2021 (7) TMI 251 - AT - Service Tax

Convenience fee for online movie tickets not taxable

M/s. PVR Limited Versus Commissioner of Service Tax, New Delhi

M/s. PVR Limited Versus Commissioner of Service Tax, New Delhi - 2021 (55) G. S. T. L. 435 (Tri. - Del.) Issues Involved:1. Taxability of 'convenience fee' under OIDAR.2. Invocation of the extended period of limitation.3. Computation of service tax on a cum-tax basis.4. Imposition of penalty and interest.Detailed Analysis:1. Taxability of 'Convenience Fee' under OIDAR:The core issue was whether the 'convenience fee' charged by the appellant for online booking of movie tickets falls under the taxable service of 'online information and database access or retrieval' (OIDAR) as defined under section 65(75) and taxable under section 65(105)(zh) of the Finance Act, 1994.- The appellant argued that the convenience fee was charged for the facility of booking tickets online, not for accessing any information or database. The website provided information on movies freely accessible to all, and the fee was for the convenience of booking tickets online rather than physically standing in the queue.- The Tribunal examined the terms and conditions of online booking, which indicated that the convenience fee was charged for the facility of online booking and not for accessing or retrieving information. The dominant intention of the transaction was to book a movie ticket online, which is an e-commerce activity, not an OIDAR service.- The Tribunal referred to the Board Circular dated 09.07.2001, which clarified that e-commerce transactions do not fall within the ambit of OIDAR service. It also noted that the convenience fee was charged only when a ticket was booked online, not for accessing information on the website.- The Tribunal concluded that the convenience fee charged by the appellant was not for providing access or retrieval of information or database and, therefore, service tax under OIDAR could not be levied on the appellant for the period prior to 01.07.2012.2. Invocation of the Extended Period of Limitation:The Tribunal addressed whether the extended period of limitation under the proviso to section 73(1) of the Finance Act could be invoked for the demand of service tax.- The first show cause notice dated 14.06.2012 covered the period from 01.04.2007 to 31.12.2011. The Tribunal noted that the Department was aware of the collection of convenience fees by the appellant much before one year from the date of issue of the first show cause notice. The appellant had disclosed the collection of convenience fees to the Department during an audit and in response to summons.- The Tribunal held that there was no wilful suppression of facts by the appellant, nor was there any intent to evade payment of service tax. Mere suppression of facts is not sufficient to invoke the extended period of limitation; it must be wilful and with an intent to evade tax.- The Tribunal concluded that the confirmation of demand for the period 01.04.2007 to 31.03.2011 was beyond the prescribed period of one year and, therefore, set aside the demand for this period.3. Computation of Service Tax on a Cum-Tax Basis:The appellant argued that if service tax was to be levied, it should be computed on a cum-tax basis.- The Tribunal noted that the Commissioner had made only a one-line observation that the appellant had not substantiated the claim of the amount being cum tax.- Given that the demand itself was set aside, the Tribunal did not find it necessary to delve further into this issue.4. Imposition of Penalty and Interest:The appellant challenged the imposition of penalty and interest under sections 78 and 75 of the Finance Act.- Since the Tribunal set aside the demand for service tax, it also concluded that the imposition of penalty and interest could not be sustained.- The Tribunal allowed the appeals and set aside the impugned order dated 25.07.2014 confirming the demand of service tax under the two show cause notices.Conclusion:The Tribunal held that the convenience fee charged by the appellant was not for providing access or retrieval of information or database under OIDAR. It also found that the extended period of limitation could not be invoked as there was no wilful suppression of facts with an intent to evade payment of service tax. Consequently, the demand for service tax, along with the imposition of penalty and interest, was set aside, and the appeals were allowed.