Supply of Online Educational Courses to Out-of-State Students Payable as IGST Under Place of Supply Provisions: AAR [Read Order]

The Authority for Advance Ruling (AAR) Rajasthan held that online educational courses supplied to students located outside the State of Rajasthan are liable to Integrated Goods and Services Tax (IGST) under the place of supply provisions of the GST law.

Allen Career Institute Private Limited is engaged in providing coaching and educational services for competitive examinations through both offline classroom programs and online learning modules. The dispute before the Authority centered around the GST implications on online courses supplied to students situated outside Rajasthan through digital platforms and applications.

Before the Authority, the applicant stated that since the services were supplied from Rajasthan the transactions should qualify as intra-State supplies liable to Central GST (CGST) and Rajasthan GST (RGST). Further, It was argued that the educational content was developed and managed from within the State and that the company remained physically located in Rajasthan while rendering the services.

However, the Authority examined the provisions relating to place of supply under the Integrated Goods and Services Tax Act, 2017. The AAR noted that online educational content delivered electronically to students through internet-based platforms would fall within the ambit of Online Information and Database Access or Retrieval (OIDAR) services when supplied digitally without significant human intervention.

The Authority observed that the location of the recipient becomes crucial in determining the nature of supply in cases involving online services. Since the students receiving the services were situated outside Rajasthan, the place of supply was held to be the respective States where the recipients were located.

The Bench consequently ruled that the services rendered by the applicant to out-of-State students constitute inter-State supplies and are therefore chargeable to IGST. However, the Authority clarified that merely because the supplier is located in Rajasthan would not convert the transaction into an intra-State supply when the place of supply lies outside the State.

The Authority observes the significance for ed-tech companies and coaching institutions operating digital learning platforms across India particularly those supplying online coaching, recorded lectures, test series and electronic educational content to students located in multiple States.

The Bench comprising Utkarsha(Member Central Tax) and Dr Akhedan Charan (Member State Tax) concluded that online educational courses supplied by Allen Career Institute Private Limited to students outside Rajasthan are taxable as inter-State supplies liable to IGST under the place of supply provisions of the GST regime.

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