Printing firms’ conversion of digital images and letters onto paper held to constitute a service attracting 18% GST instead of 12% | Kerala High Court
Safiya Malik
The High Court of Kerala, Single Bench of Justice Ziyad Rahman A.A. held that the process of printing digital images, letters, or photographs onto paper constitutes a supply of services taxable at 18 percent under Service Code 998386, and not a supply of goods attracting 12 percent under HSN 4911. The Bench was called upon to decide whether such printing activity—converting digital content into its physical form on paper—was liable to GST at 12 or 18 percent. The Court dismissed the writ petitions filed by printing firms and permitted them to pursue statutory appellate remedies, if desired.
The petitioners, including M/s. Stark Photo Book and others, operate printing presses engaged in producing brochures, books, magazines, leaflets, photo books, posters, and similar printed materials. The content for printing is supplied by customers in digital formats such as CDs, DVDs, or pen drives. The firms argued that their activity, combining the supply of printing material and the printing process, constitutes a composite supply where the principal supply is that of goods.
They classified their outputs under HSN Code 4911, which covers printed matter including pictures and photographs, taxable at 12%. The tax authorities, however, initiated proceedings under Section 74 of the CGST Act, alleging misclassification and contending that the proper classification should be SAC 998386, attracting an 18% rate.
To support their stance, the petitioners relied on several documents, including a clarification issued under Section 94 of the Kerala Value Added Tax Act, a Circular by the Ministry of Finance, and a ruling by the West Bengal Authority for Advance Ruling. The Kerala VAT clarification had earlier treated printed photographs in book form as supply of goods taxable at 5% under the State VAT regime. The petitioners also referred to FAQs and a Twitter post from the Department of Revenue indicating that photo books printed using digital offset presses were classifiable under HSN 4911.
The respondents, represented by the State Tax Officer and the Commissioner of State GST, opposed the petitions, asserting that the transactions were composite supplies in which the principal element was service. They maintained that the printing activity involved transforming digital content provided by customers into physical form and therefore constituted photographic and videographic processing services taxable at 18%.
The Court examined the statutory provisions of the CGST Act, particularly Sections 2(30), 2(74), and 2(90), which define composite supply, mixed supply, and principal supply respectively, and Section 8, which governs tax liability for composite and mixed supplies. It also referred to Schedule II of the CGST Act, which distinguishes supply of goods from supply of services.
Justice Ziyad Rahman A.A. noted: “Since both the said elements viz; transfer of goods and supply of services are involved in the transaction, it is a composite supply, as defined under section 2(30) of the CGST Act.” The Court further stated that “the tax liability on composite supply shall be on the principal supply” and that “the activity of printing amounts to the predominant element of the composite supply.”
Clarifying the distinction between supply of goods and supply of services, the Court recorded that “the main object of printing is to convert the figures, letters, photographs etc. in a digital form into physical format by printing it on the paper supplied by the petitioners.” Since the title to the printed photographs remains with the customers, there was “no transfer of title in goods.” Thus, the transaction did not amount to supply of goods but supply of services.
The Court reasoned that the materials such as paper and ink used for printing were merely tools or means for rendering the service and could not determine the nature of the transaction. It observed: “The supply of paper by the petitioners which is only a means to effect such supply of service has to be treated as ancillary activity.”
Comparing the two relevant classifications, the Court noted that HSN Code 4911 covers printed matter and pictures as supply of goods, whereas SAC 998386 expressly includes “colour printing of images from film or digital media.” It stated: “The word ‘digital media’ itself indicates a process where no negatives are necessary and therefore it certainly leads to the conclusion that SCN 998386 takes in the service of digital printing, whether it is through offset printing machinery or other machines.”
The Court rejected reliance on clarifications issued under the Kerala VAT Act, noting that the statutory framework of the CGST Act was different and the earlier interpretation had no bearing on GST liability. It also held that the Ministry’s FAQ and social media clarification pertained to the classification of printed materials supplied as goods and not to services rendered to customers. Justice Rahman recorded: “A distinction has to be drawn between a case where printed material, wherein, the content was obtained by the assessee from its own source, and a case in which the assessee undertook a service of printing of the material furnished by the customer.” The former would fall under supply of goods, and the latter under supply of services.
Citing the Kerala Authority for Advance Ruling’s 2019 decision, the Court concluded that printing work of images from digital media is covered under SAC 998386 and taxable at 18%. It stated: “When the nature of supply of service is taken into account, it undoubtedly falls within SCN 998386, which is meant for printing photographic and videographic processing services.”
The judgment stated: “I do not find any justifiable reasons to invoke the jurisdiction of this Court to interfere with the proceedings initiated and finalized against the petitioners.” However, the Court permitted the petitioners to pursue statutory appellate remedies if they were aggrieved by the assessment orders.
“if the petitioners have any grievance with respect to the assessment of tax, it shall be open to the petitioners to invoke the statutory remedy, if any, available to them.” The Court also granted a limited relief regarding limitation, ordering that “the period from the filing of the respective petitions till the receipt of this judgment shall be excluded while computing the period of limitation for the purpose of invoking their statutory remedies.”
“Subject to the above, these writ petitions are dismissed.”
Advocates Representing the Parties
For the Petitioners: Sri. R. Sreejith, Smt. K. Krishna, Shri. Achyuth Menon, Shri. Padmanathan K.V., and Smt. Meera V. Menon.
For the Respondents: Smt. Reshmitha R. Chandran, Senior Government Pleader.
Case Title: M/s. Stark Photo Book & Connected Cases v. State of Kerala & Others
Neutral Citation: 2025: KER:72200
Case Number: WP(C) Nos. 16709/2024, 20193/2022, 21666/2021, 21676/2021, 29948/2021, 16667/2024, 16785/2024
Bench: Justice Ziyad Rahman A.A.
