In one of the rare incidents, the Delhi High court has overruled the advance rulings sought by one of the publishing firm through Authority of Advance Rulings (AAR). This judgment will provide a stability to the disputed issues and hence, bringing goods news to the complete publishing industry.
Let us discuss this judgment of Delhi High Court in detail.
Facts of the case
The applicant is an established publisher running the business of publishing textbooks and workbooks for school students. As per the GST slabs, the textbooks are exempt from GST, however, books like exercise books, laboratory books and drawing books attract 12% GST.
Since the workbook is different from the textbooks, the publisher was in the dilemma whether work would be clubbed under the slab of exercise books and hence liable to 12% GST or is it treated at par with textbooks and hence, exempted from GST.
What is a workbook?
After analyzing the facts of the case, the AAR states that workbooks are usually smaller and lighter than textbooks. It states that textbooks are compulsory but the workbook is not and hence different from textbooks. It further states that workbook is nothing but an exercise book and hence liable to GST @12%.
AAR took the case more strictly and didn’t consider the real purpose of the book. Hence, aggrieved by the order, the publisher filed a petition with Delhi High Court.
Delhi High Court view
The Delhi high court states that workbook and exercise book are often used alternatively, however, from a taxation point of view, they are different. It states that workbook contains question and assignment while exercise book just contains printed text with space for copying.
As per the honorable high court, the principle question is the real purpose of the book for which it is used.
The principle question: Honorable High court states that whether the book is merely helping the student or whether it poses a question which is evaluated by the respective teacher. The workbook falls under the latter category because it tests the child’s knowledge and hence, cannot be termed as an exercise book.
The final verdict is that Delhi High Court has overruled the advance ruling by stating that workbook will be treated at par with the textbook and hence, exempt from GST.
Impact on the Publishing Industry
The judgment of Delhi High court is a welcome judgment as it will clear the anomaly and will provide long term stability to the industry. Further, the judgment is also a boon for the overall macroeconomic development, as GST must be kept aside from the basic things like education.