TMI Blog2024 (4) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... elf navigates through the contents and access whatever that is available in the subscribed database - 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. 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? - HELD THAT:- 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 autonomous university by both the National Medical Commission (NMC) and the University Grants Commission (UGC). AIIMS provide both undergraduate and post graduate degrees in medical and para medical fields on its own and thus gets covered under an instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any other business or profession is not satisfied as the service recipient viz., AIIMS, as an institution, is into the business of providing medical and para-medical courses both at the undergraduate and postgraduate levels and awards its own degrees and thus the said services are received in relation to the business. Thus AIIMS does not satisfy the definition of NTOR in terms of Section 2(16). 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. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 01 st October 2023? c) Whether the supply of services (subscription of Clinical Key) to other educational institutions is exempt from GST under Entry No. 69 (b) (v) of the Notification No. 9/2017-IT (Rate) dated 28 June 2017? 4. Admissibility of the Application : This application is filed by the Applicant, under Section 97 (2) (b) of the CGST Act read with Section 20 of IGST Act, 2017 for obtaining an advance ruling on the applicability of a notification issued under the provisions of the IGST Act, 2017. Thus the instant application is admissible in terms of Section 97 (2) (b) of the CGST Act read with Section 20 of IGST Act, 2017. 5. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue: 5.1 The Applicant submitted that they offer one of the services under the name 'Clinical Key' ( 'the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boarding 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 may be either registered under the CGST Act or they may be unregistered as well. 5.4 Clinical Key is supplied in different packages (essential package and specialty package, depending upon coverage of content). The essential package is the standard subscription inter alia including the core resources, whereas the specialty package is an advanced subscription which includes the core resources, and additional content relating to the respective medical specialty. These packages are available either on monthly subscription or on annual subscription. The customers could be located any place in the world. Once the subscription is active, the customers can access Clinical Key via their computer, tablet or mobile phone via login credentials. 5.5 Understanding regarding OIDAR services In terms of Section 2 (17) of the IGST Act, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant 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 medical centric database with a search facility, with the content entirely supplied in electronic form. There is no human intervention from the Applicant's side given the user can himself navigate through the content and access whatever is available in the subscribed database. The Applicant submits their understanding as below. 6.2 Supply of OIDAR services to NTOR is covered under Section 14: It is firstly apposite to reproduce the relevant extracts of the IGST Act 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 database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 instant case, the Applicant is located in the non-taxable territory, hence, in respect of Clinical Key subscription given to NTOR persons, the Applicant becomes obligated to take registration in India and discharge IGST liability on such supplies. In the paragraphs below, the Applicant submits their understanding as to the rate of tax/ exemption on such supplies. 6.4 Rate of tax in normal situations : It is apposite to reproduce the relevant entries of the Notification No. 8/2017-IT (Rate) dated 28 June 2017 ('the rate notification*) S.No. Chapter, Section or Heading Description of Service Combined Rate 22 Heading 9984 (Telecommunications, broadcasting and information supply services) (i) Supply consisting only of e-book. Explanation .- For the purposes of this notification, e-books means an electronic version of a printed book (falling under tariff item 4901 in the First Schedule to the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, customized patient education handouts, clinical calculators etc.). Hence services are covered by SAC 9984. The Applicant is presently applying SAC 9984 and discharging IGST at 18% in terms of S. No. 22 (ii) of the rate notification against the services being supplied to NTOR persons. 6.7 Applicability of Entry 69 of exemption notification : It is apposite to reproduce the extracts of the Notification No. 9/2017-IT (Rate) dated 28 June 2017 ('the exemption notification') In exercise of the powers conferred by 52 , sub-section (3) and sub-section (4) of section 5, sub-section (1) of section 6 and clause (xxv) section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), read with sub-section (5) of section 15 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017)] of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p, 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 column (3) of the aforesaid table. The Chapter, Section, Heading, Group, or Service Code mentioned in column (2) are only indicative. Hence even if the services hereunder are classifiable under SAC 9984, so long as the services are covered in the description in column (2) above, the services would be eligible for exemption. In view of entry 69 (b) (v), the exemption is available on supply of online educational journals or periodicals provided to an educational institution [as defined in para 2 (y)]. In below paragraphs, the Applicant explains their understanding of the phrase. As stated in Entry 69 (b) (v), the exemption applies to online educational journals or periodicals. The phrases journals and periodicals are not defined under the GST law; hence reference may be made to the external aids; Journal Journal is a serious magazine or newspaper that is published regularly about a particular subject [Cambridge dictionary] a journal is a magazine , especially one that deals with a specialized subject [Collins dicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized in a systematic manner. A user can access the information through search/ navigation facility through electronic means. Therefore, Clinical Key is a database. It appears that a 'database' is different from a journal and periodical in as much as the latter could be constituents of a database. A database could be a compilation of various journals or periodicals, with or without other resources (such as textbooks, videos, guidelines, handouts etc.). Hence as per this view, the supply of Clinical Key subscription may not qualify as 'online educational journal or periodicals'. However, on the other hand, it is the position of law that the beneficial exemptions should be interpreted in their contextual sense and with the reference of object sought to be achieved. The rule of purposive interpretation of statute which provides that statute should be interpreted in a manner that helps in the fulfilment of its object. It has also been recognized by the Supreme Court of India 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 legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ateria provisions under the service tax, it was held by the Court that even though the University-petitioner was not itself providing the education services to students, but it was affiliating the colleges and regulating the manner in which the education is to be provided. Thus, the act of university in granting affiliation to a private college has to be considered as a service in furtherance of providing education and the decision of the respondents to consider otherwise is erroneous. It is further submitted that the education sector is given a reduced rate in as much as e-books are taxable at 5% and journals and periodicals are exempted. That being the case, a consolidation of substantially e-books, journals and periodicals with some other related content should not be taxable at 18%. 6.12 Understanding about AIIMS's status as an educational institution The term 'educational institution' is defined under para 2(y) of the exemption notification as below: '(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 obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l authority is defined as under : 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. In this regard, it is submitted that since AIIMS was established in 1956 by the Act of Parliament it will fall under the definition of NTOR (up to 30 September 2023) which includes under its ambit all governmental authorities and the expression governmental authority means an authority or a board or any other body set up by an Act of Parliament or a State Legislature. After 01 October 2023 The definition of NTOR is changed to include any unregistered person receiving online information and database access or retrieval services located in the taxable territory. In the view of new definition, even when AIIMS is a governmental authority, but since it is registered (normal registration) under the GST, it will not qualify as NTOR. The App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority 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; 8.3 Clause (i) and clause (ii) are disjunctive. In this regard, the Applicant submits that 'governmental authority' is defined to mean two types of institution under clause (i) and clause (ii). Clause (i) is segregated by the word or and with the use of semi colon where clause (ii) which 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). Meaning thereby, clause (i) and clause (ii) are disjunctive and the long line that follows clause (ii) is not applicable to clause (i). 8.4 Grammatically, a semicolon separates the two expressions showing that they are not inextricably connected [ Jayant Verma and Ors. vs. Union of India (UOI) and Ors. (16.02.2018 - SC) : MANU/SC/0133/2018], Similarly, in the case of cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g its true purpose of indicating an alternate and implies satisfaction of any one of the conditions. 8.6 AIIMS qualify as governmental authority under clause (i) In the present case, as the Applicant had stated in the application [para-A.32], AIIMS was established in the year 1956 by the Act of Parliament i.e., All India Institute of Medical Sciences Act, 1956. By virtue of this, AIIMS qualifies as 'governmental authority' under clause (i) of Explanation to Section 2 (16), and thereby it becomes an NTOR up to 30 September 2023. Since, AIIMS qualify as governmental authority by clause (i), the applicability of clause (ii) and the long line that follows is not required to be examined. 8.7 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 'go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant authority/ board/ body. Incidentally, neither is there any indication in the petition nor has Ms. Bagchi been able to disclose the identity of any such authority/ board/other body which is covered by her argument. No such identified authority/board/body covered by the aforesaid construction of the definition of governmental authority in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL (Emphasis Supplied) 8.9 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), and thereby it also qualifies as NTOR for the period upto 30 September 2023. For the period from 1 October 2023, since AIIMS is a recipient registered under the GST law, it does not qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s All India Institute of Medical Sciences (AIIMS) and thus sought advance ruling as to whether the said services are exempt from GST under Entry No. 69 (b) (v) of the Notification No. 9/2017-Integrated Tax (Rate) dated 28 June 2017 or not. 13.1 The applicant provides the services under the product 'Clinical Key', which is an online subscription based clinical database with search and navigation facility that helps doctors, nurses and other healthcare professionals to make better decisions anywhere, anytime, in any patient scenario; it is accessible through internet from the website 'www.clinicalkey.com'; the user interface of the website is a search engine that offers a compilation of resources such as full-text reference books, journals, synoptic content, drug information, videos, clinical calculators etc.; the search engine shows various results on typing the keyword, the content of the results can be the proprietary content of the applicant or of the third party; the categories of content accessible through the clinical key are Clinical Overview, Drug Monographs, Full-text books, Full-text journals, step-by-step procedural videos, clinical calculators, imag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et covered under OIDAR services. The applicant, at present, is following the GST treatment of their services, described as under: (a) Non-taxable online recipient (NTOR) customers : The applicant, on the services supplied to these customers (located in India), is discharging IGST at 18%, classifying the said Clinical Key services as OIDAR services covered under SAC 9984. (b) Other customers : The applicant, on the services supplied to GST registered customers (located in India) is not discharging GST as the reverse charge is applicable Now we proceed to examine the entry number 69(b)(v) of the Notification No.9/2017-Integrated Tax (Rate) dated 28.06.2017, which is as under: Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 69 Heading 9992 or Heading 9963 Services provided (a) by an educational institution to its students, faculty and staff; (aa) by an educational institution by way of conduct of entrance examination against consideration in 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-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (UGC). AIIMS provide both undergraduate and post graduate degrees in medical and para medical fields on its own and thus gets covered under an 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. 13.8 Next, we examine the services provided by the applicant. In the instant case, the applicant submitted that they offer services under the name 'Clinical Key' ('the product'), which is an online subscription based clinical database with search and navigate facility and that it is accessible through internet from the website www.clinicalkey.com ; the user interface page of the website is a search engine that offers a compilation of resources such as full-text reference books and journals, synoptic content, drug monographs, Clinical overviews, videos, practice guidelines, customized patient education handouts, clinical calculators, medline abstracts, clinical trials etc. Thus it is seen that applicant provides online access and retrieval services to a systematically organized clinical / medical database with one of the constituents of database being journals or period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any exemption. In the instant case the exemption is crystal clear and very specific to 'supply of online educational journals or periodicals' and not to entire gamut of OIDAR services, which is a composite supply of service, provided to educational institutions. Thus the said laws are not squarely applicable to the instant case. 13.11 Thus it is seen that the supply of services by the applicant to AIIMS is not covered under exemption in terms of Entry No. 69(b)(v) of the Notification No. 9/2017-IT(Rate) dtd 28.6.2017 as amended. 14. Now we proceed to consider the second question i.e. 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 01 October 2023? This question becomes relevant as it is discussed and decided, in the foregoing paras, that the first question is answered in negative i.e. the exemption is not applicable. Thus we proceed to answer this question. As per 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 datab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2023. For the period upto 30.09.2023, applicant contended that AIIMS is a 'governmental authority' and falls within the definition of NTOR in terms of Section 2(16) and the applicant being the service provider is liable to discharge GST. In this regard the relevant definition as it existed prior to 30.09.2023 is examined and the following conditions are to be satisfied to constitute NTOR: (i) any Government, local authority, governmental authority, an individual or any other person not registered (ii) receiving online information and database access or retrieval services (iii) in relation to any purpose other than commerce, industry or any other business or profession, (iv) located in taxable territory. On the issue whether AIIMS constitute a governmental authority, the Explanation to the said sub-section is examined and the same is as under 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 ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnmental authority' under clause (i). The other two conditions of definition of NTOR, i.e., AIIMS to be receiving OIDAR services and located in taxable territory are satisfied as a matter of fact. However, the condition that the services are received in relation to any purpose other than commerce, industry or any other business or profession is not satisfied as the service recipient viz., AIIMS, as an institution, is into the business of providing medical and para-medical courses both at the undergraduate and postgraduate levels and awards its own degrees and thus the said services are received in relation to the business. Thus AIIMS does not satisfy the definition of NTOR in terms of Section 2(16). In view of the foregoing, we examine whether the receipt of OIDAR services by AIIMS amounts to import of services or not. Section 2(11) of the IGST Act 2017 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
