also done as per the design/pattern/data being provided by the customer along with the approved size/paper quality etc.

The important products supplied by the applicant are as under:

The Examination Answer Sheets, which include Optical Character Reading facilities, Optical Mark Recognition features and these products are printed as per the approved design and pattern and sometimes students’ data is also provided by the educational authority/board. Therefore, these products cannot be sold at large, but have to be printed only in required numbers under strict confidentiality and under the supervision by such educational authorities.

Similarly, the Applicant also prints different types of certificates with security features to ensure the genuineness of these documents and prevent from unauthorized misuse/duplication. This activity also involves approved printing as per the design/pattern/data being provided by the customer under their supervision.

The applicant submits that before the onset of Goods and Services Tax, the activity of the Applicant was treated as manufacture by classifying the products under Chapter 49/48 of the First Schedule to the Central Excise Tariff Act, 1985. Simultaneously, the clearance was treated as sale within the meaning of AP VAT Act, 2005.

The applicant further submits that, with the onset of Goods and Services Tax in 2017, a different connotation has been accorded by treating the said activity as supply of service instead of supply of goods in as much as the Applicant does not own the goods at any stage in view of the security features or the nature of the goods which cannot be sold to any other person due to fiduciary value. In view of the above, the services rendered in printing industry, particularly in cases where the design/data/pattern is provided by the customer, are recognized to be a service.

In connection with the above product, the Appellant sought clarification with regard to classification of the product and the rate payable thereon. The Appellant had filed an application for Advance Ruling before the Authority for Advance Ruling on the following questions.

Question: Whether printing of Pre examination items like question papers, OMR sheets (Optical Mark Reading), Answer booklets for conducting of an examination by the educational boards be treated as exempted supply of service in terms of Serial Number 66 of Notification No. 12/2017-CGST [Rate] dated 28-6-2017 as amended?

Answer: Affirmative

Question: Whether printing of Post examination items like marks card, grade card, certificates to educational boards (up to higher secondary) after scanning of OMR Sheets and processing of data in relation to conduct of an examination be treated as exempted supply of service by virtue of in terms of Serial Number 66 of Notification No.12/2017-CGST[Rate] dated 28-6-2017 as amended?

Answer: Affirmative

Question Whether scanning and processing of results of examinations be treated as exempted supply of service by virtue of in terms of Serial Number 66 of Notification No. 12/2017-CGST [Rate] dated 28-6-2017 as amended?

Answer: Affirmative

2. Grounds of Appeal:

This present appeal is being filed by the Principal Commissioner of Central Tax, Guntur CGST Commissionerate (hereinafter referred to as “appellant”) Guntur against the order AAR No. 07/AP/GST/2022 dated 30.05.2022 passed by the Authority for Advanced Ruling (AAR), Andhra Pradesh in respect of application filed by M/s universal Print Systems (GSTIN:37AACFU2478G1ZZ) in form GST ARA-01 Dated 09-12-2021 on the following grounds.

The appellant submits that the Order of the AAR is verified and found to be not correct for the following reasons and needs to be appealed against with reference to the following questions-

a) whether printing of pre-examination items like question papers, OMR sheets (optical Mark Reading), Answer booklets for conducting of an examination by the educational boards be treated as exempted supply of service in terms of serial Number 66 of Notification No.12/2017-CGST [Rate] dated 28-6-2017 as amended.

b) whether printing of post examination items like marks card, grade card, certificates to educational boards (up to higher secondary) after scanning of OMR Sheets and processing of data in relation to conduct of an examination be treated as exempted supply of service by virtue of in terms of serial Number 66 of Notification No.12/2017- CGST [Rate] dated 28-6-2017 as amended.

c) Whether scanning and processing of results of examinations be treated as exempted supply of service by virtue of in terms of Serial Number 66 of Notification No.12/2017-CGST (Rate) dated 28-6-2017 as amended.

The AAR has given ruling that the same are to be treated as exempted supply of service in terms of Serial Number 66 of Notification No. 12/2017 CGST [Rate] dated 28-6-2017 as amended. As per entry Number 66 of Notification No.12/2017- CGST [Rate] dated 28-6-2017 as amended description of services provided which are exempted is as follows:

Entry number 66 of Notification No.12/2017

(a) by an educational institution to its students, faculty and staff;

(aa) by an educational institution by way of conduct of Entrance Examination against consideration in the form of entrance fee;

(b) to an educational institution, by way of, –

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;

(iii) security or cleaning or house – keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution (up to higher secondary).

(v) supply of online educational journals or periodicals

Provided that nothing contained in (sub-items (i), (ii) and (iii) of item (b)] shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. The same notification further provides the definition of ‘educational institution’ as under

educational institution” means an institution providing services by way of,-

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

(iii) education as a part of an approved vocational education course,:

The notification No.12/2017- CGST [Rate] exempts only Intra-state supply of services from levy of Central tax under sub section 1 of Section 9 of CGST ACT 2017.

The appellant submits that on perusal of the AAR No. 07/AP/GST/2022 dated 30.05.2022 passed by the Authority for Advance Ruling (AAR), APGST it is observed vide Point No 7 (Discussion and findings) that, M/s. Universal Print Systems is providing/ intending to provide services of printing of examination material to the following educational institutions:

i) Andhra university, Vishakapatnam, A.P.

ii) Satavahana University, Karimnagar, Telangana

iii) Board of secondary education, Andhra Pradesh

iv) Krishna University, A.P.

v) Board of higher secondary examination government of Kerala

vi) Dr. B.R. Ambedkar open university, Hyderabad.

The appellant further submits that some of the above-mentioned educational institutions are falling under different states other than Andhra Pradesh. However, the notification No 12/2017-CGST (Rate) Dated 28-06-2017 deals with intra-state supply of services only. It is pertinent to mention that a taxing statute has to be interpreted in the light of what is clearly expressed. The law in respect to interpretation of exemption notification is well settled. In all tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities is given a benefit which is specifically stated in the Notification, does not mean that the benefit can be extended to legal entities not referred to in the Notification as there is no equity in matters of taxation. An exemption has got to be construed strictly however fairly. There’s no scope of extending the words and expressions utilized in the notification on the premise of analogy or on equitable consideration.

3. Virtual Hearing:

The Proceedings of Hearing were conducted through video conference on 04.11.2022. The authorized representative Sri. M.R.R. Reddy, Commissioner of Central Tax, Guntur attended and reiterated the submissions already made.

4. Discussion and Findings:

We have gone through the entire submission made by the appellant along with the ruling pronounced by authority for advance ruling. On perusal of the appeal and submission made by the appellant at the time of hearing, it is observed that the main issue of contention is that, M/s. Universal Print Systems is providing/ intending to provide service of printing of examination material to the following educational institutions:

i) Andhra university, Vishakapatnam, A.P.

ii) Satavahana University, Karimnagar, Telangana

iii) Board of secondary education, Andhra Pradesh

iv) Krishna University, A.P.

v) Board of higher secondary examination government of Kerala

vi) Dr. B.R. Ambedkar open university, Hyderabad.

Some of the above educational institutes are located in states other than Andhra Pradesh and the supplies made by M/s. Universal Print Systems to the educational Institutions located in states other than Andhra Pradesh are interstate supplies and are not covered by the exemption under Entry 66 of Notification No.12/2017- CGST [Rate] dated 28-6-2017.

In this regard we invite the attention of the appellant to Entry 69 of Notification No.9/2017-Integrated Tax (Rate) dt: 28.06.2017, which exempts interstate supply of certain services, whose description is specified under column 3 of the table in the above said notification. Entry 69 of Notification No.9/2017-Integrated Tax (Rate) dt: 28.06.2017 is as follows:

Services provided –

(a) by an educational institution to its students, faculty and staff;

(b) to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory;

(iii) security or cleaning or housekeeping services performed in such educational institution;

(iv) services relating to admission to or conduct of examination by, such institution; upto higher secondary

Provided that nothing contained in entry (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.

Subsequently, the relevant entries under CGST and IGST were amended duly omitting the words ‘up to higher secondary’ in item (b)(iv) vide notification 2/2018 Central tax Rate dt 25.1.2018 and Notification No 2/2018 IGST Rate dt 25.1.2018 respectively.

Therefore the Intra-State supplies made by M/s. Universal Print Systems that is providing/intending to provide services of printing of examination material to the educational institutions are exempted vide entry 66 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, as amended. Inter-State supplies made by M/ s. Universal Print Systems that is providing/intending to provide services of printing of examination material to the educational institutions are actually not covered under Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended, as the said Notification is issued under CGST Act and is having limited jurisdiction over intra-state supplies only. However, a similar and equivalent exemption is available to Inter State Supplies vide entry 69 of Notification No.9/2017-Integrated Tax (Rate) dated 28.06.2017, as amended.

Further, it is observed from the original application for Advance Ruling made by the ‘Appellant’, that the appellant despite mentioning both Intra-state (supplies within the state of AP) and Inter-state (supplies to other side states than AP i.e. to Telangana and Kerala) supplies, sought Advance Ruling on ‘availability of exemption benefit under Notification No.12/2017-CGST Dated 28.06.2017’. This being the case, The Ruling passed by the Advance Ruling Authority, on applicability of a Notification without discussing the jurisdiction of being the case, The Ruling passed by the Advance Ruling Authority, on applicability of a Notification without discussing the jurisdiction of the said Notification, appears to be stretched beyond the legal boundary. However, this could have been properly addressed by way of discussing the jurisdictions of similar notifications of CGST and IGST i.e. in the instant case Notification No. 12/2017-CT (Rate) and Notification No.9/2017-IT (Rate) both dated 28.06.2017 extending the benefit of exemption sought for by the appellant applicable to different jurisdictions i.e. intra-state and inter-state, respectively.

In view of the foregoing, we rule as under.

ORDER

We hear by modify the order passed by the Authority for Advance Ruling vide AAR No.07/AP/GST/2022 dated 30.05.2022 and hold that, the services rendered by M/s. Universal Print Systems to educational institutes with reference to the products associated with the conduct of examinations falls within the ambit of entry 66 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended and entry 69 of Notification No.9/2017-Integrated Tax (Rate) dated 28.06.2017 as amended.