Tamil Nadu Authority for Advance Ruling (TN AAR): The Coram of Manasa Gangotri Kata, Additional Commissioner and Thiru Kurinji Selvaan V.S., Joint Commissioner, held that DVD/CDs do not contain electronic versions of the journals but an executable software application and therefore do not fall under the explanation of “e-book”.
Applicant in the instant matter supplied printed law journals and DVD’s of the law journal.
Questions that arose for Advance Ruling:
- Whether the assessee/dealer which publishes law journals in print and sells the same content that is in books in an electronic form in DVD’s/CD’s with a software to search and read it in computers and hand held devices come under the category of ‘E-book’, so that it can avail the benefit of notification dated 26-07-2018 in respect of E-book?
- Whether the liability on the sale of DVD/pen drive which contains printed version of law citations can be adjusted against the ITC?
- Whether the liability on the sale of e-book of printed versions of law citation can be adjusted against the available ITC?
- Whether the balance of ITC after adjustment accrued on the purchase of paper and other material can be reversed while filing GSTR 9?
Applicant in its submissions mentioned that the Law Weekly were registered dealer under the erstwhile Tamil Nadu General Sales Tax Act and Tamil Nadu Value Added Tax Act.
Due to development in technology applicant supplies e-books of the printed version to their customers at their request.
On supply of printed books/journals, they have not collected any GST as it is exempt. However for the supply of DVDs/CDs and pen drives they paid GST at the tax rate of 18% and subsequent to the issue of Notification 13/2018 Central Tax (rate) dated 26-07-2018 the applicant sought Advance Ruling on the applicability of the above said notification for the supply of the electronic form of DVDs/CDs supplied by them.
Analysis and Ruling
Bench found that DVD/CD & Dongle loaded with the ‘The Law Weekly’ desktop software is an optical media loaded with software and the licence to use the software during the subscription period is a supply of service made along with the principal supply of goods in the said ‘Composite Supply’.
The DVD/CD & Dongle being storage devices containing the software is the principal supply.
AAR expressed that ‘e-books’ are electronic version of a printed book falling under the tariff item 4901 and supplied online which can be read on a computer or a hand held device, while in the case at hand, the contents supplied in the form of DVD/CD is a software which is used to access content containing the judgments of various fora, case laws Act, etc. which provides for searching using a particular case number/period/act/court or a combination of the above.
DVD/CDs do not contain electronic versions of the journals but an executable software application and therefore do not fall under the explanation of ‘e-book’.
Initial supply of DVD/CD is the supply of goods and hence the Notification won’t be applicable.
Hence, the supply of DVDs/CDs with ‘The Law Weekly Desktop’ software along with end user license and the supply of access to the on-line database on the applicant’s website are not eligible to avail the benefit of entry at SI. No. 22 of Notification No. 13/2018-C.T. (Rate) dated 26-07-2018.[Venbakkam Commandur Janardhanan Proprietor, Law Weekly Journal; Order No. 13/AAR/2020, decided on 27-02-2020]