2022 (2) TMI 828 - AAR - GST

Online databases and e-books don't qualify for GST exemption under notification 12/2017, only educational journals exempt

In Re: M/s. Manupatra Information Solutions Private Limited

The AAR, UP held that online text-based information services including legal databases, e-books, newspapers, and directories provided through a website do ... Classification of services - providing on-line text based information such as online books, newspapers, periodicals, directories etc (judgements/Notifications/Bare Acts/Rules/E-books/News/Articles) through their website www.manupatra.com to law firms, lawyers, companies, government, judiciary, law schools - to be classified under SAC code 997331 or not - Applicability of N/N. 12/2017-Central Tax (Rate) dated 28th June 2017 further amended by N/N. 02/2018-Central Tax (Rate) dated 25th January 2018, against Serial number 66 - HELD THAT:- The nil rate of tax is applicable only on supply of online educational journals or periodicals under sl. No. 66(b)(v) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended and the said entry does not cover supply of E-books, Newspapers, directories and non-educational journals or periodicals - the invoices issued by the applicant to different educational institutions have mention of description 'Annual Subscription Online Database' and the same have no mention of 'online educational journals or periodicals'. As such, the applicant is collecting a subscription fee which is nothing but the fee charged to gain access to the data available in the database and to download the articles or information. The said invoices are not in respect of supply of online educational journals or periodicals. Database and journals or periodicals are different thing and exemption is not available to online database, online books, newspapers, directories and non-educational journals under sl. No. 66(b)(v) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Issues Involved:1. Applicability of GST rate on services provided by the applicant.2. Interpretation of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 as amended by Notification No. 02/2018-Central Tax (Rate) dated 25th January 2018.3. Clarification on whether the services provided by the applicant qualify for NIL GST rate under the specified notification.Issue-wise Detailed Analysis:1. Applicability of GST rate on services provided by the applicant:The applicant, M/s Manupatra Information Solutions Private Limited, is engaged in providing online text-based information such as online books, newspapers, periodicals, directories, etc., through their website to various entities including law firms, lawyers, companies, government, judiciary, and law schools. The applicant sought an advance ruling to determine whether their services fall under the category taxed at NIL rate as per the amended Notification No. 12/2017-Central Tax (Rate).2. Interpretation of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 as amended by Notification No. 02/2018-Central Tax (Rate) dated 25th January 2018:The applicant referred to the specific entry 66(b)(v) in the Notification, which states that services provided to an educational institution by way of the supply of online educational journals or periodicals are taxed at NIL rate. The applicant argued that their services should be taxed at 18% as per their interpretation, but some competitors are charging NIL rate, causing confusion.3. Clarification on whether the services provided by the applicant qualify for NIL GST rate under the specified notification:Upon examination, it was found that the applicant's services do not fall under the category of 'online educational journals or periodicals.' The invoices provided by the applicant described the services as 'Annual Subscription Online Database,' which does not qualify as online educational journals or periodicals. The ruling clarified that the exemption under entry 66(b)(v) of the Notification does not cover online databases, online books, newspapers, directories, and non-educational journals or periodicals.Discussion and Findings:The ruling emphasized that the nil rate of tax is applicable only to the supply of online educational journals or periodicals. The applicant's services, described as an online database subscription, do not meet this criterion. The terms 'database,' 'journal,' and 'periodical' were defined and distinguished, with the conclusion that databases and journals/periodicals are different entities.Ruling:The Authority for Advance Ruling concluded that the applicant's services are not covered under the amendment provided in Notification No. 02/2018-Central Tax (Rate) dated 25.01.2018. Therefore, the services provided by the applicant are not eligible for the NIL GST rate and should be taxed at 18%.Validity:This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and is subject to the provisions of Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.