Supply of Law Journals in DVD/CD with dongle does not qualify as ‘E-book’ – AAR Tamil Nadu
by ReinHeads Team | May 15, 2020
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AAR Tamil Nadu* – Supply of Law Journals in DVD/CD with dongle does not qualify as ‘E-book’
| Facts |
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- Venbakkam Commandur Janardhanan, Propreitor M/s Law Weekly Journal (‘the Applicant’) is engaged in supply of printed law journals
- The law journals are also supplied in electronic form in DVDs/ CDs with a dongle as security lock with ‘the Law Weekly Desktop’ software to use it as an application in computers/ hand held electronic devices to search and retrieve judgments
- The Applicant also supplies an online version on their website which can be accessed through user id and password without any limitation on the number of devices
- Initial supply of DVDs/ CDs is with a subscription period of 1 year which can be further renewed (without needing any supply of DVDs/ CDs)
- The Applicant has not collected any GST on supply of printed journals/ books as the same is exempt from GST. However, for the supply of DVDs/ CDs and pen drives/dongles they paid GST @18%
- Vide Entry No. 22 of the Notification No. 13/ 2018 – CT(R) dt. 26.07.2018 (‘the Notification’), the GST rate with respect to supply consisting only of e-book has been reduced from 18% to 5%
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| Key Issue before the Authority for Advance Ruling (‘AAR’) |
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- Whether the supply of DVDs/ CDs with software to search and read it in computers comes under the category of ‘E-book’ under Entry No. 22 of the Notification and thereby liable to reduced rate of 5% GST?
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| Discussion and Findings of the AAR |
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- Supply by the Applicant consists of two parts i.e., i) supply of DVDs/ CDs and dongle and ii) the Law Weekly Desktop Software application loaded onto the DVD/ CD and proprietary software in the dongle with End User License Agreement which needs to be accepted by the user
- The same is a composite supply involving supply of DVD/ CD, dongle and the loaded software (goods) along with license to use the same for a limited period (service), wherein DVD/ CD and dongle being the ‘Storage Devices’ (containing the software) is the principal supply
- Supply of DVD/ CD with the loaded software is a supply of goods classifiable under CTH 85238020, i.e. ‘Information Technology Software’
- Thus, the AAR held that supply of DVD/ CD with software cannot be classified under the category of supply of ‘E-book’ on account of following reasons:
- As per Explanation under Entry No. 22 of the Notification, ‘E-books’ means an electronic version of a printed book falling under the tariff item 4901 and supplied online which can be read on a computer/ hand held device
- DVD is not an electronic version of the print journals and acts as a key with some software installed on it which allows the application to be used
- If it was an electronic version of the print journals, it would have machine readable files in any format such as .doc, .txt, .pdf or any other readable files and not the executable file (setup application) which it has
- Initial supply of DVD/ CD [8523] is supply of goods and hence the Notification has no applicability
- In respect of renewal (without needing any further supply of DVDs) and supply of an online version (accessible on website through user id & password) – Supply involves access to an online database hosted on the website which is a supply of service classifiable under SAC 998431
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*Advance Ruling No. 13/ARA/2020 dated 27 February 2020 (The Authority for Advance Ruling, Tamil Nadu) |
