Custom, Excise & Service Tax Tribunal
Glo Colour Labs Pvt Ltd vs Commissioner Of Gst & Ce -Principal ... on 5 March, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
SOUTH ZONAL BENCH, CHENNAI
COURT HALL No. III
SERVICE TAX APPEAL No.40556 OF 2021
(Arising out of Order-in-Original No.CBE/ST/29/2017-Commr dated 09.05.2017
passed by Commissioner of Central Excise, Customs & Service Tax, 6/7, A.T.D.
Street, Race Course Road, Coimbatore 641 018.)
M/s.Glo Colour Labs Pvt. Ltd. .... Appellant
112, Cross Cut Road,
Gandhipuram,
Coimbatore 641 012.
Versus
The Commissioner of GST & Central Excise, ...Respondent
Coimbatore Commissionerate
No.6/7, A.T.D. Street,
Race Course Road,
Coimbatore 641 018.
WITH
SERVICE TAX APPEAL No.42002 OF 2017
(Arising out of Order-in-Original No.CBE/ST/29/2017-Commr dated 09.05.2017
passed by Commissioner of Central Excise, Customs & Service Tax, 6/7, A.T.D.
Street, Race Course Road, Coimbatore 641 018.)
The Commissioner of GST & Central Excise, ...Appellant
Coimbatore Commissionerate
No.6/7, A.T.D. Street,
Race Course Road,
Coimbatore 641 018.
Versus
M/s.Glo Colour Labs Pvt. Ltd. .... Respondent
112, Cross Cut Road,
Gandhipuram,
Coimbatore 641 012.
2
Service Tax Appeal No.42002 of 2017
Service Tax Appeal No.40556 of 2021
APPEARANCE :
Mr. M. Saravanan, Consultant
Mr. J. Shankarraman, Advocate
For the Assessee
Mr. Anoop Singh, Joint Commissioner (A.R)
For the Department
CORAM :
HON'BLE MS. SULEKHA BEEVI.C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
DATE OF HEARING : 05.03.2024
DATE OF DECISION : 05.03.2024
FINAL ORDER Nos.40271-40272/2024
ORDER :[Per Ms. Sulekha Beevi. C.S ] As the issue involved in both these appeals is same and arising out of common impugned order, they were heard together and are disposed of by this common order. For the sake of convenience, the parties herein are referred to as 'assessee' and 'department'.
2. Brief facts are that the assessee is engaged in the making of photo books/albums, calendars, brochures etc. to their different customers. Intelligence forwarded by DGCEI, New Delhi revealed that that the entire activity of the assessee would fall under 'Photography Services' and that they are liable to pay service tax on 3 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 the amounts received from their customers for the services provided by them. Based on such intelligence show cause notice dt. 16.10.2015 was issued to the appellant for the period 01.04.2010 to 30.06.2012 and 01.07.2012 to 31.07.2015 proposing to demand service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand for the period 01.04.2010 to 30.06.2012 and dropped the demand for the period from 01.07.2012 to 30.07.2013. Against such confirmation of demand, interest and penalties, the assessee has filed Appeal ST/40556/2021. Aggrieved by the order of the Commissioner dropping the demand for the period 01.07.2012 to 30.07.2013, the Department has filed Appeal ST/42002/2017.
3. The Ld. Consultant Sri M. Saravanan appeared and argued for the assessee. The activity undertaken by assessee is explained by the Ld. Consultant as under :
3.1 The customers give images in digital form to the assessee. In the HP Digital Printing Press using several raw materials like LMO, paper board, BOPP Lamination Roll, Ink and cartridges, matt film rolls fusion boards, red tapes, pins, bags, calico sheet, packing boxes and polythene covers the final products viz. photo books, printed wedding cards, visiting cards, printed books, Digital offset printing, catalogues and Brochures, Table Calendars, wall Calendars etc..
emerges. This resultant product is new and different from its raw materials. It is known under a distinctive name and has acquired a new character and use. Therefore, it squarely meets the criteria set 4 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 out by the Supreme Court that the process undertaken by assessee amounts to 'manufacture'.
3.2 One of the determining tests is whether the process is 'manufacture' and it is to be seen whether the process brings into existence, a new commercial commodity which is distinct from the starting material, having different name, character of use. The Hon'ble Supreme Court in Union of India Vs J.G. Glass Industries 1998 (97) ELT 5 (SC) laid down a twofold test to determine what is 'manufacture'. The first is whether by the said process, a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist. The second is whether the commodity already in existence will serve no purpose but for the said process. The Hon'ble Supreme Court also considered the point whether 'printing' amounts to 'manufacture' and held that the test is whether resultant product would serve any purpose after the printing or not?. If the product serves purpose even without printing and there is no change in the commercial product after the printing is carried out, the process cannot be said to be one of 'manufacture'. Hence it is clear that if printing serves any purpose, then it amounts to 'manufacture'. In this case also, only by printing, the required purpose is served and without printing nothing emerges. 3.3. The appellant submits that printing of any image in the form of book or in a single sheet amounts to manufacturing and it falls under chapter 49. Printing of book and photographs falls under 5 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 chapter 49119100. Like wise printed books, brochures etc falls under 4901 of CETH. Hence the activity carried out by assessee is nothing but manufacture and not a service so as to attract service tax. Assessee has sold printed items and have paid sales tax on the same. All the printed items falls under chapter 49. 3.4 The Hon'ble Supreme Court in the case of Fitrite Packers 2015(324) ELT 625 (SC) considered the question whether printing on packaging paper meant for M/s Parle Products would amount to "manufacture" or not in terms of section 2(f) (iii) of the Central Excise Act, 1944. The Apex Court held that it amounts to 'manufacture'.
3.5 The Tribunal in the case of J. J. Enterprises vs. CCE reported at 2013 (295) ELT 324 held that the process of printing on sheets amounts to manufacture and the end product would be classifiable under Chapter 49 of the Central Excise Tariff Act, 1985 i.e. product of printing industry which attracts nil rate of duty. 3.6 It is submitted that Printed books, Brochures, Leaflets merit classification under chapter heading 4901. Other printed matter, including printed pictures and photographs merit classification under chapter hearing 4911. All these goods have Nil Tariff as prescribed. Hence, there is no question of payment of central excise duty. As the activity of the assessee amounts to manufacture, no service tax can be demanded on an activity that amounts to manufacture.
6
Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 3.7 In the case of Venus Albums Private Limited Vs.Commissioner CEX, Chandigrah - 2019 (22) GSTL 386(Tri.) the Tribunal considered the question of manufacture on very same activity. The facts there was that the photographers provide predesigned photos in soft form via email or on CD/Pendrive to the appellant for supplying photo book. The department classified the service as 'photography service' and demanded service tax. The Tribunal held that the process of formation of photo book etc. is manufacture. Thus, there is a complete change in the identity and nature of the photographs when printed from soft form to hard bound form as a photo book.
3.8 The Tribunal relying on the decision of the Apex Court in the case of Commissioner Vs. Fitrite Packagers - 2015 [324] ELT 625 (SC) and the decision of the Hon'ble High Court of Delhi in the case of CIT Vs. Delhi Press Patra Prakashan - 2013 TIOL 463 (HC) Del (IT) and the decision of the Hon'ble High Court of Madras in CIT Vs. Jamal Industries Pvt. Ltd. - 2006 [285] ITR 209 (Mad) held that the appellant has undertaken the activity of printing photograph on plain printing paper and thereafter bind them and selling them as photo books which is a distinct new commodity. The said activity amounts to 'manufacture'.
3.9 The appeal filed by the Revenue against the order of the Tribunal in the case of Venus Albums (supra) was dismissed by the Hon'ble Apex Court on the ground that there is no substantial 7 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 question of law requiring consideration by the Apex Court as reported in 2023 (70) GSTL 225(SC).
3.10 The Tribunal in the case of SRK Creative Pvt. Ltd. Vs. Commissioner Central Tax and GST Thanai considered the very same issue i.e copy of the picture, photographs were provided by the client which is printed within the digital printing machine and supplied as photo book. The question considered was whether the activity is service so as to be liable to service tax as photography service, both prior and post Negative list with effect from 01.07.2012. The Hon'ble Tribunal relying on the decision of the Venus Albums (supra) set aside the demand of service tax, with interest and penalties.
3.11 The assessee in the present case was of the bonafide belief that the activity carried out by them is manufacture and will attract VAT and not service tax. The question involved in the present case is purely one of interpretational. The assessee paid VAT on the entire value of goods sold, which is a reasonable cause for non- payment of service tax liability, if any. It is argued that extended period is not invokable.
3.12 The appeal filed by the department is on the assumption that the assessee is liable to pay service tax under 'Photography' service without any basis. Even for the period after 1.7.2012 the activity does not fall within the four corners of the definition of "service" defined in Section 65B (44) of the Finance Act, 1994. 8
Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021
4. Ld. Consultant prayed that the appeal filed by assessee may be allowed and the appeal filed by the Department may be dismissed,
5. Ld. A.R Shri Anoop Singh appeared for the Department. It is submitted by the Ld. A.R that after 1.7.2012, the activity of the assessee would fall under 'service' as defined under Section 65B (44) of the Finance Act, 1944. The activity of the assessee does not amount to 'manufacture' and is akin to 'Photograph Service'. Ld. A.R prayed that assessee appeal may be dismissed and the Department appeal may be allowed.
6. Heard both sides. The issue to be considered is whether the activity of the assessee amounts to 'manufacture' or whether it falls under 'photography service' prior to 1.7.2012 and whether would fall under the definition of 'service' for the period w.e.f 01.07.2012 to 30.07.2015. The activity of the assessee as explained in the show cause notice is as under :
• Since 2006-07, GL0 are engaged in the printing of photographs, images, pictures and combinations of all the above, making photo albums (of various sizes), printed photo books, printed calendars and table calendars, printing of wedding cards, brochures, catalogues etc., by using HP Indigo Digital Printing machines; in short, they are engaged in making the following products : (i) Printed Photo Book (ii) Printed wedding cards (iii) Visiting cards (iv) Printed books (v) Offset printing (vi) Catalogues, (vii) Brochures (viii) Table Calendars, (ix) Wall calendars (x) Wall pictures(xi) Mini photo albums.
• GL0 are engaged in printing of photographs, images etc. on any media like paper, chart board, paper board from 80 GSM to 400 GSM (Grams per Square Metre); colour printouts of photogrpahs, images etc. are 9 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 taken by GLO on the said media of size A-3 (13 inches x 19 inches) and B2 (28 inches x 21 inches); they also undertake product print out (with and without binding), photo book of sizes A-3 (13 inches x 19 inches) and B2 (28 inches x 21 inches), brochures, pamphlets, invitation card, visiting cards etc. • GLO receive orders for printing photo books / photo albums etc., from (i) Directly from companies, individuals, printing press, DTP centres, photographers, designers, photo studios and students in soft copies like CDs, DVDs; Pen Drives and sometimes via e-mail etc. (ii) Data sent by courier which includes CDs/DVDs/Pen Drives (iii) Data received through Internet, E-mail and the photographs pertain to clients of the photo studios/photographers / companies etc. who have engaged them for providing photography services in relation to occasions like wedding ceremonies, birthday ceremonies, other functions etc. • GLO print the details given by their customers like individual photographers phot studios etc. which includes photos in a book format and gives it to their customers; the said activities are also performed in the branch officers of GLO.
• GLO stores the raw materials required for business at their godowns.
• The photos/pictures to be printed are supplied by various photo studios, photo labs and photographers in soft from like CD, pen Drive and via E-mail etc; the photographs pertain to clients of the photo studios/photographers who have engaged them for providing photography services in relating to occasions / functions like wedding ceremonies, birthday ceremonies etc. • GLO is engaged in the manufacture of photo albums/ photo books etc., of different sizes; photo albums/photo books containing photographs of 125 GSM (Grams per Square Metre) are made of LMO films; LMO which stands for laser Matte Opaque Film 125 DS (Double side) (LMO 5505) is a polyester film specially coated on both sides and used in electro photography, screen and offset printing; it is suitable for high quality photo books visiting cards, indoor wallpapers, invitation cards and posters; photo albums/photo books containing photos upto 300 GSM thickness are made of paperboards.
• Orders are received by GLO for printing of photo books or photo albums as soft copy via E-mail or on CDs, DVDs, pen drives from their clients mentioned above; on receipt of printing order, the job work order is prepared by the staff of GLO who copies the file into their system after which verification of the size and colours of the photographs as required by customers are undertaken; the file is then converted into PDF format and it is transferred to printing system; such service activities are undertaken by them before the printing process.
7. After analysing the activity of the assessee as brought out in the SCN as well as the submissions made by both sides, we find that the issue stands covered by the decision of the Tribunal in the case 10 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 of Venus Albums Private Ltd. (supra). The Tribunal in the said case analyzed the issue relating to the very same activity and held that the activity would amount to 'manufacture' and does not fall under 'service'. Relevant part of the decision of the Tribunal is noticed as under :
"2. The brief facts of the case are that the appellant is having units at Chandigarh, Ludhiana and Amritsar and was carrying out the business of manufacturing and sale of photo books to photography studio or individual photographers who outsources such work to the appellant. The appellant was also engaged in the business of printing and selling of wedding cards, photo calendars, visiting cards, etc. During the year 2010-11, the appellant was also carried out the business of mere binding of books, registers, etc. The appellant was registered under the Central Excise law as manufacturer. The appellant was paying Central Excise duty on wedding cards, photo, calendars, etc. The photo books being classified under Chapter Heading 4911 of Central Excise Tariff Act, 1985 which attracted Central Excise duty at nil rate. The appellant filed ER-1 returns with the department wherein goods falling under Chapter Heading 4911 were separately mentioned. The appellant was also registered as dealer under Punjab VAT Act, 2005. The appellant was paying VAT on sale of photo book and other printed material viz. calendars, visiting card, etc. The present dispute with regard to the sale of photo books to photographers/photo studios and individual photographers. An investigation was conducted at the business premises of the appellant and a show cause notice was issued to the appellant on 20-10-2015 alleging that the activity of printing of photo book belonging to a particular person falls under the scope of photography service under Section 65(105)(zb) of the Finance Act, 1994 till 30-6-2012 and thereafter it is taxable as a service under Section 66B(44) of the Act. It was also alleged that photo books are not the product of printing industry but a specialized and customized service provided to customer. It was proposed to demand service tax along with interest and to impose penalties under Section 77 and 78 of the Act. The demand of service tax has been confirmed on the premise that the activity of printing of personal photographs which is undertaken for a particular person falls under the scope of photography service till 30-6-2012. Thereafter as a service falls under Section 65B(44) of the Act and the photo books are not the product of printing industry but a specialized and customized service provided to customer and the activity undertaken by the appellant for making photo book does not amount to manufacture and photo book do not classify under Chapter 4911 of the CETA. It was also held that the impugned service do not fall under the scope of works contract service, therefore, no exemption available to intermediate printing process. It was also held that the benefit of Notification No. 12/2003-S.T., dated 20-6-2003 is not available. Against the said orders, the appellant is before us.
... ... ....
14. Section 65(105)(zb) defines the service provided to a any person by a photography studio or agency in relation to photography, in any manner. We also take note of the fact Chapter 49 covers printed pictures, designs and 11 Service Tax Appeal No.42002 of 2017 Service Tax Appeal No.40556 of 2021 photographs and other product of printing industries. For better appreciation, Chapter 4911 is reproduced as under :-
4911 Other printed matters, including printed
pictures and photographs.
4911 Pictures, designs and photographs
91
00
15. We take note of the fact that what activity has been undertaken by the appellant. We observe that the process of formation of photo book, the photographers provide predesigned photos in soft form via e-mail or on CD/Pen drive, to the appellant for supplying the photo book. In terms of the arrangement agreed, the appellant cannot format, edit or alter the photographs received by it in the soft form. The Customer specifies the nature of sheets covers, etc. to be used in photo books. The appellant prints photographs on both sides of standard plain printing paper by using high quality digital press. Thereafter, the printed photo sheets are laminated on both sides and specified number of printed photo sheets and then wire-stapled on the stapling machine. Finally, plain sheets are pasted on both sides of the stapled book and thereafter, cardboard cover having digital printed photographs of the function is pasted with the stapled book to finally make a photo book. Thus, there is a complete change In the identity and nature of the photographs when printed from soft form to hard bound form as a photo book.
.... .... ......
19. In view of the above judicial pronouncements and the activity undertaken by the appelant Chapter Heading 4911, is very much clear that the appellant has undertaken the activity of printing photograph on plain printing paper and thereafter bind them and selling them as photo books. The said activity amount to manufacture and the appellant is paying VAT and therefore, the said activity merit manufacturing activity and classified under Chapter 4911 and the appellant has classified accordingly.
20. We also take note of the fact that after introduction of GST, the classification of the same has been answered vide Circular F.No. 332/2/2017- TRU, dated 7th December, 2017 by observing that these items fall under HS Code 4911 an attract 12% GST.
TABLE
S. Queries Replies
No.
62 What is the classification 1. These
and GST rate for photo items fall
books printed using under HS
digital Offset printing code 4911
press on printing paper and attract
[other than photo albums] 12% GST.
and thereafter manually
bound?
12
Service Tax Appeal No.42002 of 2017
Service Tax Appeal No.40556 of 2021
21. Further, we take note of the fact that Notification No. 14/2004-S.T., dated 10-9-2004 amended by Notification No. 19/2006-S.T., dated 25-4-2006 with effect from 1-5-2006, exempts specifically the activity of printing from payment of service tax.
22. We also take note of the fact that the service exempted in terms of Notification No. 25/2012-S.T., dated 20-6-2012 amended by Notification No. 44/2012-S.T., dated 7-8-2012, 49/2012-S.T., dated 24-12-2012 and Notification No. 3/2013, dated 1-3-2013 with effect from 1-4-2013, S. No. 30, the activity of printing as job worker is exempted from payment of service.
23. In view of the above discussion, we hold that on merit the activity undertaken by the appellant amounts to manufacture and classifiable the Chapter 4911, therefore, no service tax is payable by the appellant.
24. In the result, the impugned orders are set aside and the appeals are allowed."
The above decision of the Tribunal was affirmed by the Hon'ble Apex Court as reported in 2023 (70) G.S.T.L. 225 (SC).
8. By judicial discipline, we follow the said decision and hold that the activity carried out by assessee amounts to 'manufacture'. The demand of service tax cannot therefore sustain. The impugned order to the extent of confirming the demand, interest and imposing penalties is set aside. The assessee's appeal is allowed with consequential relief, if any. Department appeal is dismissed.
(Dictated and pronounced in court)
sd/- sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI. C.S)
Member (Technical) Member (Judicial)
gs
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Service Tax Appeal No.40556 of 2021