2024 (6) TMI 447 - AT - Service Tax

Classification of services - Online Information and Database Access or Retrieval Services (OIDAR) or Business Support Services (BSS) - POPOS rules - export of services or not - HELD THAT - It is observed that respondent is engaged only in assimilating the verification documents and information available in public domain into a final verification report to its client- entities Dataflow Dubai. Respondent do not have any ownership or contract out the data and is not disseminating the same through the network appearing for public for uses against the cost, these the verification report created or transmitted through by the appellant to its clients/entities namely Dataflow Dubai by using network of computers. In case of PHILIPS ELECTRONICS INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2018 (11) TMI 1093 - CESTAT CHENNAI it was held that ' In any case, all these infrastructure services are only in the nature of providing intra connectivity between Philips locations worldwide and the payments made are obviously then for sharing of the maintenance cost between the Philips units and not as fees for supply of online information or retrieval of data from the portal'. It is well established fact that there is no res-judicata in the taxation matter even if in some cases party have discharged service tax liability by treating these services under the category of OIDAR that cannot be a para for not claim otherwise in subsequent transactions - the claim of revenue that these services should be classified under the category of OIDAR cannot be accepted and the appeal on this ground lacks merit. As it is held that the services provided by the appellant are not classifiable under the category of OIDAR but the same are classifiable under the category of Business Support Service as per Rule 3 of Place of Provision of Services Rules, 2012, benefit of export of services is admissible to the appellant and no service tax could have been demanded from him as per the show cause notice. Appeal filed by the revenue is rejected.

Summary

Issues Involved:
1. Classification of Services: Whether the services provided by the respondent fall under "Online Information and Database Access or Retrieval Services" (OIDAR) or "Business Support Services" (BSS).
2. Export of Services: Whether the services provided qualify as export of services and thus exempt from service tax.

Summary:

Issue 1: Classification of Services
- Original Authority's Decision: The Original Authority determined that the respondent's services were not OIDAR but rather BSS. The services involved verification of data and operational support, which required significant human intervention and did not fit the automated nature of OIDAR. The services were outsourced by Dataflow Dubai and included education verification, health license verification, and employment verification, among others. The Original Authority cited various definitions and judicial precedents to support this classification.

- Commissioner (Appeals) Decision: The Commissioner (Appeals) upheld the Original Authority's decision, noting that the respondent's services involved extensive human intervention and did not provide new data owned by the respondent. The services were categorized as BSS, which included operational or administrative assistance. The Commissioner also referenced the Service Tax Educational Guide and various circulars to support this classification.

- Tribunal's Decision: The Tribunal agreed with both the Original Authority and Commissioner (Appeals), affirming that the services provided were BSS and not OIDAR. The Tribunal referenced the education guide and judicial precedents, emphasizing that the services were not automated and involved significant human intervention. The Tribunal also noted that the respondent did not own the data, which is a key requirement for OIDAR classification.

Issue 2: Export of Services
- Original Authority's Decision: The Original Authority found that the services provided by the respondent to Dataflow Dubai met the criteria for export of services u/s Rule 6A of the Service Tax Rules. The conditions included the service provider being located in India, the service recipient being outside India, and the payment being received in convertible foreign exchange. The Original Authority concluded that all conditions were met, and thus the services qualified as export and were exempt from service tax.

- Commissioner (Appeals) Decision: The Commissioner (Appeals) concurred with the Original Authority, noting that the place of provision of services was outside India, as per Rule 3 of the Place of Provision of Services Rules, 2012. The Commissioner confirmed that the services were export of services and thus not subject to service tax.

- Tribunal's Decision: The Tribunal upheld the decisions of the lower authorities, confirming that the services provided by the respondent were export of services. The Tribunal noted that the services met all the criteria for export and were thus exempt from service tax. The Tribunal rejected the revenue's appeal, stating that the services were correctly classified as BSS and qualified as export of services.

Conclusion:
The appeal filed by the revenue was rejected. The Tribunal confirmed that the services provided by the respondent were correctly classified as Business Support Services and qualified as export of services, exempting them from service tax.