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2013 (8) TMI 146 - AT - Service TaxOnline Database Access or retrieval Service - Central Reservation System (CRS) - There is difference of opinion between Member (Judicial) and Member (Technical) Held that - The Registry was directed to place the matter before Larger Bench of the Hon ble Tribunal, for deciding the following points of difference. 1. Whether on the facts and in the circumstances of the case, the appellant permitted by Reserve Bank of India (RBI) to carry out air transport activity in India was a branch in India and was recipient of online Database Access or retrieval Service from CRS/GDS service provider abroad and liable to service tax in terms of section 65(105)(zh) read with section 65(75) of Finance Act, 1994 on reverse charge mechanism basis u/s 66A of the said Act w.e.f. 18.4.2006 or exempt in terms of section 66A(2) thereof . 2. If service tax is payable by the appellant in respect of the service provided by the CRS/GDS companies, whether longer limitation period under provision to section 73(1) finance Act, 1994 would be available to the Department for recovery of tax and whether penalty on the appellant u/s 78 ibid would be attracted?
Issues Involved:
1. Liability of "Online Database Access or Retrieval Service" to service tax under Section 66A of the Finance Act, 1994. 2. Invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994. 3. Applicability of penalties under Sections 77 and 78 of the Finance Act, 1994. Issue-Wise Detailed Analysis: 1. Liability of "Online Database Access or Retrieval Service" to Service Tax: The primary issue was whether the appellant, an airline operating in India, was liable to pay service tax under Section 66A of the Finance Act, 1994, for availing "Online Database Access or Retrieval Service" from foreign-based CRS (Computer Reservation System) service providers during the period from 18.4.2006 to 31.5.2008. The Tribunal held that the appellant received the service from foreign CRS providers, which facilitated reservation and ticket availability for Air Travel Agents in India. The service was deemed to be received in India, making the appellant liable for service tax under the reverse charge mechanism. 2. Invocation of the Extended Period of Limitation: The appellant challenged the invocation of the extended period of limitation under the proviso to Section 73(1) of the Act, arguing that they were not liable to service tax under Section 66A and had disclosed all information during the investigation. The Tribunal found that the appellant had suppressed the value of taxable services, failed to deposit service tax, and did not file returns, thereby justifying the invocation of the extended period of limitation. 3. Applicability of Penalties: The Tribunal imposed penalties on the appellant under Sections 77 and 78 of the Finance Act, 1994. A penalty of Rs. 4,95,92,348/- was imposed under Section 78 for suppression of facts and evasion of tax, and a penalty of Rs. 5,000/- was levied under Section 77 for failure to comply with procedural requirements. The appellant argued that the demand was time-barred and that they had a bona fide belief that they were not liable to service tax. However, the Tribunal upheld the penalties, stating that the appellant's failure to register and file returns indicated deliberate evasion of tax. Separate Judgments: The Tribunal delivered separate judgments by the two judges. One judge held that the appellant was liable for service tax under Section 66A and upheld the extended period of limitation and penalties. The other judge disagreed, stating that the appellant's head office in the UK was the recipient of the service, not the Indian branch, and that the extended period of limitation and penalties were not applicable. The matter was referred to the President for a final decision on the points of difference. Conclusion: The Tribunal concluded that the appellant was liable for service tax on "Online Database Access or Retrieval Service" received from foreign CRS providers under Section 66A of the Finance Act, 1994. The extended period of limitation was applicable, and penalties under Sections 77 and 78 were justified. However, due to differing opinions among the judges, the matter was referred to the President for a final decision.
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