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TMI Blog2025 (4) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... n Hong Kong and their registered office is situated at 5th Floor, Swire House, 9 Connaught Road, Central Hong Kong i.e., outside India. The registered/head office of appellants international airline office undertakes business and management decisions. The head office of the appellants at Hong Kong had entered into an agreement dated 05.04.1990 with M/s Abacus Distribution Systems PTE Ltd., Singapore and similar service providers like Amadeus, Galileo, Sabre, Worldspan etc., who were providing Centralized Reservation System (CRS), Data Retrieval System (DRS), Global Distribution Systems (GDS) in connection with computerized reservation system for airline travel, comprehensive information on reservations, ticketing, communications, distribution and other travel related functions on behalf of the airline shareholders and participating carriers. The dispute in the present case is with reference to service tax liability of the appellants office in India for such services received by them, which in the department's view are taxable under the category of "Online Information and Data Base Access or Retrieval Service". The Revenue contended that the appellants in India had received such ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Larger Bench of the Tribunal vide Interim Order No.23/2024 dated 02.09.2024, after hearing both sides had decided on the issues referred to them and had forwarded those conclusive answers to the questions raised, back to the Regional Bench which had referred the case, for deciding the appeal on merits of the case. Therefore, the present appeal has been placed before this Bench for hearing and disposal on the merits of the case. 3. Heard both sides and perused the records of the case. We have also considered the paper book containing submissions made in writing by the learned Advocate appearing for the appellants and the learned Authorized Representative of the Department. 4. We find that the dispute in this case lies in the narrow compass of deciding whether service tax is liable to be paid or not, in respect of the Online Information and Database Access or Retrieval (OIDAR) services contracted by the overseas head office of the appellants with Computer Reservation System (CRS)/Global Distribution System (GDS) companies to be supplied to them, under the Finance Act, 1994 and the Rules made there under; and whether the Indian branch office of the appellants would be liable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice has his business establishment 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. (2) 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 purposes of this section. 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. Explanation 2.-Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted. (3) The provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint." From plain reading of the above legal provisions, it transpires that during the period prior to negative list regime, for the purpose of charging service tax on any service, the service provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod, have been dealt with in detail by the Larger Bench of the Tribunal in the Interim Order dated 03.09.2024 (supra) by relying on the judgement of the Hon'ble Supreme Court in the case of Formula One World Championship Ltd. vs. CIT, International Taxation-3, Delhi & Anr - (2017) 394 ITR 80. The relevant paragraphs of the said order are extracted and given below: "28. As seen above, the CRS/GDS companies enter into an agreement with the head office of the Airline. The head office of Airline is required to provide data pertaining to passenger information, schedules, space availability, fares to the CRS/GDS companies for display thereon. The head office maintains and updates the server with relevant data which is connected to the master server of the CRS/GDS companies. All the rights to access and update the server located at the head office rests with the head office. Thus, in case a contractual agreement exists between the CRS/GDS companies and the head office of the Airline, then the head office of the Airline is the establishment most directly concerned with the receipt of services provided by CRS/GDS companies. 29. The India branch office of the Airline does not provide an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted above that as per Philip Baker27, a PE must have three characteristics: stability, productivity and dependence. All characteristics are present in this case. Fixed place of business in the form of physical location, i.e. Buddh International Circuit, was at the disposal of FOWC through which it conducted business. Aesthetics of law and taxation jurisprudence leave no doubt in our mind that taxable event has taken place in India and non-resident FOWC is liable to pay tax in India on the income it has earned on this soil." (emphasis supplied) 38. The appellant does not dispute that it has a place of business in India. What the appellant disputes is that the place of business in India is not the recipient of service. 39. The aforesaid discussion would lead to the inevitable conclusion that the branch office in India is not the recipient of OIDAR services provided by CRS companies. It is the head office which is contractually entitled to receive the services rendered by the CRS/GDS companies and it is the head office which is contractually obligated to make payment for the services rendered by the CRS/GDS companies. 40. The reference would, accordingly, have to be answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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