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2024 (4) TMI 841
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....917NLD29003OSV in the State of Karnataka, for providing the services under the category of online information and database access or retrieval (OIDAR) services; engaged in the business of providing online content such as educational periodicals, online journals, online books and online newspapers, videos to various educational institutions, corporates and individuals; supplies services i.e., different products (namely Clinical Key, SSRN, JCol etc.) to different types of customers. The applicant is seeking the rate of tax/ exemption on the supplies under Clinical Key subscription product supplied to specified customers (educational institutions). 3. In view of the above, the applicant has sought advance ruling in respect of the following questions: a) Whether the supply of services (subscription of Clinical Key) to the All India Institute of Medical Sciences ("AIIMS") is exempt from GST under Entry No. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017? b) If the answer to the above question is negative, whether the Applicant or AIIMS needs to discharge the GST liability (i) for the period up to 30 September 2023 and (ii) for the period after....
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....rocedural videos and articles to teach techniques or simply help clinicians refresh their skills f. Clinical calculators: Drug, Clinical Criteria, Decision Tree, Medical, and Unit Conversion Calculators from EBM calc are available to aid clinicians in assessment and decision-making g. Images h. Practice guidelines i. Customizable patient education handouts j. MEDLINE abstracts k. Clinical trials 5.3 Customer Profile The customers to whom Clinical Key is offered to individuals or institutional customers who are generally (i) Healthcare executives (ii) Clinicians (iii) Nurses (iv) Medical librarians and (v) Medical students. These customers can be an individual customer or institutional customer, described as below; * Individual customers: Any individual customer may opt for a subscription package online through the website or he/she may reach out to the sales team of the Applicant who may help them with the onboarding process. Different subscriptions are offered at different prices. * Institutional customers: With institutional customers such as hospitals, educational institutions etc., the Applicant enter....
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....the Applicant is registered in the State of Karnataka in terms of Section 14 of the IGST Act. Presently, the Applicant is following the GST treatment as below. • Non-taxable online recipients (NTOR)-customers: On the service supplied to these customers (located in India), the Applicant is discharging IGST at 18%, classifying the Clinical Key services as OIDAR services under SAC 9984. • Other customers: On services supplied to GST registered customers (located in India), the reverse charge is applicable, and hence the Applicant is not discharging GST. Copies of the sample invoices issued to the customers are enclosed as Annexure 1. A copy of the sample agreement entered with the customer is enclosed as Annexure 2. A few customers, including educational institutions such as All India Institute of Medical Sciences (AIIMS) have been insisting the Applicant that supply of the Clinical Key subscription is exempt under Entry no. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017 and thus the applicant filed the instant application. 6. Applicant's Interpretation of Law: 6.1 The applicant with regard to the issue of Whether the s....
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....the internet; (ii) providing cloud services; (iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet; (iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network; (v) online supplies of digital content (movies, television shows, music and the like); (vi) digital data storage; and (vii) online gaming; IGST Act, 2017 Section 14. Special provision for payment of tax by a supplier of online information and database access or retrieval services (1) On supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services: 6.3 As per Section 14 (1), the supply of OIDAR services by a person located in non-taxable territory and received by a NTOR, the supplier shall be liable to pay IGST on the said supplies. Further NTOR means • Any unre....
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....ly or more frequently; periodic newsletters; on-line directories and mailing lists, including telephone books; other on-line collections of facts/ information (databases) ............... 998439 Other on-line content n.e.c. This service code includes games that are intended to be played on the Internet such as role-playing games (RPGs), strategy games, action games, card games, children's games; software that is intended to be executed on-line, except game software; mature theme, sexually explicit content published or broadcast over the Internet including graphics, live feeds, interactive performances and virtual activities; content provided on web search portals, i.e, extensive databases of Internet addresses and content in an easily searchable format; statistics or other information, including streamed news; other on-line content not included above such as greeting cards, jokes, cartoons, graphics, maps Note: Payment may be by subscription, membership fee, pay-per-play or pay-per view. 6.6 The SAC 99843 covers supply of online content. At 6-digit level, SAC 998431 covers on-line books, textbooks, reference books, dictionaries, encyclopedi....
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....the form of entrance fee; (b) to an educational institution, by way of,- (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or housekeeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; (v) supply of online educational journals or periodicals: Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of,- (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course. Nil Nil Para 2. Definitions (y) "educational institution" means an institution pro....
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....he definitions, it transpires that there are two features of a journal or a periodical i.e. (i) they are published at some regular interval and (ii) they are related to a particular subject/ sphere In academic context, the journal and periodical may be contrasted with other materials such as textbooks, which is generally not published periodically. 6.9 In the instant case, Clinical Key is a compilation of resources such as fulltext reference books and journals, synoptic content, drug information, videos, practice guidelines, customized patient education handouts, clinical calculators etc. Thus, the database itself is not a journal or periodical as such, but a compilation of various resources and inter alia include journals and periodicals. In this regard, it is also relevant to refer the term "database". database is large amount of information stored in a computer system in such a way that it can be easily looked at or changed [Cambridge dictionary] database, also called electronic database, any collection of data, or information, that is specially organized for rapid search and retrieval by a computer [Britannica dictionary] A col....
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....he offline and online contents. Seeing from this perspective, the contents which are exempt in print should also be exempt if they are supplied online. In this backdrop, the Clinical Key database is a compilation of educational content which are also available in print form e.g., educational books. Therefore, from this perspective the exemption under S. No. 69 (b) (v) may be available to the entire database containing the educational materials. 6.11 In Government of Kerala and another vs. Mother Superior Adoration Convent [2021 (376) E.L.T. 242 (S.C.)], it was emphasized by the Hon hie Supreme Court that with respect to beneficial exemptions, their beneficial purpose must be given full effect to. A literal formalistic interpretation of the statute at hand is to be eschewed. First, the object sought to be achieved by the provision should be analysed, and the statute should be construed with such object. In case any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. In K.P. Varghese v. Income Tax Officer [(1981) 131 ITR 597], the Supreme Court stated that literal construction of the section was not acceptable. The section had to b....
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....ies of educational institutions, entry 69 (b) (v) is applicable only to those educational institution providing services by way of education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. AIIMS was established in 1956 by the All-India Institute of Medical Sciences Act, 1956 ('the AIIMS Act') as an Institute body corporate. The autonomous university is approved by both the National Medical Commission (NMC) and the University Grants Commission (UGC). In terms of Section 13 of the AIIMS Act, the objects of the Institute shall be: * To develop patterns of teaching in undergraduate and postgraduate medical education in all its branches so as to demonstrate a high standard of medical education to all medical colleges and other allied institutions in India. * To bring together in one place educational facilities of the highest order for the training of personnel in all important branches of health activity: and * To attain self-sufficiency in postgraduate medical education AIIMS provide both undergraduate and post graduate degrees in medical and para medical fields on its own. Hence, in te....
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....udgments and certain relevant screen shorts along with reiterating the facts narrated in their application. During the hearing in context of question number 2 and in the context of Section 2(16) of the IGST Act 2017 it was enquired about the status of AIIMS as to whether it qualifies as 'governmental authority' and the applicant sought time to furnish written submissions in this regard. ADDITIONAL WRITTEN SUBMISSIONS DTD 21.11.2023 8. The applicant vide letter dated 21.11.2023 received in this office on 29.11.2023 made additional written submissions w.r.t Question 2 especially on the status of AIIMS as to whether it qualifies as 'governmental authority'. 8.1 It is apposite to submit that in Question No. 2, the Applicant had sought ruling on whether the Applicant (supplier of service) or AIIMS (recipient of service) is liable to pay GST on the supply of services (subscription of Clinical Key) (i) for the period up to 30 September 2023 and (ii) for the period after 01 October 2023. 8.2 In terms of Section 14 (1) of the Integrated Goods and Services Tax Act, 2017 ("the IGST Act"), GST is liable to be paid by the person located in non-taxable territory if pr....
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....te form, of a kind used in the manufacture of paints. Since there are semi-colons in the entry, "stamping foils" becomes another sub-heading, and the third sub-heading is "dyes and other colouring matter" put up in forms or small packings of a kind used for domestic or laboratory purposes. Reading this entry, it is obvious that the other colouring matter must be in the nature of a dye, because the expression "other colouring matter" cannot be read independent of the word "dyes" and it must also be a "pigment" as it comes in the main category of "pigments". It follows that Item 3212.90 could refer only to other pigments or other colouring matter in the nature of a dye." 8.5 The State of Tamil Nadu Represented by its Secretary Commercial Taxes Department, The Deputy Commissioner (CT) (FAC) versus Everest Industries Limited ([2022] 103 G S.T.R. 10 (Mad)) relevant extracts in this context are re-produced verbatim as under:- "99. Further, section 19 (2) is a positive provision which allows the dealers to claim FTC. Semi-colon followed by the disjunctive "or" used at the end of subclauses (i), (ii), (iii) and (iv). Semi-colons are generally used to distinguish or divide sente....
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....isentitle IIT and NIIT from being covered as governmental authority (copy of the decision is attached-refer para 27 and 28 of the decision). Relevant extracts; 28. Let us consider the problem from a different angle. The revised definition of "governmental authority" and the few punctuations in the definition (two semicolons and two commas) and the conjunction 'or' have been noticed above. Literally read, the conjunction 'or' between sub-clauses (i) and (ii) clearly divides the two clauses in two parts with the first part completely independent of the second part. The first part is by itself complete and capable of operating independently. A construction leading to an anomalous result has to be avoided and to so avoid, it has to be held that the long line of clause 2(s) starting with "with 90%" and ending with "Constitution" qualifies sub-clause (ii); and, if the conjunction 'or' is to be read as 'and', meaning thereby that the portion "with 90% ... Constitution" has to be read as qualifying both sub-clauses (i) and (ii), then the intention of re-defining "governmental authority" would certainly be defeated. As discussed earlier, the purpose ....
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....ovember 2023 and requests that the aforesaid submissions may please be taken on record and be considered for pronouncing the ruling on the advance ruling application. FINDINGS & DISCUSSION 9. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 10 We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant, the submissions made by their learned representative during the time of hearing and the written submissions dtd 21.11.2023. 11. The applicant submitted that they are engaged in the business of providing online content such as educational periodicals, online journals, online books and online newspapers, videos to ....
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....clinicians, nurses, medical librarians and medical students. Individual customers subscribe online through the website. Institutional customers such as hospitals, educational institutions etc., who are registered or unregistered under GST, subscribe annually for a specific number of authorized users. 'Clinical Key' is supplied in different packages i.e. essential package and specialty package, where the essential package is a standard one that includes the core issues and the specialty package is an advanced one that includes core resources and additional content related to respective medical specialty. Both the packages are available on monthly or annual subscription. 13.3 The customer, with the 'Clinical Key' subscription, gets online access to a medical centric database with a search facility. The website also has a browser facility for navigation of the content that is supplied in electronic form. There is no human intervention from the applicant's side as the user himself navigates through the contents and access whatever that is available in the subscribed database. 13.4 Section 2(17) of the IGST Act 2017 defines "online information and database acce....
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....tory; (iii) security or cleaning or housekeeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; (v) supply of online educational journals or periodicals: Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. Provided further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of,- (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course. Nil Nil Para 2. Definitions (y) "educational institution" means an institution providing services by way of (i) pre-school education and education up to higher secondary school or equivalent; (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in fo....
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....h one of the constituents of database being journals or periodicals. One constituent part of database alone cannot define the whole. Given the composite nature of contract and supply involving several constituents detailed above, the supply by the applicant does not qualify as 'supply of online educational journals or periodicals'. 13.9 Applicant contended that the beneficial exemptions should be interpreted in their contextual sense and with the reference of the object sought to be achieved. Further the rule of purposive interpretation of statute provides that statute should be interpreted in a manner that helps in the fulfilment of its object. Hon'ble Supreme Court also recognised, on multiple occasions, that whenever two interpretations are feasible the court will prefer such interpretation which advances the remedy and suppresses the mischief as it was envisioned by the legislature. The phrase 'Educational' in entry number 69(b)(v) supra transpires that the object of the exemption is to reduce costs of the degree awarding educational institutions to bring parity between the offline and online contents and thus the contents which are exempt in print sho....
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....upplier of online information and database access or retrieval services. (1) On supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services', In the context of above provision of Section 14 of IGST Act, the applicant intends to know whether the applicant (being the supplier) or AIIMS (recipient of service) is liable to discharge GST. In terms of the said Section, GST is liable to be paid by the person, located in non-taxable territory, on supply of OIDAR services to a non-taxable online recipient (NTOR) located in taxable territory. The phrase 'Non-taxable Online Recipient' (NTOR) is defined in Section 2(16) of IGST Act, 2017 and was amended w.e.f 01.10.2023 as detailed below: Section 2 (16) *Upto 30 September 2023* "non-taxable online recipient" means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and data....
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....ion "governmental authority" means an authority or a board or any other body, (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with ninety per cent, or more participation by way of equity or control, to carry out any function entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution; The expression 'governmental authority' is defined in the explanation. It is the contention of applicant that Clause (i) and clause (ii) of the definition are disjunctive as clause (i) is segregated by the word "or" and with the use of semi colon and clause (ii) is followed by the long line; The usage of semi colon combined with the word 'or', follows that there is necessary bifurcation between clause (i) and clause (ii) and thus the long line that follows clause (ii) is not applicable to clause (i); AIIMS was established in the year 1956 by the Act of Parliament i.e., All India Institute of Medical Sciences Act, 1956 and hence AIIMS qualifies as 'governmental authority' under clause (i) of Explanation to Section 2 (16). As AIIMS qualify as governmen....
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.... defines "import of services" to mean the supply of any services where (i) the supplier of service is located outside India, (ii) the recipient of service is located in India and (iii) the place of supply of service is in India. The provider of the OIDAR services is located outside India and the recipient of the said service i.e. AIIMS is located in India as a matter of fact. Section 13(12) of the IGST Act stipulates that the place of supply OIDAR services shall be the location of the recipient of services and in the instant case the place of supply is in India as the recipient AIIMS is located in India. Thus all the conditions of import of service are satisfied and hence the receipt of OIDAR services by AIIMS amounts to import of services. Therefore AIIMS, being a person located in the taxable territory other than non-taxable online recipient, is liable to discharge GST on OIDAR services for the period upto 30.09.2023, in terms of Sl.No.l of Notification 10/2017-Integrated Tax (Rate) dated 28.06.2017. 15. Now we proceed to consider the last question i.e. whether the supply of services (subscription of Clinical Key) to other educational institutions is exempt from GST under Entr....