The Hon’ble AAAR, Karnataka, in the matter of NCS Pearson Inc., [Order No. KAR/AAAR/07/2020-21 (dated, November 13, 2020)] held that, the scoring done by the human scorer is to be regarded as being within the realm of minimum human intervention. Sets aside AAR’s findings of disqualifying classification of a Type-3 test offered by the M/s. NCS Pearson Inc. to its client in India as Online Information Database Access and Retrieval (‘OIDAR’) service.
M/s. NCS Pearson Inc (“Company/ Respondent”), a Minnesota Corporation, having a business division ‘Pearson VUE,’ engaged in the provision of computer-based test (“exams”) administration solutions to its clients (“test sponsors”) like educational institutes, professional licensing organizations, etc. and is registered with Bangalore West Commissionerate as a supplier of OIDAR services. The Company offers three types of test-administrative solutions on behalf of its clients to the test-takers in India. Test-takers are typically individual candidates across the world including candidates from India, who are not registered under GST. Relevant test is described below:
The Company has entered into contractual arrangements in India with independent third-party service providers including a subsidiary company of the Respondent to act as Pearson VUE Authorized Test Centres (“Testing centres”) to provide secure test centre services to the Company for delivery of the tests including verification of candidates identity, invigilation etc.
This appeal has been filed by the Department against the ruling given by the Authority for Advance Ruling in the case of M/s NCS Pearson Inc. [Order No.- KAR ADRG 37/2020 (dated, May 22, 2020)] wherein, the AAR arrived at the conclusion that Type 3 test does not qualify as OIDAR services, and it was held that there will not be any liability on the supplier located outside India and hence the entire transaction is exempted both in the hands of the supplier and also the recipient.
Whether the service provided for type 3 test classifies as OIDAR Services?
The Hon’ble AAAR, Karnataka, in Order No. KAR/AAAR/07/2020-21 held as under:
Section 2(17) of the IGST Act:
“Online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,-
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming.”
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