TaxTMI 
TaxTMI 
2016 (8) TMI 989
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....tegory of "online information and database access or retrieval service" (herein after referred to as "services") from foreign based service providers and is not depositing the tax liability on the amounts paid to such foreign based service providers. Investigation was initiated, statements were recorded and copies of the agreements were called for and scrutinized. On scrutiny it was noticed that appellant entered into agreements with entities like M/s. Abacus Distribution System Pvt. Ltd., M/s.Galileo International Partnership, M/s. Amadeus Marketing S.A., M/s Sabre Travel Information Network, M/s. Infini, M/s. Topaz, Axess, Apollo, M/s. Travelsky who were the Companies provided Computer Reservation System (CRS) based upon a facility called as Global Distribution System (GDS). Advantages of CRS Company is that they are able to display the real time availability of flights, reservation availability and all the details related to the movement of flights. The CRS Companies are located outside India and collect the data i.e. real time data from the main server of the Jet Airways, the appellant herein. It was noticed by the investigating authorities that functioning of the system is whe....
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.... of booking of tickets, reads the definitions of the "services" and taxable services as assigned in Section 65 (75) and Section 65 (105)(zh) for the meaning "taxable services". He would submit that for classification under taxing entry of the services there are four requirements - (i) providing data or information, (ii) retrieval or otherwise, (iii) to any person and (iv) in electronic form through a computer network, 4.1 It is his submission that the data or information, which is provided must either be owned by the service provider or at the very least must not be owned by service recipient himself. It is his submission that CRS Companies make data available to the Travel Agents and act as medium of exchange of data / information as a part of the chain through which data is exchanged and they do not provide any data as they do not own the same. He would submit that the adjudicating authority has himself noted that the data as inventory availability etc. is owned by the appellant. He would submit that it is settled law that the ownership of the data is a key criterion under the present taxing entry as has been decided by the Tribunal in the c....
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....they are conduct the business and these can be construed as permanent establishments as CRS Companies. He would submit that the term "permanent establishment" is not defined under Service Tax law hence it is permissible to refer to a pari material legislation, viz. the Income Tax Act, under which the CRS Company offices in India have been held to be permanent establishment. Accordingly, CRS Company should be liable to discharge the service tax if any. He would submit that levy of service tax under Section 66A on the present transaction where data / information is displayed on the CRS servers which are located outside India and the services are therefore not provided / rendered within India would be unconstitutional hence tax liability would not arise. It is his submission that the CRS companies are providing necessary access to software and on-line connectivity to the subscriber but in this case is Travel Agent who obtain information, make reservations and issue documents as to the travel related services. It is his submission that the amounts paid by the appellant is for the use of CRS system of the CRS Companies and is in no manner correlated to the fact of provision of data / in....
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....the entry of taxable services. 5. Learned Commissioner would submit that there is no dispute that the appellant has entered into contract with CRS Companies for enabling them to allow to accesses of the data of Jet airways seat availability, flight schedule for rendering services of on-line information and data base services. It is his further submission that the Travel Agent accesses the data through CRS Company and book the ticket which are of the appellants airline. He would then draw our attention to the fact that the Travel Agents are making the payments of the tickets so booked after deducting their commission, to appellant. He would then draw our attention to the specific clauses of the agreement and submit that appellant had entered into an agreement with CRS Companies for making payment of specific amount on tickets issued to travelers in India. He would submit that the activities of CRU Companies maintaining on-line information as to availability of flight schedule, fare, seat etc. operated by the appellant all over the world. He would submit that the contract of appellant with CRS Companies clearly indicate that while Jet airways is required to provide data, CRS Comp....
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....ncorrect as the said activity and scope of the taxing entry for 'on-line Information and Database Access or Retrieval Service' it is to be noted that it is inherent to the concept of access/retrieval for which the consideration is paid, the person who renders that services should be owner or should have exclusive right over the relevant information/data so as to put him in a position to charge the recipient for access/retrieval of that data/information. He would submit that the adjudicating authority is faulted and did not consider the fact that the appellant is clearly being invoiced on the basis of charging event i.e. the booking of a ticket and not for any access of data or information. He would submit that the judgement of this Tribunal in the case of United Telecom (supra) and State Bank of India (supra) were directly on the issue. He would submit that the demands to be set aside and the appeals be allowed. 7. Heard both sides at length on 16.03.2016, 28.03.16 and 05.04.16. 8. The issue that falls for consideration is whether the services rendered by the CRS companies to the appellant are classifiable under the taxing entry of "online information and database access or r....
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....inted by British Airways which is used by them for selling of air tickets of British Airways. I agree with the findings of my learned brother that this activity of the CRS/GDS Companies is covered by the definition of "Online Database access and/or retrieval" service, as given in Section 65(75) read with Section 65(36) of the Finance Act, 1994 and this service, if provided or deemed to be provided in India, would attract service tax under section 65(105)(zh) ibid. In this regard, I do not accept the Appellant's contention that the activity of CRS/GDS Companies is e-commerce and therefore, not taxable, as there is no sale of tickets by the CRS/GDS Companies. The Tickets of British Airways are sold through IATA agents by using the information/database maintained by the CRS/GDS Companies and it is the IATA agents who collect payments from the passengers. Another plea of the Appellant that for taxing a service under section 65(105)(zh) read with section 65(75), as "Online Database access and/or retrieval service", the data stored in computer system to which access is provided, must belong to the service provider and since in this case, the data belongs to British Airways not to the....
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....as provided to the appellant are correctly held under the category of "online information and database access or retrieval service". 9.5 Another point which was raised by the learned Sr. Counsel that the judgement of the Tribunal in the case of United Telecom Ltd. (supra) and SBI (supra) needs to be considered for coming to the conclusion as to the taxability of the services as ownership of data is not the CRS Companies but the appellant. In our considered view this argument also fails on the face of the fact that an identical issue has been decided by the Tribunal in the case as reproduced herein above. 10. On the issue of revenue neutrality, very many arguments were put forth by both sides. Learned Sr. Counsel submitted that appellant herein is also rendering taxable services of transport of passengers through air and other services on which they are discharging the service tax as output service provider hence any amount which need to be paid as service tax liability under reverse charge mechanism was eligible to be availed as CENVAT credit. Per contra learned A.R. had argued that the appellant had rendered taxable as well as exempted services hence could not have availed t....
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.... relied upon the decisions of the Tribunal in the case of British Airways, Thai International Public Co. Ltd. and Austrian Airways; in the decision of British Airways, the Technical Member has in paragraph No.32 in respect of revenue neutrality situation has recorded as under:- "32. As regards the question of longer limitation period under Proviso to Section 73(1) of the Finance Act, 1944, the same would not be available to the Department, as no intention to contravene the Provisions of Finance Act, 1994 and of the rules made there under can be attributed to the Appellant for the reason that even if they are required to pay service tax on the service, in question, provided by CRS/GDS Companies, the entire service tax paid would be immediately available to them as Cenvat Credit and collection of service tax from the Appellant would be a revenue neutral exercise. A Larger Bench of the Tribunal in case of Jay Yushin Ltd. reported in 2000(119) ELT -718, has held that in such circumstances where revenue neutral situation comes about in relation to the credit available to the assessee himself of the duty paid by him and not by the way of availability of credit to the buyer of th....
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.... has held that when an assessee is contesting the correctness of the demand, he could not have followed the procedure of Rule 56A (erstwhile) for the claim of set-off, which has to be extended, if the demand is ultimately upheld. It is only when after the demand stands confirmed, against an assessee, who is even challenging the same on merits, he can always take an alternative plea of availability of the demand as Cenvat credit to him leading to Revenue neutral situation. As such, even on this count, the appellant is bound to succeed. 52. I am also of the view that the demand, having been raised by invoking the longer period of limitation is hit by the provisions of Section 11A of the Act. My ld. Brother Shri D.N. Panda in his proposed order has held that inasmuch as the appellant was not registered under the Act and failed to file return periodically their plea of bona fide belief does not arise and there was a deliberate breach of law to cause evasion. I am afraid that I do not find myself in agreement with the said observations made by my brother. If non-registration and non-filing of returns is the criteria for rejecting the appellant's plea of bona fide belief and....