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Service tax demand on online information and database access and retrieval service. Analysis: The appellate tribunal in Chennai dealt with a case where the lower authorities had demanded a substantial amount of service tax from the appellants for providing "on-line information and database access and retrieval" service related to matrimonial services from October 2001 to May 2004. The appellants operated multiple portals and websites under different names like "Tamil Matrimony.com", "Assamese Matrimony.com", and "Hindu Matrimony.com", catering to free, paid, and premium membership customers. While free members accessed information without payment, the other two categories paid for loading their profiles on the websites. The lower authorities had taxed these payments. Upon examining the definitions of "on-line information and database access or retrieval" and "taxable service" under relevant sections of the Finance Act, 1994, the tribunal opined that the service provided to paid and premium members fell within the taxable service category. The tribunal acknowledged the financial hardship plea presented by the appellants, supported by unaudited balance sheets and profit & loss accounts. However, the tribunal refused to accept unaudited accounts as proof of the company's current financial status and directed the appellants to pre-deposit a significant amount of rupees thirty lakhs within four weeks, emphasizing compliance by a specific date. In conclusion, the tribunal upheld the tax liability on the service provided by the appellants to paid and premium members accessing online information and database services. Despite considering the financial difficulties raised by the appellants, the tribunal required a substantial pre-deposit as a condition for further proceedings. The judgment highlighted the importance of complying with tax obligations and financial transparency in such cases.
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