2019 (10) TMI 874 - AAR - GST

Exemption from GST - supply of services in the nature of subscription to the J-Gate by the educational institution - N/N. 2/2018- Central Tax (Rate) - HELD THAT - The nature of the activity undertaken by the applicant relates to compilation of a certain prepared data at one place. They are not involved in the creation of the journals. In respect of the metadata they are only the gateway to the journals. In this context what the applicant supplies is educational material/information already prepared by someone else. They act only as a platform for supply of information or as an aggregator of information in case of metadata. Instead the transaction of supply of information by the applicant is more appropriately covered under the Heading 9984 Telecommunications broadcasting and information supply services under the Group 99843 and Service Accounting Code of 998431 the description of which is online text based information such as online books newspapers periodicals directories and the like . The explanatory notes to the scheme of classification of services refers. The articles are covered under the items and the like and hence the SAC applicable for the providing access to the portal is 998431. This service is liable to tax at 9% CGST under the entry no.22 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The transaction is liable to tax at 9% under the KGST Act as it is covered by entry no. 22 of Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017.

Summary

Issues:
1. Eligibility for GST exemption on supply of services in the nature of subscription to J-Gate by educational institutions.

Analysis:
The applicant sought an advance ruling on whether the supply of services in the form of subscription to J-Gate by educational institutions is eligible for GST exemption under Notification No.2/2018-Central Tax (Rate). The applicant, a company supplying online journals through the J-Gate platform, argued that as per the notification, the supply of online journals to educational institutions is exempt from GST. They contended that J-Gate should be considered an online journal similar to Tax India Online and GST Law Times, and hence, subscription fees from educational institutions should be exempt. The applicant highlighted that J-Gate indexes scholarly journals and provides aggregated access to educational material, qualifying it as a journal. However, the Authority for Advance Ruling examined the nature of the applicant's services and concluded that they provide access to articles from various journals without publishing any journals themselves. The applicant's activity was deemed as aggregation and supply of educational material prepared by others, not falling under the exemption for supply of online educational journals and periodicals. Therefore, the ruling determined that the applicant's service falls under SAC 998431, taxable at 9% CGST and KGST.

The Authority considered the applicant's submissions and additional facts presented during the hearing. It was observed that the applicant's platform serves as a gateway to articles published in various journals, with subscribers accessing individual articles through the platform. The applicant does not publish journals but aggregates articles from various sources, creating a reference database. The ruling emphasized that the applicant's role is in compiling prepared data, acting as an aggregator and platform for information supply. The applicant's service was distinguished from the supply of online educational journals and periodicals, falling under the category of online text-based information services. As per the classification, the service provided by the applicant was considered liable for 9% tax under the relevant notifications. The ruling clarified that the applicant's activity did not meet the criteria for GST exemption on supply of online educational journals and periodicals to educational institutions, classifying it under telecommunications, broadcasting, and information supply services.

In conclusion, the Authority for Advance Ruling ruled that the provision of access to online content by the applicant to users is categorized under SAC 998431, subject to 9% tax under the specified notifications for CGST and KGST. The ruling clarified that the applicant's service did not qualify for GST exemption on supply of online educational journals and periodicals to educational institutions, as it was deemed to fall under the classification of online text-based information services.