Sonka Publication GST Case – Delhi High Court Ruling on Classification of Educational Books under GST (2019)

Sonka Publication GST Case: The GST framework relies heavily on the HSN classification system, and disputes often arise over the correct classification of goods. A key area of litigation has been the distinction between printed educational books and exercise books, as the former are exempt under Notification No. 2/2017-CT(R) dated 28.06.2017, while the latter are taxable as stationery.

In Sonka Publication (India) Pvt. Ltd. vs. Union of India & Ors. [(2019) 5 TMI 643 – Delhi HC], the issue centered on whether the petitioner’s books—“Sulekh Sarita Parts I to V”—were classifiable as:

• Printed Books under HSN 4901 (exempt), or
• Exercise Books under HSN 4820 (taxable).

Facts of the Sonka Publication GST Case

Assessee: Sonka Publication (India) Pvt. Ltd., engaged in publishing and selling educational books for students across various classes.

Books in Dispute: Sulekh Sarita Parts I–V, designed as workbooks for students.

Application before AAR: Sought clarification whether these books fall under HSN 4901 (Printed Books) or HSN 4820 (Exercise Books).

AAR Ruling (06.04.2018): Classified them as Exercise Books (HSN 4820) on the ground that most pages were for practice/writing, with limited printed exercises/questions.

Challenge before Delhi HC: The assessee argued that these are authored, copyrighted educational books, not mere stationery notebooks.

Point of Dispute

Whether Sulekh Sarita Parts I–V are:

• “Printed Books” (HSN 4901) – exempt under GST, or
• “Exercise Books” (HSN 4820) – taxable as stationery.

The classification depended on the functional characteristics of the books—whether they primarily served as educational material or merely provided space for handwriting practice.

Submissions by the Assessee

• Authored educational content:
  • Each book displays the author’s name, ISBN number, and a contents page.
  • Includes structured lessons, comprehension, essay writing, and vocabulary-building exercises.
• Beyond handwriting practice:
  • Initial sections may contain copy-writing exercises, but later chapters encourage independent thinking and writing.
  • Teachers can evaluate student performance, making them more than mere handwriting aids.
• Copyright and educational value:
  • Protected under the Copyright Act, 1957.
  • Unlike exercise books, these are authored works with substantial educational content.

Submissions by the Revenue

• Classification scope:
  • HSN 4901: Covers printed books, educational books, catalogues, prayer books, and workbooks.
  • HSN 4820: Covers stationery items, including exercise books, notebooks, and registers.
• Nature of Sulekh Sarita books:
  • Only a few pages contain exercises; the majority are for handwriting practice.
  • Primary function resembles exercise books, which are blank ruled notebooks.
  • Books do not contain children’s pictures/drawings (HSN 4903), excluding classification under that heading.

Legal Principles and Findings of the Court

• Functional approach to classification:
  • Classification must consider the primary purpose of the book: merely providing handwriting space or imparting educational content.
• Rejection of AAR’s limited view:
  • Court disagreed that only a few pages had questions.
  • Educational workbooks often start with simple exercises and progressively engage students in comprehension and critical thinking.
• Comparison with exercise books:
  • Exercise books in trade parlance are blank ruled notebooks with no authorship or content.
  • Assessee provided samples of conventional exercise books to demonstrate the difference.
• CBIC Circular support:
  • CBIC Circular No. 1057/06/2017-CX (07.07.2017) clarified that exercise books are stationery with no copyright or educational content.
• Precedents referred:
  • Central Press (P.) Ltd. vs. Union of India (Delhi HC)
  • Commissioner of Customs vs. Gujarat Perstorp Electronics Ltd. (SC)

Held:

• Sulekh Sarita Parts I–V are classifiable under HSN 4901 (Printed Books).
• Covered under Entry 119 of Notification No. 2/2017-CT(R) – hence, exempt from GST.

Practical Impact on Businesses

• Publishing industry relief: Authored educational workbooks enjoy GST exemption.
• Clear distinction clarified: Exercise books = stationery (HSN 4820, taxable); authored educational books = printed books (HSN 4901, exempt).
• Educational institutions benefit: Schools and parents purchasing such books do not bear GST.
• Guidance for classification disputes: Functional test + industry parlance + copyright protection serve as guiding principles.

Key Takeaways

1. Authorship and copyright are strong indicators of classification under HSN 4901.
2. Exercise books vs. educational workbooks: distinction lies in content and functionality.
3. CBIC circulars and trade parlance play a vital role in classification disputes.
4. Courts may intervene in classification matters where AAR/AAAR rulings misapply legal principles.

Why This Case Matters

The Sonka Publication GST Case (Delhi HC, 2019) provides crucial clarity for publishers, schools, and policymakers.

It ensures that authored educational books are not wrongly taxed as stationery. By emphasizing functional characteristics and educational value, the Court reinforced that GST law must align with academic realities and trade understanding.