9911796707
TMI Blog2024 (4) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 01st October 2023? c) Whether the supply of services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 enters into an annual subscription agreement wherein the total number of authorized users and the subscription fee are agreed, among other things. The institutional customers m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 supply of database services on subscription basis is exempt from GST under S. No. 69 (b) (v) of the exemption notification stated that in the case of a Clinical Key subscription, the customers get online access to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k; (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 unregistered person * Who is receiving OIDAR services in taxable territory; * Up to 30 September 2023, there was additional qualification on NTOR that OIDAR services should have been received in relation to any purpose other than commerce, industry or any other business or profession, however with effect from 01 October 2023, this condition has been removed In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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, encyclopedias, publications which are updated on periodical basis (daily/ weekly/ monthly), newspapers portions, periodic newsletters etc. SAC 998439 covers content provided on web search portals, i.e. extensive databases of Internet addresses and content in an easily searchable format. As stated in facts above, the Clinical Key subscription includes supplying of online content (full-text reference books and journals, synoptic content, drug information, videos, practice guidelines, custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing 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 force; (iii) education as a part of an approved vocational education course; Para 3. Explanation. For the purposes of this notification, - (ii) Chapter, Section, Heading, Group, or Service Code mentioned in Column (2) of the Table are only indicative. 6.8 As per the exemption notification, the exemption is linked to the description mentioned in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means. [Article 2, E.C. Database Directive - extracted in P Ramanatha Aiyar Advance Law Lexicon] From the above, it emanates that there are three features of a database (i) it is collection of data or information (ii) the data or information is arranged in an organized manner (iii) for easy access or retrieval Clinical Key is also a collection of various resources, which are organized in a systematic manner. A user can access the information through search/ navigation facility through electronic means. Therefore, Clin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmalistic 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 be interpreted with respect to the object and purpose, the legislature had in view, in enacting the provision and the context of the setting in which it occurred. It is also submitted that services with respect to exemption relating to education sector, the exemption should be seen from the perspective of 'in the course of providing education'. Reliance in this regard is placed on Hon'ble Karnataka High Court's judgment in Rajiv Gandhi University of Health Sciences, Karnataka vs Principal ADG, DGGI [2022 (64) G.S.T.L. 465 (Kar.)]. In this case, in the context of pari materia provisions under the service tax, it was held by the Court that even though the University-petitioner was not itself providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 terms of the definition of an educational institution for Entry 69(b)(v), AIIMS will qualify as an educational institution providing services by way of education as part of a curriculum for obtaining a qualification recognized by any law for the time being in force. 6.13 Understanding about AIIMS's status as NTOR Up to 30 September 2023 The NTOR means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in the taxable territory. The term "governmental authority" is defined as under : For the purposes of this clause, the expression "governmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 provides online information and database access and retrieval (OIDAR) services to a non-taxable online recipient (NTOR), located in taxable territory. Upto 30 September 2023, NTOR definition included within its purview a 'governmental authority', relevant extracts reproduced below; Section 2(16) 'non-taxable online recipient' means any Government, local authority, governmental authority, an individual or any other person not registered and unregistered person receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory. Explanation. - For the purposes of this clause, the expression "governmental authority" means an authority or a board or any other body, (i) set up by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts 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 sentences more particularly when used in a series. It is also used in the sentences to denote a relation between two independent sentences... 100. The use of semi-colon in the sub-clauses as referred above clearly indicates that the legislature intended to treat the sub-clauses as distinct and capable of being treated independently. The deliberate omission of the legislature to make way for separate clause for manufacturers who sell their goods to a dealer outside the State postulates the fact that the legislature intended to go-by the simple and plain meaning of the word "Sale" without any distinction. 101. It is not out of sight to point out here that the word, "or" is used to denote the alternatives. It is a conjunction that can be used as a conjunctive or disjunctive. When it is used in a positive condition, it acts as a disjunctive implying its true purpose of indicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;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 for which "governmental authority" was re-defined must have been to make it workable. We cannot, therefore, resort to a construction that would allow subsistence of the unworkability factor. Assuming what Ms. Bagchi contended is right, it was incumbent for the appellants to bring to our notice, if not by way of pleading, but at least with reference to the relevant statutes, which of the particular authorities/boards/bodies are created by legislation - Central or State - "with 90% or more participation by way of equity or control by Government". Each word in the definition clause has to be given some meaning and merely because promoting educational aspects is one of the functions of a municipality in terms of Article 243W of the Constitution read with Schedule XII appended thereto is no valid argument unless equity or control by the Government, to the extent of 90%, is shown to exist qua the relevant aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 various educational institutions, corporates and individuals, by way of different products (namely Clinical Key, SSRN, JCol etc.) to different types of customers, which are covered under the category of online information and database access or retrieval (OIDAR) services. The applicant seeks the rate of tax/ exemption on the supplies under 'Clinical Key' subscription, the product supplied to specified customers (educational institutions). 12. The applicant sought advance rulings in respect of the questions mentioned at para 3 supra. We consider one question at a time, discuss and decide the issues. The first question is "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?" 13. The applicant involved in supply of subscription of clinical key se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uman 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 access or retrieval services" (OIDAR services) to mean the services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,- (i) advertising on 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; 13.5 In view of the foregoing the impugned services i.e. supply of subscription based services via 'Clinic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualification recognised by any law for the time being in force; (iii) education as a part of an approved vocational education course; Para 3. Explanation. For the purposes of this notification, - (ii) Chapter, Section, Heading, Group, or Service Code mentioned in Column (2) of the Table are only indicative. 13.6 Entry 69(b)(v) read with second proviso and definition of 'educational institution' implies that the "supply of online educational journals or periodicals" to institutions providing M(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;" is exempted from IGST unconditionally. Now the issues to be decided is whether the services provided by the applicant qualifies to be that of supply of online educational journals or periodicals; and whether AIIMS qualifies to be an institution providing education as a part of the curriculum for obtaining qualification recognized by law. 13.7 In the instant case, the service recipient is AIIMS, established in 1956 by the All-India Institute of Medical Sciences Act, 1956 ('the AIIMS Act') as, an Institute body corporate and approved as the autonomou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are exempt in print should also be exempt if they are supplied online. In the aforesaid backdrop, the applicant contends that the 'Clinical Key' database is a compilation of educational content which are also available in print form e.g. educational books and thus the exemption under entry number 69(b)(v) supra is available to the entire database containing the educational materials. Further the education sector is given a reduced rate in as much as e-books are taxable at 5% and journals & periodicals are exempted. Thus the consolidation of substantially e-books, journals and periodicals with some other related content should not be taxable at 18%. The applicant relied upon the following case laws, in support of their claim. a) Hon'ble Supreme court judgment in Government of Kerala and another vs. Mother Superior Adoration Convent [2021 (376) E.L.T. 242 (S.C.)], b) Hon'ble Supreme court judgment in K.P. Varghese v. Income Tax Officer [(1981) 131 ITR 597] (SC) c) Hon'ble Karnataka High Court's judgment in Rajiv Gandhi University of Health Sciences, Karnataka vs Principal ADG, DGGI [2022 (64) G.S.T.L. 465 (Kar.)]. 13.10 The case laws relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory. Explanation.- For the purposes of this clause, the expression "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 Section 2 (16) With effect from 01 October 2023 "non-taxable online recipient" means any unregistered person receiving online information and database access or retrieval services located in taxable territory. Explanation.- For the purposes of this clause, the expression "unregistered person" includes a person registered solely in terms of clause (vi) of section 24 of the Central Goods and Services Tax Act, 2017 (12 of 2017). For the period w.e.f 1.10.2023, it is clear that any unregistered person receiving OIDAR services, located in taxable territory is considered as NTOR. It is an admitted fact in that AIIMS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the interpretation of the term 'governmental authority' and the inter-play of clause (i), clause (ii) and the long line that follows clause (ii) was settled by Hon hie Supreme Court in a very recent decision in Commissioner, Customs Central Excise and Service Tax Patna Vs M/s Shapoorji Pallonji and Company Pvt Ltd [2023-TIOL-145-SC-CX]. The question before the Court was whether the Indian Institute of Technology (IIT) and the National Institute of Technology (NIIT) qualify as 'governmental authority as per S. No. 2 (s) of the service tax exemption notification. The Hon'ble Court upheld that IIT and NIIT being institutions set up by Acts of Parliament qualify as 'governmental authority' under clause (i) of S. No. 2, the conditional long line that follows clause (ii) does not disentitle IIT and NIIT from being covered as governmental authority. The definition of governmental authority in S. No. 2 (s) is pari materia to the definition contained in Explanation to Section 2 (16) of the IGST Act. In view of the Supreme Court's judgment, AIIMS being set up by the Act of Parliament, qualifies as 'governmental authority' under clause (i). Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017 is applicable only on 'supply of online educational journals or periodicals', whereas the applicant providing services of subscription of Clinical key are providing services by way of online access and retrieval services to a systematically organized clinical / medical database, and not covered under subject entry of the Notification. 16. In view of the foregoing, we pass the following RULING a) The supply of services (subscription of Clinical Key) to the All India Institute of Medical Sciences ("AIIMS") is not exempt from GST under Entry No. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017. b) Applicant is not liable to discharge the GST liability in respect of supply of services by the applicant to AIIMS through subscription of Clinical Key for both the periods i.e, for the period upto 30th September 2023 and for the period after 01 October 2023. The recipient of service, being the importer of service, is liable to discharge GST liability for both the periods. c) The supply of services (subscription of Clinical Key) to other educational institutions is not exempt from GST under Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
