TaxTMI 
TaxTMI 
2018 (8) TMI 30
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....n 78 of the Act and an additional penalty under Section 77 of the Act. 2. The facts relevant for the purpose are that M/s National Internet Exchange of India (NIXI for short) is a not for profit company registered under Section 27 of the Companies Act, 1957 and is engaged in Domain Name Business in India i.e. for providing efficient interconnectivity of internet in India and for setting up of internet domain name operations and related activities. For the purpose the appellant has been entrusted by the Department of Information and Technology under the Ministry of Communication and IT, Government of India vide its policy framework dated 28.10.2004, with the responsibility of setting up the registry for ".in‟ country got top level d....
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....lating to registration of domain names. It is impressed upon that the registry i.e. appellant and their accredited registrars are two different entities as is very much clear from the registry accreditation agreement entered into between the two. It is further submitted that a sum of Rs. 50,000/- as received by the appellant from its registrars is again under the mandate of policy framework of Government of India to receive the same as accreditation fee. No services in lieu of said amount are being provided by the appellant to the registrars. The findings of the Adjudicating Authority below are alleged to be wrong in this context. Penalties are also impressed upon to have been wrongly levied upon. Order is prayed to be set aside and Appeal ....
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.... Show Cause Notice upon the appellants, the findings of the impugned Order to that effect are therefore prayed to be set aside. Resultantly, the Department has prayed for the appellant‟s Appeal to be allowed whereas for respondents Appeal to be rejected. 6. After hearing both the sides, our considered opinion is as follows:- The moot question for adjudication in the present case appears to be as to whether the registrar accreditation agreement is a mere agreement between the appellant and its registrar for accreditation or it actually is in agreement for rendering franchise services by the appellant to its registrars. For the purpose it is important to know the definitions of the franchise, franchiser and franchise service an....
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....nt makes one thing abundantly clear that not even once the word "franchise" or "franchisor" has been used. The agreement defines accredit in Clause 1.1 thereof to mean to enter into an agreement that sets forth the rules and procedures applicable to the provisions of registrar services. The two parties of the agreement are ".in‟ registry i.e. appellant including its successors (Clause 1.5) and registrar as the second party (Clause 1.9). Registrar services (Clause 1.10) are absolutely different from registry services as in Clause 1.15 of the agreement. It makes clear that the agreement gives the registrar no right, power or authority to operate or manage ".in‟ registry. He is only required to act as registrar for top level domain....
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....om the above discussed agreement is that the registrars are the entities which contract with the registered name holders and the registry and collects registration data about registry name holders and submit the same to the registry for entering in the database maintained by the registry. It becomes abundantly clear that both registry and registrars are independent entities operating on principle-toprinciple basis. Thus, the conditions of the above discussed definitions are not fully satisfied in the present case. 9. The emphasis of the Ld. Counsel for appellant on the agreement between ICANN, the corresponding registry at international level seems appealable in view of above opinion and the case law of Direct International Solutions Pvt....
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.... High Court in another case titled International Airport (supra) has held that for a transaction to be taxable under Section 65(105) (zze), it is necessary that the services should be provided by the appellant but the agreement makes it clear that there is no provision of services being provided. Clause 3.5.3 thereof is relevant. 10. In view of the entire above discussion, we have no hesitation in holding that the original Adjudicating Authority has miserably erred while holding an arrangement of accreditation as that of providing franchisee services. The levy confirmed vide the Order under challenge is therefore set aside. 11. Further, the original Adjudicating Authority has held that there is clear cut suppression of facts on the pa....