2014 (1) TMI 507 - AT - Service Tax

Waiver of pre deposit - Online information and data base access and/or retrievable services - Held that - appellant herein has entered into a joint venture in the agreement with M/s. Gujarat Infotec Petroleum Ltd. who are in the services of rendering of online information and data base access and/or retrievable services. The appellant herein had set up an international internet gateway and hardware which can be used for rendering up internet service providing services. Appellant, the owner of such infrastructure, by virtue of joint agreement had given M/s. GIPL the right to use the same to generate business. It is seen that the appellant herein gets 10% of the gross receipts for providing the infrastructure facilities to M/s. GIPL. Lower authorities are of the view that the appellant herein had given services in relation to online information and data base access and/or retrievable services. On perusal of the definition of online information and data base access and/or retrievable services , we find that the appellant herein has not provided any data or information to M/s. GIPL and has only given the infrastructure of broadband for the use of M/s. GIPL and getting a share out of the revenue earned by M/s. GIPL. We find that the prima facie, the appellant may not be covered under category of online information and data base access and/or retrievable services - Stay granted.

Summary

Issues:
1. Stay petition for the waiver of pre-deposit of service tax, penalty, and interest amounts.
2. Determination of service tax liability for online information and data base access services.

Analysis:
The appellant filed a stay petition seeking the waiver of pre-deposit of confirmed service tax liability, penalty, and interest amounts. The lower authorities had confirmed the amounts as liabilities based on the appellant's involvement in providing online information and data base access services. The appellant had entered into a joint venture agreement with another entity for rendering such services. The appellant owned infrastructure used for providing internet services, and under the agreement, the other entity utilized this infrastructure and paid the appellant a share of the revenue generated. The lower authorities considered this arrangement as falling under the category of online information and data base access services. However, upon examination of the definition of these services, the Tribunal found that the appellant did not provide data or information but only the infrastructure for use. Therefore, the Tribunal concluded that prima facie, the appellant may not be covered under the said category. Consequently, the Tribunal allowed the application for waiver of pre-deposit and stayed the recovery of the amounts until the appeal's disposal.

In the detailed analysis, the Tribunal highlighted the nature of the appellant's involvement in the joint venture agreement and the services provided. By distinguishing between providing infrastructure and providing actual data or information, the Tribunal determined that the appellant's role did not align with the definition of online information and data base access services. This distinction was crucial in deciding the applicability of service tax liability, penalty, and interest on the appellant. The Tribunal's decision to allow the waiver of pre-deposit and stay the recovery of amounts was based on this interpretation of the appellant's activities and the relevant legal definitions. The judgment emphasized the importance of a precise understanding of the services rendered in the context of tax liabilities and the need for a clear alignment with statutory definitions to determine tax obligations accurately.