2015 (5) TMI 805 - AT - Service Tax

Waiver of pre deposit - Online Information and Database Access and/or Retrieval Services - Held that - Inter-connection charges paid by one ISP to another ISP are not liable to service tax - on 01.05.2006, appellant on their own, to avoid any further litigation, took registration certificate under the category of Business Support Services and discharged service tax liability on such amount received from ISP and in 2008 took registration under the category of Internet Telecommunication Services . - appellant has made out a case for waiver of pre-deposit of the amount involved as the adjudicating authority could not have argued against the Board s Circular and the clarification as is reproduced here-in-above. In view of the foregoing, we allow the application for waiver of pre-deposit of the amount involved and stay recovery thereof till the disposal of the appeal. - Stay granted.

Summary

Issues:
1. Stay petition for waiver of pre-deposit of service tax liability, interest, and penalties.
2. Classification of services under "Online Information and Database Access and/or Retrieval Services."
3. Dispute over service tax liability on amount received from ISPs for inter-connectivity services.
4. Applicability of Board's Circular on inter-connection charges between ISPs.
5. Prima facie case for waiver of pre-deposit based on Board's Circular.

Analysis:

1. The stay petition was filed seeking a waiver of pre-deposit of the amount confirmed as service tax liability, interest, and penalties. The adjudicating authority had confirmed the demand of service tax under the category of "Online Information and Database Access and/or Retrieval Services" for the period April 2004 to April 2006.

2. The adjudicating authority classified the appellant's services under the aforementioned category based on the charges on a "Per Mb basis" consumed by the Customer of ISP. The appellant, an internet provider, was providing interconnectivity services to direct customers, resulting in the discharge of service tax. The dispute arose regarding the amount received by the appellant from other ISPs for internet connection services and the subsequent service tax liability on that amount.

3. The Board's Circular clarified that inter-connection charges paid by one ISP to another are not liable to service tax. The appellant, to avoid further litigation, took registration under different categories over time and discharged service tax liability accordingly. The Tribunal found that the appellant had a prima facie case for waiver of pre-deposit based on the Board's Circular and allowed the application for waiver, staying the recovery of the amount until the appeal's disposal.

4. The Tribunal noted that the appellant's case aligned with the Board's Circular regarding inter-connection services between ISPs. The appellant's actions in taking registration certificates under different categories were considered in the decision to grant the waiver of pre-deposit.

5. Given the substantial amounts involved and the alignment of the appellant's case with the Board's Circular, the Tribunal granted an out-of-turn hearing of the appeal and directed the Registry to list the appeal for final disposal on a specific date.

This detailed analysis of the judgment covers the issues raised in the case and provides an in-depth understanding of the Tribunal's decision based on the legal principles and factual circumstances presented.