In schools, ‘work book’ and ‘exercise book’ are often used alternately. From the tax point of view, though, they are different, and now a Delhi High Court order has further clarified on this difference.

A two-judge Bench of Justice S Muralidhar and Justice Rekha Palli, in its ruling on a petition filed by Sonka Publication, has said Hindi vocabulary practice books Sulekh Sarita (Parts I to V) fall under the category of printed books and are thus “fully exempted from GST”.

How they differ

Exercise books — including graph books, laboratory books and notebooks — attract GST of 12 per cent, while printed books including those in Braille fall under the zero tax category.

Earlier, Sonka had approached the Authority for Advance Rulings (AAR), which ruled that printed work books are exercise books, and thus attract 12 per cent GST. The court ruling set that order aside.

What mainly differentiates a work book from an exercise book is that the former contains questions or assignments within the space given for writing the answers, while the latter contains printed text with space for copying it manually.

According to the High Court, the question that needs to be asked is whether the book in question merely helps children improve their handwriting by providing them with space for copying from a given text, or whether it poses questions for the children to answer, which the teacher can then evaluate.

The books printed and sold by the petitioner fall in the latter category — they test the child’s knowledge and ask questions — and hence cannot be termed as mere exercise books, said the court. It also observed that the petitioner’s books are not ‘exercise books’ as understood by the trade. Those are simply bound volumes of blank pages which may contain lines to facilitate writing, it said.

Rare overruling

Commenting on the decision, Waman Parkhi, Partner at KPMG, said it is one of the rare court rulings where an AAR ruling has been overruled.

“The High Court has rightly looked at the principle purpose of the book, which is to enhance the child’s knowledge, and then determined the classification,” he said.

Rajat Mohan, Partner at AMRG & Associates, said the basic premise of GST is to create fair and unambiguous tax categories in which items of basic importance such as education are exempted from tax to achieve macro-level benefits.

“The AAR ruling imposed a 12 per cent tax on the sale of educational textbooks based on technical jargon. This revenue-biased ruling is now struck down by the Delhi High Court on the grounds that these books of Sulekha Sarita are ‘practice books’ used to facilitate the evaluation of a child’s knowledge and are to be regarded as ‘printed books’ which are fully exempt from GST,” he said.

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