AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 182
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....ndents to entertain the physical application of the petitioner to seek advance ruling which may be made within a week. The petitioner is permitted to deposit the fee for advance ruling and provide physical challan to the respondent along with his application. The application shall be processed and considered by the appropriate jurisdictional authority. 3. The applicant is a supplier of OIDAR services and the registration has been allotted at the Principal Commissioner of Central Tax, Bengaluru West, who has been designated for the grant of registration in such cases. Hence the matter is heard. STATEMENT OF FACTS 4. NCS Pearson Inc.,( hereinafter referred to as 'the applicant), a Minnesota Corporation, having its registered office at 5601 Green Valley Drive, Bloomington, Minnesota - 55437, USA, , has a business division 'Pearson VUE' engaged in the provision of computer based test (alternatively referred to as 'exams) administration solutions to its clients (test sponsors) like educational institutes, professional licensing organizations, etc. 5. The activities undertaken by the applicant in performing the services and delivery to its clients broadly include the followin....
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....a break with the approval of the invigilator. For instance, if the candidate wants to take a break, he/she needs to notify the invigilator by raising their hands. The invigilator will come to the candidate's desk and allow the candidate to take a break / refreshments in a supervised area. Once the break time is over, the invigilator will again do a physical check of the candidate and escort them back to the computer desk to allow the candidate to complete the test. Once the candidate has completed the test, the scores are provided by a computer-based algorithm on the electronic software and the test-taker gets the result immediately on completion of the test at the test center itself. The test administrator is responsible for sharing the candidate's printed unofficial score report. In addition to this, the entire process is recorded by cameras as a video and such video recording of the test-taker's testing session is reviewed by a test security official to validate any testing issues (or to confirm any testing suspicions) that may have arisen during the test administration. Type 3 Test: 6.3 These tests contain a mixture of multiple choice questions and analytical writing asse....
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.... electronically by the candidates via the internet at the test centers or any other location. Applicant further submitted that to facilitate the delivery of tests, the applicant will also appoint or establish test centers worldwide in locations where candidates take specified online exams which requires supervision. 9. Further, in India, as applicant submitted, they entered into contractual arrangements with independent third party service providers including a subsidiary company of the applicant to act as Pearson VUE Authorized Test Centers (hereinafter referred to as Testing centers). These third party service providers though independent operators have entered into a contract with the applicant to provide secure test center services to the applicant for delivery of the tests including verification of candidates identity, invigilation etc. 10. Applicant submitted that under Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as 'IGST Act'), the applicant is of the opinion that the type 1 test which is entirely automated, falls under the category 'online information and database access or retrieval services (hereinafter referred to as 'OIDAR service)' as def....
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....es of digital content (movies, television shows, music and the like) ; • Digital data storage; and • Online gaming. 12.1 The applicant submitted that from the above definition, the following four elements are essential for a supply to qualify as OIDAR services: 1. The services are to be delivered over the Internet or an electronic network; 2. The services should be essentially automated; 3. The service should involve minimal human intervention and ; 4. The delivery of service should be impossible in the absence of information technology. The applicant submitted that while assessing the classification of OIDAR services all the above four conditions have to be taken into account on equal basis and does not place more value to some of these elements and less to others. In the instant case, the delivery of the all the three types of test is mediated by information technology over an electronic network and the set-up of the online test is such that it is impossible to ensure supply in the absence of information technology. 12.2 The applicant submitted that in the case of Type 1 tests which are self-administered by th....
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....udicial precedent available neither under the IGST Act nor the rule and regulations thereunder to understand as to what constitutes 'minimal human intervention' or to ascertain the level of human intervention. However, the law and the rules relating to taxability of OIDAR services under the IGST Act are same as that under the erstwhile service tax law. Hence, reference can be made to Circular No. 202/12/2016-Service Tax dated 9 November 2016 which provides clarification on classification and taxability of OIDAR services under service tax (attached as Exhibit B). This circular provides an indicative list of OIDAR services. At serial no. 16(5)(b) of the circular, it is specifically stated that workbooks completed by pupils online and marked automatically, without human intervention should be treated as OIDAR services. The relevant extract of the same is reproduced below for your ready reference: (5) supply of distance teaching. (a) Automated distance teaching dependent on the Internet or similar electronic network to function and the supply of which requires limited or no human intervention, including virtual classrooms, except where the Internet or similar electron....
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....puter-based algorithm. However, the essay based questions are then sent to a human-evaluator in the United States of America (USA) for assessment and final scoring. In addition to this, in case the difference in score for a single essay question between the electronic computed based algorithms scoring vis-a-vis human scoring is more than 1 point, then the essay based questions are again sent to an expert evaluator for assessment and scoring. Therefore, in the type 3 test in addition to the physical presence and supervision of the invigilator, human intervention is also required for evaluation and scoring of essay-based questions (by 1^st stage evaluator) and also for the expert evaluation if the difference in scores provided by the computers algorithm and 1^st stage human-evaluator is more than 1 point. 12.9 The applicant submitted that type 3 test is an extension of type 2 test and similarly requires more than minimal human intervention in order to complete the provision of the service. In this regard applicant again palace a reliance on Circular No. 202/12/2016-Service Tax dated 9 November 2016 providing clarification on taxability and classification of OIDAR service by referr....
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....supply to other than non-taxable online recipients. Based on the above provisions of the IGST Act and the notifications issued thereunder, applicant submitted that the applicant is not responsible to collect and pay IGST on supply of service in type 2 and type 3 test to recipient in India. PERSONAL HEARING: / PROCEEDINGS HELD ON 09.01.2020 13. Sri Harish Bindhumadavan, Advocate and DAR of the above concern appeared for personal hearing proceedings on 09.01.2020 before this authority. FINDINGS & DISCUSSION 14. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by them during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 14.1 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 14.2 The applicant is an intermediary located in non taxable....
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.... intervention and; d. The delivery of service should be impossible in the absence of information technology. According to the applicant, the presence of the test administrator at the testing centers who is responsible for verifying candidate's identity, monitoring him during the test and providing the test report once the candidate has completed the test requires more than the minimal human intervention. For this, he relies upon Guidelines agreed by the VAT Committee of European Commission dated 28.02.2017 where the notion of minimal human intervention is discussed in detail and explained with illustrations. The applicant have specifically relied upon the following guideline: Where such individual supply made to the customer requires human intervention on the side of the supplier it should be seen as involving more than just minimal human intervention. Here, the applicant has interpreted the guideline quite literally by stating that the administrator is verifying the identity of each individual test taker. However, we understand that the Commission is more focused on catering to every individual and thereby a distinct need of the service recipient in a speci....
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....hoice questions and indicative score for essay based questions marked by computer based algorithm. However, the essay based questions are then sent to a human evaluator in the USA for assessment and final scoring. In addition to this, in case the difference in score for a single essay question between the electronic computed based algorithms scoring vis-a-vis human scoring is more than one point, then the essay based questions are again sent to an expert evaluator for assessment and scoring. 14.7 The applicant has argued that since the final score of the candidate is provided only after human intervention, Type 3 tests requires more than minimal human intervention in order to complete the provision of the service. They have also relied upon CBEC Circular No. 202/ 12/2016-Service Tax dated 09.11.2016 and flyer prepared by NACEN for reference on OIDAR under GST. 14.8 We observe that Board has provided an indicative list of OIDAR Services and among others, we quote the following relevant service: Workbooks completed by pupils online and marked automatically, without human intervention. We note that since tests are scored after human intervention in type 3, it should ....