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TMI Blog2014 (4) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... he services provided by the foreign entity and not the appellant. The contention of the appellant in this regard is mis-placed. First of all, the service provider and the group companies in India are distinct and different legal entities. The group entities in India are not a branch office or agency of the foreign service provider. Further, they are not involved in any way in providing the service of online data access or retrieval service. Therefore, they clearly fall outside the purview of section 66A read with the Explanation thereto - Prima facie case not in favour of assessee. Extended period of limitation - Held that:- The question of time bar is both a question of fact as well as a question as well as a question of law. Even according to the appellant, out of the total service tax demand of ₹ 187 core, an amount of ₹ 147 crore (approx) is within the normal period of limitation; therefore, the question of time bar can be gone into at the time of final hearing of the appeal. Financial difficulty / hardship - Held that:- appellant has not established any prima facie case at all. - The service tax demand confirmed against the appellant is also substantial to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in her statement dated 05/07/2005 admitted that the CRS companies provided M/s. Jet a media or platform to sell its tickets to the market across the world. The CRS system provides the software which accesses the airlines database and displays the information of the flight details, status of availability of the seats, etc. to the Travel Agents and to M/s. Jet. When a passenger requests for the booking of a ticket, the Travel Agent is able to display the information of the flights and their availability; the connectivity of Jet database for uploading the information on the CRS System for this purpose was established through an interface. These services were being provided by the CRS companies to M/s. Jet as well as Travel Agents. The agreement entered into with M/s. Abacus vide agreement dated 01/03/1996 was examined and Ms. D'Souza stated that as stipulated under the Clause 4 of the agreement, the Abacus System identifies the transaction and transmits the same to the Jet System and accordingly processes the data thereby enabling the issuance of a ticket and accordingly charges at the rate of USD 2.50 per passenger segment were payable to Abacus, the transmission of data of a Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he process of providing access to the air travel agents to the database of respective airlines and continuously feeding and updating of the database maintained by the CRS companies for access or retrieval by airlines was made possible through the data processing center of CRS companies and for these services rendered by CRS companies, Jet paid consideration for usage of the computer network provided by the CRS companies. It was also found that the database was done using a software called EDIFACT and this software was provided by the CRS companies to provide access to the Air Travel Agents to the airlines database which allows the airlines to retrieve data relating to bookings. The servers of airlines, CRS and the computer system provided by the CRS companies to the Air Travel Agents interact with one another on a real time basis. Therefore, it appeared that the services rendered by CRS companies with Jet fell under the category of online information and database access or retrieval services as defined in Section 65(105) (zh) of the Finance Act, 1994. In terms of the Taxation of Services (Provided from outside India and received in India) rules, 2006, the location of the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as follows: 3.1 The data pertaining to the flights operated by Jet, such as flight schedules/plans/traffic, etc. are the proprietary information of the appellant, which is stored in a server, hosted and maintained by M/s. Sabre Decisions Technologies International Inc. in USA. The CRS companies receive/access data pertaining to the flights operated by the appellant from the database on the Sabre Server and also transmits the updated information to the Sabre Server. As per the agreement entered into by the appellant with the CRS companies, the appellant is only a mere participant in the overall information distribution system maintained by the CRS companies and only has an obligation to provide the information stored on the Sabre server. In terms of the agreement entered into with the CRS companies, the information is provided to the users of the CRS system, that is, the travel agents, which term specifically excludes the airlines. The contract for provision of the data/information in relation to the flights is between the CRS companies and the Travel agents and the consideration also flows from the travel agents to the CRS companies, where the travel agent is not able to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... participant who wishes to make available information on its flights, seat availability and related information to travel intermediates and consumers by participating in the CRS system and as per which the subscriber to the CRS system shall mean any person other than an airline using the system under a contract or other arrangements to obtain information, make reservations and/or issue documents involving travel-related services and as per the said agreement the user shall be subscriber, the Airport Ticket Offices and City Ticket Offices or the licensees, who are licensed to market or distribute CRS system anywhere in the world. The participant's service mean the travel-related information and reservation services provided by the participant as per which the participant is responsible for provision of information and information up-dates. Thus the role of the appellant was that of a participant in the entire programme with application to merely providing of necessary information hosted on the Sabre server. Thus, the appellant neither retrieved any information nor received any data from the CRS system and therefore, it cannot be said that the appellant was a service recipient of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Appellate Tribunal in the case of Amadeus Global Travel Distribution S.A. Vs. DCIT [ 113 TTJ 767] and Galileo International Inc. Vs. DCIT [MANU/ID/5178/2007]. Since the term permanent establishment is not defined under the Finance Act, it is permissible to refer to legislations which are pari material on the subject matter in question. In as much as the service providers have offices in India, the reverse charge mechanism would not apply and consequently, the appellant is not liable to discharge service tax on the services received from abroad. 3.5 It was also argued that the demand was also barred by limitation. The present dispute is an industry wide interpretational issue which is well known to the department. Further, with respect to one of the show-cause notices (SCN dated 21-10-11 pertaining to the period 2010-11), a corrigendum dated 19-3-2012 had been issued beyond the normal period of limitation to amend the taxing entry under which the original demand had been raised, namely, Business Support Services to Online Information or Database Access or Retrieval Service . The corrigendum alters the very nature of the demand and ought to be treated as a fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are appointed by the airlines and they act for and on behalf the airlines and it is precisely for this reason that CRS Companies are paid by Jet for the benefit of service received by it. 4.4 As regards the reliance placed by the appellant in the case of United Telecom Ltd. (cited supra) it was submitted that the decision was rendered in the context of Telecommunication Service wherein the appellant therein had supplied certain equipment and was responsible only for the proper functioning of the said equipment and therefore, the facts of the said case are complexly different and distinguishable and the ratio therein has no application in whatsoever. 4.5 It was contended that in a similar facts situation in the case of Thai Airways International Public Company Ltd. Vs. CCE, Delhi ST/ 330/2012, this Hon'ble Tribunal had rejected the contention that ownership was a relevant factor by holding that there was no such requirement in Section 65(105) (zh), Section 65 (75) or Section 65 (36) of the Finance Act, 1994. It was submitted that in the said case, the activity undertaken by the CRS Companies were held to be classifiable under Online Information Database Access or Retrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner. 5. We have carefully considered the submissions made by both the sides. 5.1 It will be useful at this juncture to see the statutory definitions of the taxable entries under Finance Act, 1994. 5.1.1 As per Section 65 (75), on-line information and database access or retrieval means providing data or information, retrievable or otherwise, to any person in electronic form through a computer network . 5.1.2 As per Section 65 (39), Electronic form has the meaning assigned to it in clause (r) of sub-section (1) of Section of the Information Technology Act, 2000. As per that section, electronic form with reference to the information means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro-firm, computer generated micro-film, computer generated micro fiche or similar device. 5.1.3 As per Section 75 (53), information has the meaning assigned to it in Section 2 (1) (v) of the Information Technology Act, 2000 and as per that section, Information includes data, text, images, sounds, codes, computer programmes, software and databases or micro film or computer generated micro fiche. 5.1.4 Section 65(105) (zh) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation is received by the master computer system maintained by the CRS Companies and thereafter, transmitted to airlines computer system maintained by M/s. Sabre as the data has to be continuously updated from the booking information transmitted by the CRS Companies to the computer system maintained by the airlines. The airlines access the information relating to the passengers and also information about the bookings made for a particular flight and whether there is an over bookings made for a particular flight and whether there is an over booking or not. Similarly, wherever the travel agents cancel the tickets issued to a passenger, the information reaches maintained by the CRS Companies which transmit the data awaiting to the airlines computer network and storage system. Therefore, there is no doubt that the information is transmitted both ways, i.e. from the airline's computer network to the computer network o the CRS Companies who in turn transmits the same to the travel agents. Similarly, information/data of booking/cancellation and the passenger details are transmitted by the travel agents. Similarly, information/data of booking/cancellation and the passenger details are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usage of the CRS System. Shir H.V. Raghavan, Manager (Finance) had also stated that payments to CRS companies were being made by the appellant in US Dollars as the CRS Companies are based abroad, after deducting TDS, wherever necessary. From these clear admissions and the nature of the transaction undertaken, it is very evident that the appellant was accessing data from the computer system of CRS companies. 5.5 It should also be noted that the travel agents are agents of the airlines and it is to enable them to access the airlines data, the appellant has entered into agreement with the CRS companies; therefore, the CRS companies provide access to the data to the travel agents on behalf of the airlines. The beneficiary of the information may be the travel agent who is able to book the ticket but the service is rendered to the airlines by the CRS companies which enables them to sell or distribute their products/services. Therefore, even it is assumed that beneficiary of the service is the travel agent, the recipient of the services are the airlines and none else. This position can be best explained by means of an illustration. When a person X places an order on a florist Y to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not able to demonstrate that the impugned services results in providing access to the applicant to any data other than their own data, it cannot be prima facie held that the activity fell under the category of online data or retrieval services. Those are not facts obtaining in the present case. Further, the said decision was only an interim order does not have any precedent value and therefore, does not help the appellant's case. 5.7 In an identical case pertaining to Thai Airways International Public Company Ltd. a question arose as to whether online database access and/or retrieval services' received by the appellant, M/s Thai Airways International Public Company Ltd. from foreign based CRS service providers is liable to service tax under the category of online database access or retrieval service in terms of Section 66A of the Finance Act, 1994 with effect form 18/04/2006 on reverse charge basis. This is the question before us also in the present case and both the Members of the Hon'ble Tribunal concurred on the point that the said services fell under the category of online database access or retrieval services. The conclusions drawn in the said case is reprod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CRS Companies is maintaining online information on real time basis about the flight schedule, fare, seat availability etc. of the flights being operated by Thai Airways all over the world, for which CRS Companies have linkage with the computer system of Thai Airways, Bangkok and providing access in respect of this information to the IATA agents appointed by Thai Airways which is used by them for selling of air tickets of Thai Airways. I agree with the findings of my learned brother that this activity of the CRS Companies is covered by the definition of Online Database access and/or retrieval service, as given in Section 65(75) read with Section 65(36) of the Finance Act, 1994 and this service, if provided or deemed to be provided in India, would attract service tax under section 65(105)(zh) ibid. In this regard, I do not accept the Appellant's contention that the activity of CRS Companies is e-commerce and therefore, not taxable, as there is no sale of tickets by the CRS Companies. The Tickets of Thai Airways are sold through IATA agents by using the information/database maintained by the CRS Companies and it is the IATA agents who collect payments from the passengers. Anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. Sub-section (2) of Section 66A says that where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purpose of this section. As per Explanation -1 A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country . It is the contention of the appellant that the CRS companies have their own group entities in India and therefore, it is those group entities who are liable to pay service tax on the services provided by the foreign entity and not the appellant. The contention of the appellant in this regard is mis-placed. First of all, the service provider and the group companies in India are distinct and different legal entities. The group entities in India are not a branch office or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any reference to the Income Tax Act or to the DTAA in Section 66A, it cannot be presumed that the definitions given in those laws would apply. It is a well settled position in law that the provisions of tax statute has to be strictly construed. In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used. [Cape Brandy Syndicate v. IRC, (1921) 1KB 64 p. 71]. Therefore, the provisions of Income Tax Act or DTAA agreement cannot be read into Chapter V of the Finance Act, 1994, for the purpose of interpreting the scope of Section 66A. Thus, the contention raised by the appellant in this regard completely fails. 5.12 The next question for consideration is whether the demand is time barred. The question of time bar is both a question of fact as well as a question as well as a question of law. Even according to the appellant, out of the total service tax demand of ₹ 187 core, an amount of ₹ 147 crore (approx) is within the normal period of limitation; therefore, the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rim orders ought not be granted merely because a prima facie case has been shown; (3) The balance of convenience must be clearly in favour of making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the interest of public revenue; (4) While dealing with the applications, the twin requirements of consideration, i.e. consideration of undue hardship, and imposition of conditions to safeguard the interest of revenue must be kept in view; (5) When the Tribunal decides to grant full or parial stay, it has to impose such conditions as may be necessary to safeguard the interest of the revenue. This is an imperative requirement; and In the case before us, the appellant has not established any prima facie case at all. On the other hand, we find that the services rendered by the appellant falls within the definition of online database access and /or retrieval service. The service tax demand confirmed against the appellant is also substantial to the extent of ₹ 187 core and the demand for the normal period (as per appellant's contention) itself is about ₹ 147 crore. Therefore, the ple ..... X X X X Extracts X X X X X X X X Extracts X X X X
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