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TMI Blog2024 (1) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... are therefore broadly covered under the category of Business support services or telecommunication services using tools of information technology, and shall not be covered under the category of OIDAR services. The instant case is wholly covered by the decision of this Tribunal in the case of State Bank of India Vs. Commissioner of Service Tax, Mumbai-II [ 2014 (11) TMI 310 - CESTAT MUMBAI ] wherein SBI had entered into a contract for providing Virtual Private Network (VPN) which enabled SBI and its branches to retrieve data from the data centre maintained by the applicants in different countries abroad and demand was made under OIDAR service - the Appellant is not liable to service tax on the services under the category of OIDAR services. Time Limitation - suppression of facts or not - HELD THAT:- The Appellant was under a bona fide belief that its activity was not liable to service tax and further, the Appellant has maintained proper records of its activity and has been making compliances with various laws including Income Tax Act, Companies Act, and had been filing ST-3 returns under service tax, filing refund claims on quarterly basis in respect of service tax paid on input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 onwards the services exported were described as 'Business support services'. It appeared to the Revenue that the Appellant was exporting OIDAR services which were taxable in the hands of the service provider (the Appellant herein) in the taxable territory of India in terms of Rule 9(b) of the Place of Provision of Services Rules, 2012, and not covered within the definition of 'Export of Services' provided under Rule 6A of Service Tax Rules, 1994 for being eligible for refund/rebate of service tax paid on input services under Notification No. 39/2012-ST dated 20.06.2012, and therefore, it was alleged that the Appellant had deliberately, with an intention to evade payment of service tax, changed the classification of 'OIDAR service' to 'Business Support Service (BSS)' for the period July 2012 onwards. 4. Hence, it was alleged that the Appellant had provided OIDAR services valued at Rs.4,40,85,52,382/- to their overseas customers during the period from July 2012 to November 2016 had not paid service tax amounting to Rs. 56,93,10,544/- (including cesses) which became recoverable from them under proviso to Section 73(1) of the Act, along with interest under Section 75 of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fix the issues in Metadata Manager (the administration of data that describes other data) which are not in sync with the data in BSI SAP system, and as a result improve quality and consistency of content and data stored in Metadata Manager and the SCR to support successful distribution to commercial channels. Innodata USA to execute backend script in UAT (User Acceptance Testing) environment to correct data & produce report and request BSI to verify the same; produce reports capturing the current state of the content (pre-correction) vs. the corrected state (post-correction) for bsiXML, bsi Images and source Images. The said work is outsourced by Innodata USA to the Appellant. 5. Based on above observations about the work outsourced by Innodata USA to the Appellant, it was concluded that the Appellant was providing:- i) Conversion of content from a variety of existing formats into Apple-compliant EPUB/ePub files which involves delivery of content mediated through internet/multi-redundant data connections, and the same is essentially automated involving minimal human intervention and impossible without information technology. ii) Processing of bibliographic information for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. 7. The Appellant claimed that the raw data/content received and data processed which was made available to the third parties through Innodata USA did not belong to the Appellant and was always the intellectual property of the content providers, and that the Appellant only provided support services to the content providers who had all the IPR/copy rights over the data for using the same as OIDAR services through internet or for personal use by the content providers. The case of the Revenue however is that ownership of data is not a prerequisite in this gamut of service being provided. In other words, to levy service tax on OIDAR services there is no such condition that the ownership of the data or content must be with the service provider. 8. The Appellant placed reliance on the decision of this Tribunal in the case of State Bank of India Vs. Commissioner of Service Tax, Mumbai-II [2015(37) STR 340 (Tri - Mumbai)], wherein SBI had entered into a contract with M/s Equant Pte. Ltd. for providing Virtual Private Network (VPN) which enabled S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly covered under the category of business support service. The Ld. CA relied upon the decision of this Tribunal in the case of State Bank of India Vs. Commissioner of Service Tax, Mumbai-II (supra). 13. To appreciate the facts and circumstances in the present case, we gainfully refer to the applicable legal provisions during the period of dispute. (A) Section 66F of the Act provides principle of interpretation of specified descriptions of services or bundled services under sub-section (1) and (2) as under:- "(1) Unless otherwise specified, reference to a service (hereinafter referred to as main service) shall not include reference to a service which is used for providing main service. Illustration- The services by RBI, being main service within the meaning of clause (b) of section 66D, does not include any agency service provided or agreed to be provided by any bank to the RBI. Such agency service, being input service, used by RBI for providing the main service, for which the consideration by way of fee or commission or any other amount is received by the agent bank, does not get excluded from the levy of service tax by virtue of inclusion of main service in clause (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 20.06.2012 on Taxation of services as under: "5.9.5 What are "Online information and database access or retrieval services"? "Online information and database access or retrieval services" are services in relation to online information and database access or retrieval or both, in electronic form through computer network, in any manner. Thus, these services are essentially delivered over the internet or an electronic network which relies on the internet or similar network for their provision. The other important feature of these services is that they are completely automated, and require minimal human intervention. Examples of such services are: i) online information generated automatically by software from specific data input by the customer, such as web-based services providing trade statistics, legal and financial data, matrimonial services, social networking sites; ii) digitized content of books and other electronic publications, subscription of online newspapers and journals, online news, flight information and weather reports; iii) Web-based services providing access or download of digital content. The following services will not be treated as "online i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully satisfied. The Appellant does not provide OIDAR service for which place of provision was location of service provider under Rule 9 of POPS Rules, 2012, so as to attract service tax. 16. We find from the agreement between the Appellant and Innodata Inc. USA as discussed above that the Appellant is required to provide services relating to conversion of raw data and information into corrected, abstracted, indexed and digitized data to the third parties as per the agreement entered into with Innodata USA. 17. It is noted that using the internet, or some other electronic means of communication just to communicate processed data to the supplier and the owner of raw data/content does not mean that a business is providing OIDAR services. The suppliers/owners of raw data/content have all the rights to title, intellectual property rights and copy rights over the data before and after processing/digitization of data. The Appellant has no title or ownership over the processed data for being used over the internet for their business. OIDAR services as clarified by the CBEC in the Education Guide for Taxation of services on 20.06.2012 in Guidance Note 5.9.5 covers services which are auto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Equant has to relate to information access/retrieval. And Equant has not provided information and database. The ownership of data is with the FOs. This is a vital fact. The Commissioner's finding that it is not necessary that the original data should emerge or originate from the provider of VPN network is an incorrect reading of section 65(75) and 65(105)(zh)". The Ld. Commissioner in support of his observations has relied upon the decision of this Tribunal in the case of Photolibrary India Pvt. Ltd. Vs. CST [(2015) 39 STR 637 (Tri-Mum.)] wherein it was observed that:- "The Appellant in the present case had a website containing a number of photographs which would be freely viewed but would be available for use in ad insertions etc., only on payment of the prescribed charges. The revenue had sought to levy service tax on these charges under the category of 'OIDAR' services. The assesse contested the demand on the ground that it had got a copyright in the photographs and hence amount received by it were for use of copyright and hence would be outside the purview of service tax. On appeal the Tribunal held that: (i) The photograph could be downloaded for use in ads etc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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