AAR ruling: DVDs/CDs with proprietary software not considered "E-Books" under Notification No. 13/2018-C.T.(Rate)

The Authority for Advance Ruling (AAR) determined that the supply of DVDs/CDs with proprietary software for reading law journals does not qualify as an "E-Book" under Notification No. 13/2018-C.T.(Rate). The AAR did not provide rulings on the adjustment of liability on the sale of DVDs/pen drives or e-books against available Input Tax Credit (ITC) as these issues were deemed outside its jurisdiction. Additionally, the AAR did not address the query regarding the reversal of balance ITC accrued on the purchase of paper and other materials while filing GSTR 9, stating it falls beyond its authority.

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Issues Involved:
1. Classification of law journals in electronic form (DVDs/CDs) as "E-Book".
2. Adjustment of liability on the sale of DVDs/pen drives against available ITC.
3. Adjustment of liability on the sale of e-books against available ITC.
4. Reversal of balance ITC accrued on the purchase of paper and other materials while filing GSTR 9.

Issue-Wise Detailed Analysis:

1. Classification of Law Journals in Electronic Form as "E-Book":
The applicant, engaged in the supply of printed law journals and DVDs of law journals, sought a ruling on whether their electronic form (DVDs/CDs with software) qualifies as an "E-Book" under Notification No. 13/2018-C.T.(Rate) dated 26.07.2018. The Authority for Advance Ruling (AAR) analyzed the nature of the DVDs/CDs supplied, which included proprietary software for searching and reading judgments. The ruling clarified that these DVDs/CDs do not merely contain electronic versions of printed journals but are software applications requiring an End User License Agreement. Therefore, they do not fall under the definition of "E-Book" as per the notification, which refers to electronic versions of printed books supplied online and readable on computers or handheld devices. Consequently, the supply of these DVDs/CDs with software does not qualify for the reduced tax rate applicable to "E-Books."

2. Adjustment of Liability on the Sale of DVDs/Pen Drives Against Available ITC:
The applicant queried whether the liability on the sale of DVDs/pen drives containing printed versions of law citations could be adjusted against available Input Tax Credit (ITC). The AAR noted that this question pertains to the utilization of credit availed by the applicant, which does not fall under the categories specified under Section 97(2) of the CGST/TNGST Act. As such, the AAR did not offer a ruling on this issue.

3. Adjustment of Liability on the Sale of E-Books Against Available ITC:
Similarly, the applicant asked whether the liability on the sale of e-books of printed versions of law citations could be adjusted against available ITC. The AAR again highlighted that this issue relates to the utilization of credit, which is not within the scope of the Advance Ruling Authority as defined by Section 97(2) of the CGST/TNGST Act. Therefore, no ruling was provided on this matter.

4. Reversal of Balance ITC Accrued on the Purchase of Paper and Other Materials While Filing GSTR 9:
The applicant sought clarification on whether the balance of ITC after adjustment accrued on the purchase of paper and other materials could be reversed while filing GSTR 9. The AAR pointed out that this question involves the reversal of credit availed, which is outside the purview of the Advance Ruling Authority according to Section 97(2) of the CGST/TNGST Act. Consequently, the AAR did not address this issue.

Conclusion:
The AAR ruled that the supply of DVDs/CDs with "The Law Weekly Desktop" software and access to the online database on the applicant's website do not qualify for the benefits of entry at Sl.No. 22 of Notification No. 13/2018-C.T.(Rate) dated 26.07.2018, as they do not meet the definition of "E-Book." Questions related to the adjustment and reversal of ITC were not answered as they fall outside the jurisdiction of the Advance Ruling Authority.

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