Service Tax Demands on International Payments Partially Set Aside; Reconsideration Ordered for Website Ads Case.

The Tribunal set aside the service tax demands on payments to Reuters UK and EPA Germany under OIDAR and on payments to stringers under BSS, deeming the exemptions applicable. The service tax demand related to advertisements on the Appellant's website was remitted for reconsideration. Consequently, the impugned order was partially set aside, allowing the appeal in part.

---

---

Issues Involved:
1. Service Tax demand on amount paid to M/s. Reuters Ltd., UK and EPA, Germany under reverse charge under Online Information or Database Access or Retrieval services (OIDAR).
2. Service Tax demand on amount received from clients for displaying their advertisement on Appellant’s website under Sale of Space or Time for Advertisement service (SSTA).
3. Service Tax demand on amount paid to stringers located outside India under reverse charge under Support Services of Business or Commerce (BSS).
4. Limitation period for the show cause notice dated April 21, 2010.
5. Imposition of penalty and recovery of interest.

Issue-wise Detailed Analysis:

1. Service Tax Demand on Amount Paid to M/s. Reuters Ltd., UK and EPA, Germany under OIDAR:
The Appellant contended that the Ad-hoc exemption order and the exemption notification should apply to services received by them under section 66A of the Finance Act, 1994. The Tribunal agreed, stating that under section 66A, the service recipient is deemed to be the service provider, making the exemptions applicable. The Tribunal cited its previous decision in United News of India vs. Commissioner of Service Tax, New Delhi, where it was held that the legal fiction created by section 66A applies to all provisions of Chapter V, including exemptions. Therefore, the service tax demand on the amount paid to Reuters UK and EPA Germany was set aside.

2. Service Tax Demand on Amount Received from Clients for Displaying Advertisements on Appellant’s Website under SSTA:
The Appellant argued that the Department did not consider the amount of Rs. 2,61,611/- already paid for the financial year 2009-10 while confirming the demand of Rs. 2,78,658/-. The Tribunal remitted this issue back to the Commissioner for fresh consideration, instructing to re-examine the documents and provide an opportunity for a hearing to the Appellant.

3. Service Tax Demand on Amount Paid to Stringers Located Outside India under BSS:
The Appellant argued that the services provided by stringers do not fall under the inclusion part of the definition of BSS under section 65(104c) of the Finance Act. The Tribunal agreed, stating that the service received from stringers is not categorized in any of the activities mentioned in the inclusion part of the definition of BSS, and thus, service tax could not be levied under BSS. The demand of service tax under this category was set aside.

4. Limitation Period for the Show Cause Notice Dated April 21, 2010:
The Appellant argued that the show cause notice was barred by limitation as it was issued beyond the period of one year from the relevant date, and there was no intention to evade payment of tax. The Tribunal did not explicitly address this issue in the final order, focusing instead on the substantive grounds for setting aside the demands.

5. Imposition of Penalty and Recovery of Interest:
The Appellant contended that penalties should not be imposed, nor interest recovered. The Tribunal’s decision to set aside the service tax demands on the amounts paid to Reuters UK, EPA Germany, and stringers implicitly addressed the issue of penalties and interest, as these would not be applicable if the underlying tax demands were invalid.

Conclusion:
The Tribunal set aside the service tax demands on the amounts paid to Reuters UK and EPA Germany under OIDAR and on the amounts paid to stringers under BSS. The issue of service tax demand on the amount received for displaying advertisements on the Appellant’s website was remitted for fresh consideration. The impugned order was thus partially set aside, and the appeal was allowed to the extent indicated.

---