Case Title | Informatics Publishing Ltd |
Court | Karnataka AAAR |
Honorable Judges | Member D.P.Nagendra Kumar & Member M.S.Srikar |
Citation | 2020 (02) GSTPanacea 27 HC Karnataka KAR/AAAR-14-D/2019-20 |
Judgement Date | 10-February-2020 |
Council for Petitioner | Dayanand K. & Supriya S.Shetty |
Council for Respondent | NA |
Section | Section 98(4) 100(2) 101 |
In Favour of | In Favour of Assessee |
The Karnataka bench of Member D.P.Nagendra Kumar & Member M.S.Srikar has held that the supply of services in the nature of subscription to the J-Gate by the educational institutions is eligible for exemption from GST.
FACTS OF THE CASE
The appellant is in the business of supplying online journals. They own an online educational journal portal called J-Gate, which is a platform for various educational journals. The appellant enters into contracts with publishers for listing their scholarly journal on J-Gate. The platform qualifies as the world’s largest database of scholarly journal articles. J-Gate includes full text access to over 25000 journals
J-Gate indexes and aggregates articles from the peer-reviewed scholarly journals in all discipline sets such as Physical science and Life Sciences, engineering and Technology, Health Sciences, Economics, Laws, Social Sciences, etc. required by higher education institutions. J-Gate platform indexes millions of articles from several thousand online journals of interest to educational institutions. The journals are updated on a monthly or bimonthly or quarterly basis. Being the platform for various scholarly and scientific journals, many educational institutions subscribe to J-Gateto have access to hundreds and thousands of educational journals.
The appellant charges the subscribing institutions an annual subscription fee, depending on the disciplines from which the journals are required to be accessed
Exemption Notification No 12/2017-CT(R) was amended vide Notification No 02/2018 CT (R) dated 25th Jan 2018 to insert “Supply of online educational journals or periodicals” to entry Sl. No 66 and exempt the same from the levy of GST when they are supplied to educational institutions (other than those providing ‘preschool education’ and education up to higher secondary school and education as part of an approved vocational education course.’). In view of the said amendment, the Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following question:
Whether the supply of services in the nature of subscription to the J-Gate by the educational institutions is eligible for exemption from GST under Notification No. 2/2018- Central Tax (Rate)? The AAR vide its order dated 23rd September 2019 gave the following ruling:
The providing of access to the online content by the applicant to their users is not a transaction covered under sub-item (v) of item (b) of serial no. 66 of Notification No. 12/2017- Central Tax (Rate) dated 28-6-2017 as amended by Notification No. 2/2018- Central Tax (Rate) dated 25-1-2018, but is a transaction covered under SAC 998431 and liable to tax at 9% CGST under the entry no. 22 of Notification No. 11/2017- Central Tax (Rate) dated 28-6-2017 and at 9% under the KGST Act
Aggrieved by the said ruling, the appellant has filed this appeal.
COURT HELD
Considering the facts as recorded, held that the Advance Ruling order No. KAR/ADRG 74/2019 dated 23rd Sept 2019 is set aside in toto and the appeal filed by M/s Informatics Publishing Ltdis allowed.
The question on which the ruling has been sought for is answered as below:
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 28-6-2017 as amended by Notification No. 2/2018- Central Tax (Rate) dated 25-1- 2018.
ANALYSIS OF THE JUDGEMENT
Bench have examined the matter in detail and have also gone through the Content Licensing Agreements entered between the Appellant and the Publishers which have been placed before us. J-Gate (the portal hosted by the appellant) is presented as a website which provides subscription-based seamless access to millions of journals published across the world. A general understanding of journals and periodicals in the context of education is that a journal is a scholarly publication containing articles written by researchers, professors and other experts. Journals focus on a specific discipline or field of study. Unlike newspapers and magazines, journals are intended for an academic or technical audience, not general readers. All the journals are segregated on the J-Gate portal based on the area of study (like Engineering, technology, social and management sciences, arts, basic sciences, etc) and are indexed. The Appellant enters into a Contract with publishers for hosting the journals on their portal
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. Bench 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. hold that the lower Authority has gone beyond the question on which a ruling was sought for and hence we set aside the finding on the classification and rate of tax of the supply
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