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2021 (7) TMI 251 - AT - Service TaxTaxability - convenience fee - fee charged on its customers for online booking of movie tickets - online information and database access retrieval system OIDAR services or not - period 01.04.2007 to 31.12.2011 - extended period of limitation - demand of interest and penalty as well. Invocation of extended period of limitation - suppression of facts or not - whether wilful suppression of facts is necessary or just suppression (unknowingly) is also sufficient for invocation of extended time? - HELD THAT - It is clear from the facts that as far back as on 27.07.2009 the Department was aware that the appellant had been collecting convenience fees from customers and by 11.08.2010 the Department was also aware of the quantum of convenience fees collected, which amount has also been mentioned in the show cause notice dated 14.06.2012. It is, therefore, more than apparent that the Department was aware of the collection of convenience fees by the appellant much before one year from the date of issue of the first show cause notice dated 14.06.2012. It cannot, therefore, be said that the appellant had suppressed facts relating to collection of convenience fee from the Department and, therefore, the confirmation of demand by the Commissioner for the period 01.04.2007 to 31.03.2011 is clearly not warranted. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax - It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil Gas Exploration Services Ltd. 2016 (10) TMI 878 - CESTAT NEW DELHI , wherein the Tribunal after making reference to the decision of the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay 1994 (9) TMI 86 - SUPREME COURT , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression is shown to be wilful with intent to evade the payment of service tax - even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade the payment of service tax. There is no finding by the Commissioner as to whether suppression of facts was wilful and in the context of intent, the Commissioner held that there is no necessity that suppression of facts has to be with an intent to evade the payment of service tax. The confirmation of demand of service tax of ₹ 1.27 crores on convenience fees for the period commencing 01.04.2007 to 31.03.2011 is beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and, therefore, this demand deserves to be set aside. Whether the convenience fees that is charged by the appellant from each user over and above the prescribed value of the movie ticket can be subjected to service tax under OIDAR? - HELD THAT - A conjoint reading of the clauses of the Terms Conditions of the contract would indicate that the purpose for charging convenience fee is to receive a consideration for offering a facility of online booking and in the facts of the present case would relate to online booking of tickets. It needs to be noted that the purpose of the transaction is to book and procure a ticket online by a user, though the website may provide for various other information like the current movie being exhibited, the upcoming movies and the timing of the movies. These information are even otherwise available through newspaper advertisements or other advertisements and no charge is leviable for the same - It is clear that the pith and substance and the dominant intention of the arrangement is not to access/retrieve data/information but it is an arrangement by which the facility of online booking is made available to users. There is no manner of doubt that the essential characteristic of the arrangement under consideration in these appeals is availing the facility of online booking of ticket and not accessing/retrieving any data/information. Service tax under the category of OIDAR, therefore, cannot be levied upon a user merely because he receives a code for getting a printout of the ticket from the cinema hall. The inevitable conclusion that convenience fee is not charged by the appellant for any access/retrieval of information or data base. Service tax under OIDAR cannot, therefore, be levied upon the appellant for the period prior to 01.07.2012. The appellant has stated that it started discharging service tax on convenience fees under the negative list regime after July 1, 2012 under the category of other taxable services - the confirmation of demand of service tax of ₹ 1.27 crores for the period 01.04.2007 to 31.03.2011 out of the total demand of ₹ 2,02,31,146/- covered under the two show cause notices dated 14.06.2012 and 15.03.2014 cannot also be sustained for the reason that it is for a period beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and the extended period of limitation could not have been invoked. Demand of interest and penalty - HELD THAT - As the confirmation of demand under the two notices cannot be sustained, the imposition of penalty and interest under sections 78 and 75 of the Finance Act cannot also be sustained. The impugned order confirming the demand of service tax under the two show cause notices dated 14.06.2012 and 15.03.3013 is liable to be set aside and is set aside - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Taxability of 'convenience fee' under OIDAR. 2. Invocation of the extended period of limitation. 3. Computation of service tax on a cum-tax basis. 4. Imposition of penalty and interest. Detailed Analysis: 1. Taxability of 'Convenience Fee' under OIDAR: The core issue was whether the 'convenience fee' charged by the appellant for online booking of movie tickets falls under the taxable service of 'online information and database access or retrieval' (OIDAR) as defined under section 65(75) and taxable under section 65(105)(zh) of the Finance Act, 1994. - The appellant argued that the convenience fee was charged for the facility of booking tickets online, not for accessing any information or database. The website provided information on movies freely accessible to all, and the fee was for the convenience of booking tickets online rather than physically standing in the queue. - The Tribunal examined the terms and conditions of online booking, which indicated that the convenience fee was charged for the facility of online booking and not for accessing or retrieving information. The dominant intention of the transaction was to book a movie ticket online, which is an e-commerce activity, not an OIDAR service. - The Tribunal referred to the Board Circular dated 09.07.2001, which clarified that e-commerce transactions do not fall within the ambit of OIDAR service. It also noted that the convenience fee was charged only when a ticket was booked online, not for accessing information on the website. - The Tribunal concluded that the convenience fee charged by the appellant was not for providing access or retrieval of information or database and, therefore, service tax under OIDAR could not be levied on the appellant for the period prior to 01.07.2012. 2. Invocation of the Extended Period of Limitation: The Tribunal addressed whether the extended period of limitation under the proviso to section 73(1) of the Finance Act could be invoked for the demand of service tax. - The first show cause notice dated 14.06.2012 covered the period from 01.04.2007 to 31.12.2011. The Tribunal noted that the Department was aware of the collection of convenience fees by the appellant much before one year from the date of issue of the first show cause notice. The appellant had disclosed the collection of convenience fees to the Department during an audit and in response to summons. - The Tribunal held that there was no wilful suppression of facts by the appellant, nor was there any intent to evade payment of service tax. Mere suppression of facts is not sufficient to invoke the extended period of limitation; it must be wilful and with an intent to evade tax. - The Tribunal concluded that the confirmation of demand for the period 01.04.2007 to 31.03.2011 was beyond the prescribed period of one year and, therefore, set aside the demand for this period. 3. Computation of Service Tax on a Cum-Tax Basis: The appellant argued that if service tax was to be levied, it should be computed on a cum-tax basis. - The Tribunal noted that the Commissioner had made only a one-line observation that the appellant had not substantiated the claim of the amount being cum tax. - Given that the demand itself was set aside, the Tribunal did not find it necessary to delve further into this issue. 4. Imposition of Penalty and Interest: The appellant challenged the imposition of penalty and interest under sections 78 and 75 of the Finance Act. - Since the Tribunal set aside the demand for service tax, it also concluded that the imposition of penalty and interest could not be sustained. - The Tribunal allowed the appeals and set aside the impugned order dated 25.07.2014 confirming the demand of service tax under the two show cause notices. Conclusion: The Tribunal held that the convenience fee charged by the appellant was not for providing access or retrieval of information or database under OIDAR. It also found that the extended period of limitation could not be invoked as there was no wilful suppression of facts with an intent to evade payment of service tax. Consequently, the demand for service tax, along with the imposition of penalty and interest, was set aside, and the appeals were allowed.
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