2017 (9) TMI 788 - AT - Service Tax

Classification of services - Business Auxiliary Service - whether classified under e-commerce service or Online information and database access or retrieval services? - Held that - the respondent is running website through which the interested steel manufacturer/trader are making trade. The respondent is buying and selling the steel product of various steel manufacturer/trader. We do not find that the buyer of the goods is accessing any information online or data online on the respondent s site but they are only interested for sale and purchase of the steel products. The respondent with regard to such trading are getting margin from sale and purchase. Hence the service of the respondent is clearly of e-commerce in respect of steel products. Therefore it merits classification as e-commerce service and not online information or database access or retrieval services. As regard the demand under Business Auxiliary Service the respondent has claimed N/N. 13/2003 which was extended by the Ld. Commissioner (Appeals). The Ld. Commissioner has relied upon the Board Circular dt. 9.7.2001 and also examined the web sites and came to conclusion that the activity of the respondent is nothing but e-commerce trading activity they are not providing on line database and access or retrieval services - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Classification of services provided by the appellant under "Online information and database access or retrieval services" and "Business Auxiliary Service."
2. Interpretation of relevant circulars and notifications regarding service tax liability.
3. Determination of the nature of the appellant's services as e-commerce or online information and database access.

Analysis:
1. The case involved a dispute over the classification of services provided by the appellant as "Online information and database access or retrieval services" and "Business Auxiliary Service." The appellant conducted online E-Sell auctions for commodities without registering or paying service tax. The adjudicating authority confirmed the service tax demand, leading to an appeal by the appellant before the Commissioner (Appeals).

2. The Revenue contended that the services provided by the appellant fell under the category of "Online information and database access or retrieval services" based on a circular issued by the Board. They argued that the appellant charged fees for accessing online information, making it taxable. However, the appellant argued that they were engaged in e-commerce trading, facilitating transactions without providing online information or database access. The appellant also claimed exemption under a specific notification for the Business Auxiliary Service.

3. Upon careful consideration, the tribunal found that the appellant's services were more aligned with e-commerce activities rather than online information and database access. The tribunal noted that the appellant facilitated trade transactions without providing online information, making their services fall under e-commerce classification. The tribunal also upheld the exemption claimed by the appellant under the relevant notification for Business Auxiliary Service, as they had been paying service tax accordingly.

4. The tribunal's decision was based on a detailed analysis of the appellant's activities, relevant circulars, and legal precedents. They emphasized that the appellant's services were focused on e-commerce trading and not on providing online information or database access. By referencing the Board Circular and a Supreme Court judgment, the tribunal concluded that the appellant's services did not warrant service tax under the category in question. The tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision in favor of the appellant.

5. In conclusion, the tribunal's judgment clarified the classification of the appellant's services, highlighting the distinction between e-commerce activities and online information services for taxation purposes. The decision was based on a thorough examination of the facts, legal provisions, and relevant precedents, ultimately ruling in favor of the appellant and dismissing the Revenue's appeal.