Subscription Charge for Providing access to Online Content attracts 18% GST: AAR [Read Order]

Subscription Charge - Online Content - GST - Taxscan

The Authority of Advance Ruling in Karnataka has ruled that, The providing of access to the online content by the applicant to his users is covered under SAC 998431 and is liable to tax at 9% CGST under the entry no.22 of Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and 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. Since the transaction is not exempt, there is no restriction on input tax credit claims as per Section 17(1) or 17(2) of the CGST Act / SGST Act / IGST Act.

The Applicant M/s Informatics Publishing Limited is a Company and is registered under the Goods and Services Act, 2017. The Authority was considering the question, Whether the input tax credit is available when the online educational journals and periodicals are supplied to the Educational Institutions other than to pre-school and higher secondary school or equivalent, which is exempt by virtue of Notification No.2/2018 – Central Tax (Rate) dated 25.01.2018?

The applicant is only providing access to the articles published in various journals and papers to its subscribers. It itself is not publishing any online journal, but only maintaining a database of links to all the journals. It is seen that the links to the articles are maintained in a metadata form and the subscriber, when accesses to the platform, can access the individual articles published in any of the journals available on the platform after reading the catalogue of the article. The articles are catalogued and made available. Some of the articles are available for a full view while some are only available in the catalogued form and the subscriber needs to subscribe to the individual journal sites to gain access to the full article. The applicant is collecting the subscription fee which is nothing but the fee charged to gain access to the data available in the database and to download the articles or information. This is an online information and database access and retrieval service provided by the applicant to its subscriber and not a sale or supply of online journals.

The AAR also said that, the transaction is not covered 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 which reads as under “66. Services provided to an educational institution by way of -(v) supply of online educational journals and periodicals.”

The AAR also observed that, “the transaction of the applicant is covered under the Heading 9984 Telecommunications, broadcasting and information supply services under the Group 99843 and Service Accounting Code of 998631, the description of which is “online text-based information such as online books, newspapers, periodicals„ directories and the like”. 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”.

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