2014 (9) TMI 818 - AT - Service Tax

Online information and data base access and retrieval services - computerised reservation systems/Global Distribution System - Held that - while the services provided by the CRS/GDS Companies merited classification under online information and data base access/retrieval services, since the service providers and the service recipients are situated outside India and the consideration for the services rendered has also been paid outside India, the said activity would be not taxable in India under reverse charge mechanism or otherwise. - Stay granted.

Summary

Issues Involved:
Appeals filed by foreign airlines against service tax demand on online information and data base access and retrieval services provided by foreign companies through computerized reservation systems/Global Distribution System (GDS).

Analysis:
1. Identification of Appeals and Service Tax Demand: The judgment involves eleven appeals and stay petitions filed by six foreign airlines, including Qatar Airways, Gulf Air, Korean Air, Singapore Airlines, Cathy Pacific Airways, and Emirates. The appeals challenge the confirmation of service tax demand related to "online information and data base access and retrieval services" provided by foreign companies through computerized reservation systems/Global Distribution System (GDS). The service tax demand amounts for each airline are detailed in the judgment, along with the respective orders-in-original.

2. Legal Arguments and Precedent: The Senior Advocate representing Qatar Airways and Emirates, supported by counsels for other airlines, argued that a similar issue was addressed by the Tribunal in the case of British Airways vs. Commissioner (Adjn), Central Excise, Delhi. In the British Airways case, it was held that services provided by CRS/GDS companies, even if classified as online information and data base access/retrieval services, would not be taxable in India under the reverse charge mechanism due to the location of service providers and recipients outside India. The Senior Advocate contended that the present appeals share identical facts with the British Airways case, thus requesting a stay based on the precedent. Additionally, reference was made to the disposal of appeals in the case of KLM Royal Dutch Airlines for final adjudication.

3. Revenue's Position and Tribunal Decision: The Revenue's Special Consultant proposed that only stay petitions should be considered at the current stage, suggesting a potential appeal by the department against the Tribunal's decision in the British Airways case. The Revenue sought to defer the final hearing of the appeals. However, the Tribunal, after considering both parties' submissions and acknowledging the applicability of the British Airways case precedent to the current appeals, granted an unconditional waiver from pre-deposit of the dues imposed on the appellants. The Tribunal also stayed the recovery of the dues during the appeal's pendency, allowing the appellants to request an early hearing for the final disposal of the appeals.

This detailed analysis outlines the issues, legal arguments, precedent, Revenue's stance, and the Tribunal's decision, providing a comprehensive overview of the judgment's key aspects and implications.