2013 (5) TMI 619 - AT - Service Tax

Import of service - Online information and data base access or retrieval service through computer network service - application for waiver of pre-deposit of service tax, interest and penalties - Held that - As per the provision section 65(75) the service is to be provided to any person in electronic form through a computer network. In the present case, as per the argument of the Revenue, M/s Equant Pte Ltd. are the provider of Virtual Private Network facility. As per the argument of the Revenue, the applicants are the beneficiary through this network facility inasmuch as the same enables the foreign offices of SBI to access to this besides updating the same on regular basis. As the data is being retrieved or access by the applicants to their own database which were in US, UK and India, therefore, it cannot be prima facie said that the applicants have received the services. Thus the applicants have made out a case in their favour. stay granted.

Summary

Issues:
Application for waiver of pre-deposit of service tax on online information and database access or retrieval service through a computer network.

Analysis:
The applicants sought waiver of pre-deposit of service tax amounting to Rs.2,61,06,556/-, interest, and penalties, contending that they are availing services from M/s Equant Pte Ltd. for Virtual Private Network (VPN) to retrieve data from their own data centers in India, USA, and UK. They argued that M/s Equant Pte Ltd. is only providing VPN services, not the actual data retrieval service. The applicants relied on the definition of service under Sec. 65(75) of the Finance Act and the terms of the agreement with M/s Equant Pte Ltd. They also cited a Tribunal decision and a Board circular to support their claim.

The Revenue, however, relied on the statement of SBI's Asstt. General Manager admitting that the online connectivity to data centers is provided by M/s Equant Pte Ltd. The Revenue contended that the service falls under online information and database access or retrieval in electronic form through a computer network, benefiting the applicants by enabling data updating. The service provided by M/s Equant Singapore is through online computer network, justifying the demand made.

The Tribunal examined Sec. 65(75) of the Finance Act, defining "on-line information and database access or retrieval" as providing data or information in electronic form through a computer network to any person. Considering the arguments, the Tribunal found that the service is to be provided in electronic form through a computer network. While M/s Equant Pte Ltd. provides the Virtual Private Network facility, the applicants benefit from accessing their own database in the US, UK, and India. Therefore, it was concluded that the applicants have a case in their favor as they are not receiving the services in question. Consequently, the pre-deposit of dues was waived, and recovery stayed during the appeal's pendency.

The Tribunal directed the registry to list the appeal for further proceedings, allowing the stay petition in light of the involved revenue.