The West Bengal Authority for Advance Ruling ( AAR ) has ruled that Supply of a bundle of services at a single price if it does not constitute a composite supply, is a mixed supply within the meaning of section 2 (74) of the GST Act. The court further elaborated that such a supply should be treated as supply of that service which attracts the highest rate of tax [section 8 (b) of the GST Act].
The ruling was made by a bench of the Authority of Advance Ruling consisting of Ms Susmita Bhattacharya, Joint Commissioner, CGST & CX and Mr Parthasarathi Dey, Senior Joint Commissioner, SGST on an application made by Infobase Services Pvt Ltd.
The Applicant herein, in addition to supplying printing service to the Tollygunge Club Ltd, was also acting as an intermediary on behalf of the Club for selling space for advertisements in the Directory. The cost of printing the Directory is covered by the sales of the advertisement space. Any profit generated from the sale of space would be divided among the parties with the applicant receiving 75% of the profit.
The question raised in the application was whether its procurement of advertisements for the Directory is classifiable as selling of space for advertisement in print media and whether SI No. 21(i) of the amended Rate Notification is applicable thereto.
The Applicant submitted that print media, as defined in clause 2 (zr) of Notification No. 9/2017 – Integrated Tax (Rate) dated 28\06\2017, includes books, as defined in section (1) (1)of the Press and Registration of Books Act, 1867, but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purpose. The Applicant further argued that the Directory is not meant for commercial purpose and therefore, is a book and part of the print media as defined under clause 2 (zr) of the above notification.
Revenue submitted that the Applicant’s supply of services goes beyond the sale of space for advertisements. The Revenue also drew attention to the press release dated 2310812017 of the Ministry of Finance, Government of India pointing that if the supplier sells space for advertisement as an agent of the print media as a part of any composite supply, the rate applicable for the principal supply shall apply.
The Authority noted that the “Applicant is making a bundled supply to the Club of printing service and intermediary service for selling space for advertisement on behalf of the Club and charging a single price for the bundle as the project cost for printing. The two services are not naturally bundled or supplied in conjunction with each other in the ordinary course of business”. The Authority further pointed out that they are bound by an obligation specified in the agreement between the Applicant and the Club and therefore, not a composite supply.
The Authority hence ruled that the applicant is making a mixed supply to the Tollygunge Club of printing service and intermediary service for selling space for advertisement on behalf of the club.
The Authority held that “It shall be treated as supply of the above intermediary service taxable @ 18% under SI No. 21 (ii) of Notification No. 11l2017 – CT (Rate) dated 2810612017 (corresponding State Notification No. 1135- FT dated 2810612017), as amended from time to time”.
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