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TMI Blog2024 (11) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the order proceeds to hold that such services are in the nature of infrastructure support and are taxable under BSS. Thus, the order has confirmed the demand under BSS though the demand made in the show cause notice is for OIDAR service. A show cause notice is the foundation and since, the taxability under BSS was not proposed in the first show cause notice, the demand could not have been confirmed under the said category. In this view of the matter the demand confirmed under BSS cannot be sustained. It would, therefore, not be necessary to examine the contention advanced by the learned counsel for the appellant that even otherwise the services received by the appellant are not taxable under BSS. Demand of service tax under advertising service for the period after 18.04.2006 - As submitted by learned counsel for the appellant that the amount that has been appropriated is Rs. 54,09,868/- but the amount paid towards service tax on advertising service is Rs. 43,25,505/- and Rs. 1,27,004/- on the service received from Minik Enterprises. Thus, the total amount of service tax that was paid is Rs. 54,52,509/- but only an amount of Rs. 54,09,868/- has been appropriated. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act. 3. During the relevant period in dispute, the appellant entered into an agreement with Verio USA for providing NTTA platform hosting. Under the agreement, Verio USA was to provide various dedicated servers and an operating software Red Hat Enterprise Linux. The scope of the agreement includes providing data storage and access services wherein Verio USA will make available various servers such as intel-based high end data base server, back linked server, high end application server for storage of data on server space. Verio USA would also provide operating software and equipment used for internet connectivity. The agreement also provides that Verio USA would exercise no control over the content, accuracy or quality of information passing through or on the equipment. 4. An audit of the records of the appellant was conducted for the period 2004-08. A letter dated 12.02.2008 was sent to the appellant to furnish the breakup of its foreign expenditure under various heads namely (a) server charges; (b) advertising expenses; (c) promotion; marketing expenses; and (d) IPO related expenses. The appellant provided the data by a letter dated 18.03.2008 and informed the department tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x of Rs. 32,29,837/- under section 73(1) of the Finance Act with interest and penalties. 7. A third show cause notice dated 21.12.2012 was also issued to the appellant under section 73(1) of the Finance Act for the period 2011-2012 on the ground that the OIDAR service provided by the appellant to the SEZ Units are not exempted services as the appellant had not fulfilled the conditions of the Notification 17/2011 - ST dated 01.03.2011 [the Notification dated 01.03.2011]. 8. All the three show cause notices were adjudicated by the Commissioner by an order dated 28.01.2014. The entire demand of service tax under reverse charge mechanism for the period prior to 18.04.2006 in the first show cause notice was dropped, following the decision of the Bombay High Court in Indian National Shipowners Association vs. Union of India [ 2009 (13) STR 235 (Bom.)] in which it was held that taxation of import of services was permissible only after introduction of section 66A of the Finance Act w.e.f. 18.04.2006. Consequently, the following demands were dropped: S. No. Demand Particular Amount of Service Tax demand dropped (in Rs.) 1. Charges paid to Verio 40,27,699 2. Charges paid to Minik 2,43,575 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty under section 77 on confirmed demand in Rs. 1. Service received from Verio USA 18.04.2006 to 01.03.2008 (first show cause notice) 92,82,446/- -- 1,07,31,820/- 1,00,000/- 01.04.2008 to 16.05.2008 (second show cause notice) 14,49,374/- -- 2. Services received from Minik Enterprises, USA 18.04.2006 to 01.03.2008 (first show cause notice) 1,27,004/- 1,27,004/- NIL 3. Advertising services from foreign entity 18.04.2006 to 01.03.2008 (first show cause notice) 1,25,799 for Ed. Cess SHE Cess -- 1,68,440/- equivalent to Ed. And SHE Cess remaining unpaid 18.04.2006 to 01.03.2008 (first show cause notice) 53,25,505/- 53,25,505/- Total 1,63,10,128/- 54,52,509/- 1,09,00,260/- 1,00,000/- 15. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Shri Kunal Aggarwal and Ms. Shagun Arora, made the following submissions: (i) The demand proposed in the first show cause notice which is mentioned at serial no. 1 of the aforesaid chart was under OIDAR service but it has been confirmed under BSS. This is not permissible as the Commissioner could not have gone beyond the show cause notice. In this connection reliance has been placed on the decision of the Tribunal in Inox Leisure Ltd. vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure facilities in the form of server space and other facilities which are necessary for the appellant to store the data. Accordingly, the order holds that services provided by Verio USA to the appellant are not taxable under OIDAR service. However, the order proceeds to hold that such services are in the nature of infrastructure support and are taxable under BSS. 19. Thus, the order has confirmed the demand under BSS though the demand made in the show cause notice is for OIDAR service. 20. A show cause notice is the foundation and since, the taxability under BSS was not proposed in the first show cause notice, the demand could not have been confirmed under the said category. 21. In this connection reliance can be placed on the decision of the Tribunal in Inox Leisure, wherein it has been held that no demand can be confirmed under a head not alleged in the show cause notice. The relevant portion of the order is reproduced below: 21. The impugned order has confirmed the demand on the basis that the appellant provided infrastructure support services to the appellant. However, the show cause notice alleged that the appellant was providing operational and administrative assistanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been appropriated is Rs. 54,09,868/- but the amount paid towards service tax on advertising service is Rs. 43,25,505/- and Rs. 1,27,004/- on the service received from Minik Enterprises. Thus, the total amount of service tax that was paid is Rs. 54,52,509/- but only an amount of Rs. 54,09,868/- has been appropriated. According to the learned counsel for the appellant, there is a short fall of Rs. 42,641/- in appropriation, 29. Learned counsel for the appellant also submitted that an amount of Rs. 20,17,511/- has been paid in excess on advertising service and, therefore, it may also be adjusted towards or refunded to the appellant. 30. The aforesaid errors that have been pointed out by the learned counsel for the appellant can be pointed out by the appellant to the Commissioner by moving an appropriate application and in case such an application is filed, the Commissioner shall examine the same and pass an appropriate order. Penalties 31. Learned counsel for the appellant submitted that penalty to the extent of Rs. 1,07,31,820/- under section 78 of the Finance Act on the demand of service tax with respect to issue at serial no. 1 is not sustainable as the demand on merits is not sus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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