2019 (4) TMI 180 - AT - Service Tax

Classification of services - Online Information and Database Access and Retrieval Service or Business auxiliary services - demand of service tax with interest and penalty - Held that - The respondent has provided Online Information and Database Access and Retrieval Service and have discharged service tax on the entire amount received as consideration. The respondent procured purchase orders from the Indian clients for getting access for online information and database and provided access details to the customers. They collected payments from the customers and paid to foreign online information service provider on behalf of their service. The entire amount received from the customers and paid to foreign service provider has been subject to levy of service tax under Online Information and Database Access and Retrieval Service. There is no dispute that the entire amount has suffered tax under Online Information and Database Access and Retrieval Service, the further demand confirmed under BAS on the very same amount cannot sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
Demand for service tax under two different categories - Online Information and Database Access and Retrieval Service and Business Auxiliary Service (BAS).

Analysis:
The case involved a dispute regarding the demand for service tax under two different categories - Online Information and Database Access and Retrieval Service and Business Auxiliary Service (BAS). The respondents, engaged in enhancing knowledge in academic and corporate segments, had obtained service tax registration under the category of Online Information and Database Access and Retrieval Service. Show Cause Notices were issued alleging short-payment of service tax, which led to the confirmation of demand, interest, and penalties by the original authority. However, the Commissioner (Appeals) set aside the demand, leading the department to appeal before the Tribunal.

The appellant argued that the respondent was acting as an agent for foreign principals, collecting amounts from customers, including their commission, which should be subject to service tax under BAS. The appellant contended that the demand confirmed by the adjudicating authority should be restored as the Commissioner (Appeals) failed to recognize the two limbs of transactions undertaken by the respondent.

On the other hand, the respondent's counsel argued that the entire amount received as consideration had already been subjected to service tax under Online Information and Database Access and Retrieval Service. The department's attempt to demand service tax again under BAS on the same transaction was deemed unjustified and futile. The counsel emphasized that there was no revenue loss to the government as the tax had already been paid, and demanding tax under a different head would be a mere book adjustment.

After hearing both sides, the Tribunal noted that the respondent had discharged service tax on the entire amount received as consideration under Online Information and Database Access and Retrieval Service. The Commissioner (Appeals) acknowledged that the entire amount had already suffered tax and that there was no concrete evidence to support the department's demand under BAS. Consequently, the Tribunal found no merit in the department's appeal and dismissed it, stating that the further demand under BAS on the same amount already taxed could not be sustained.

In conclusion, the Tribunal ruled in favor of the respondent, highlighting that since the entire amount had already been taxed under Online Information and Database Access and Retrieval Service, demanding tax again under BAS was unwarranted. The judgment emphasized the importance of avoiding double taxation on the same transaction and upheld the Commissioner (Appeals)' decision to set aside the demand.