2020 (8) TMI 524 - AAAR - GST

Delay in filing appeal - statutory period for filing the appeal (which is 30 days from the date of receipt of the order) expired on 2 nd November 2019. However, the appeal was filed before this Appellate Authority on 12 th November 2019 after a delay of 10 days from the statutory due date - HELD THAT - The provisions of Section 100(2) of the CGST Act mandates that an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, in terms of the proviso to Section 100(2) of the said Act, the Appellate Authority is empowered to allow the appeal to be presented within a further period of 30 days if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days - In the instant case, the appeal filed against the Advance Ruling order dated 23.09.2019 is evidently delayed by 10 days. The appellant, has satisfactorily explained the reason for the delay in filing the appeal. In the interest of justice, and considering the fact that the delay is within the condonable powers of this Authority, we are inclined to condone the delay in filing this appeal and proceed with a decision on the merits of this case. Eligibility for exemption from GST under Notification No.2/2018- Central Tax (Rate) - supply of services in the nature of subscription to the J-Gate by the educational institutions - HELD THAT - The services provided to an educational institution by way of supply of online journals and periodicals is exempted from the levy of GST with effect from 25th Jan 2018. However, the exemption is not available when the supply of online journals and periodicals is to institutions providing pre-school education, education up to higher secondary school or its equivalent and vocational educational institutions. Pursuant to this exemption coming into force, the Appellant applied for an advance ruling whether they are eligible for the benefit of sub-clause (v) of clause (b) of entry No 66 of Notification No. 12/2017 Central Tax (Rate) dt 28-06-2017 as amended. The lower Authority has held that the transaction of supply of information by the appellant is a supply of service covered under Heading 998431 whose description is Online text based information such as online books, newspapers, periodicals, directories and the like . It has also been held that the service is taxable to GST at 18% under entry No 22 of Notification No 11/2017 CT (R) dated 28-06-2017. The Appellant has contended that this finding of the lower Authority is beyond the scope of the ruling which has been sought for and is hence not sustainable. We agree on this point. The question before the lower Authority was regarding their eligibility to the exemption notification. There was no question regarding classification and rate of tax of the supply made by the appellant. The supply of services in the nature of subscription to the J-Gate by the educational institutions is eligible for exemption from GST under sub-item (v) of item (b) of serial no.66 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification No.2/2018- Central Tax (Rate) dated 25.01.2018.

Summary

Issues Involved:
1. Eligibility for GST exemption on supply of online educational journals.
2. Delay in filing the appeal.
3. Classification and rate of tax applicable to the service provided.

Detailed Analysis:

1. Eligibility for GST Exemption on Supply of Online Educational Journals:
The appellant, engaged in supplying online journals through the J-Gate portal, approached the Authority for Advance Ruling (AAR) to determine whether their service is exempt from GST under Notification No. 2/2018- Central Tax (Rate). The AAR ruled that the appellant's service does not qualify for the exemption as it was classified under SAC 998431 and liable to tax at 9% CGST and 9% KGST.

The appellant contested this ruling, arguing that the AAR misinterpreted the nature of their service. They emphasized that the exemption does not require the supplier to own or publish the data. The appellant supplies journals "as such" and not merely metadata. They argued that the service provided is indeed the supply of online educational journals, which should qualify for the exemption.

The Appellate Authority examined the agreements between the appellant and publishers, noting that J-Gate hosts both open access and restricted access journals. For open access journals, the subscription fee paid to the appellant grants complete access to the journals. For restricted access journals, additional fees are paid to the publishers, but access is still provided through J-Gate.

The Appellate Authority disagreed with the AAR's view that the appellant merely acts as a gateway. They concluded that the appellant supplies online journals to educational institutions, fulfilling the conditions for exemption under Notification No. 2/2018- Central Tax (Rate).

2. Delay in Filing the Appeal:
The appeal was filed 10 days late. The appellant sought condonation of the delay, citing ignorance of the appeal procedure. The Appellate Authority, considering the explanation satisfactory and the delay within the condonable period, condoned the delay and proceeded with the case on its merits.

3. Classification and Rate of Tax Applicable to the Service Provided:
The AAR had classified the appellant's service under Heading 998431, subject to 18% GST. The appellant argued that this classification was beyond the scope of the ruling sought. The Appellate Authority agreed, stating that the AAR exceeded its jurisdiction by ruling on classification and tax rate, which was not part of the original query. Consequently, the finding on the classification and tax rate was set aside.

Conclusion:
The Appellate Authority set aside the AAR's ruling and allowed the appeal. They concluded that the supply of services in the nature of subscription to the J-Gate by educational institutions is eligible for GST exemption under sub-item (v) of item (b) of serial no. 66 of Notification No. 12/2017- Central Tax (Rate) as amended by Notification No. 2/2018- Central Tax (Rate).