TaxTMI 
TaxTMI 
2021 (7) TMI 251
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....]' defined under section 65 (75) of the Finance Act and taxable under section 65 (105)(zh) of the Finance Act. 3. The appellant is engaged in the business of exhibition of movies through various cinema halls located all over India. The appellant sells tickets for movies from the cinema ticket windows and also through its website www.pvrcinemas.com which is accessible through computer and mobiles phones. The website gives information on movies that are currently being exhibited in its cinemas, upcoming movies, trailers of movies and similar information. According to the appellant, no price is charged for accessing this website and any individual can access this website and gain information on movies that are being exhibited or would be exhibited in PVR cinemas. The customers who book tickets online through the website or through mobile phones electronically are required to pay an amount of INR 5/- to INR 25/- per ticket over and above the value of tickets. When the tickets are booked electronically, the hard copies of the same can either be collected over the counter or be retrieved by way of print out from a machine kept outside the counter of the movie hall. 4. The appellant....
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....cess and/or retrieval' services in the following manner:- On the website of M/s PVR Ltd., information/data viz. names and addresses of cinema hall, name of the movies being shown there or to be shown in future, number of shows, timings of shows of each movie being shown there or will be shown in future, rates of the tickets, total number of seat in that particular cinema hall, number of vacant seats available at that particular point of time etc. are continuously updated by M/s PVR Ltd. In addition to the same, customer can also see the trailers of the movies on the said website. A customer desirous of booking tickets, first of all chooses the suitable cinema hall/desired movie name from the list generated therein, thereafter he selects his options from the various options generated/shown onscreen in an interactive manner in respect of the movie he wants to see, show-timing, rates of tickets, etc. In the website, number of seats available for a particular show is also updated time to time. If a customer enters for a number of tickets/seats for a particular show and in case the desired numbers of seats are not vacant/available for that particular show, the website ....
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....rary to the claims of the assessee, existed prior to 01.07.2012, as can be seen from the Act/ notifications/ circulars etc. I also find that the assessee has not been able to substantiate his claim of the amount being cum tax, and therefore I am inclined to consider the amount not inclusive of tax." (emphasis supplied) 8. The demand under the extended period of limitation was upheld on the ground that the Department was never made aware about the collection of convenience fee while providing OIDAR services and the evasion of service tax was detected by the Department only later. The Commissioner also observed that mere suppression of facts was enough for invoking the extended period of limitation and it was not necessary that there should be an intent to evade payment of service tax. The relevant portion of the order is reproduced below: 5.3 I find that the extended time period of five years is invokable under the provision contained in proviso to Section 73(1) of the Finance Act, 1994 as amended in specified cases, I find that the assessee had not disclosed to the Department about 'convenience fee' received while providing 'Online information and Database Access or ....
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....s Limited vs. State of U.P [2012 (9) ADJ 10]; (iii) Since the website of the appellant is used for sale of its tickets, it is in the nature of an e-commerce transaction. In this connection reliance has been placed on the decision of the Tribunal in Commissioner of Service Tax, Mumbai vs. Click For Steel Services Limited [2017 (7) G.S.T.L. 215 (Tri. - Mumbai)]; (iv) Convenience fees in question is charged only for 'booking of tickets' and mere access to the website for information is free of cost; (v) The extended period of limitation in the first show cause notice for the period from 01.04.2007 to 31.03.2011 could not have been invoked. In this connection reliance has been placed upon the decision of the Tribunal in Shiv-Vani Oil & Gas Exploration Services Ltd. vs. C.S.T., New Delhi [2017 (47) S.T.R. 200 (Tri.- Del.)]; (vi) The activity of the appellant is not covered under any taxable service prior to 01.07.2012; (vii) The subsequent Circular dated 09.11.2016 issued by the Board clarifies that booking services or tickets to entertainment events do not fall under the category of OIDAR services; (viii) The manner of computation o....
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....s that are exhibited in the cinema halls, the upcoming movies, trailers of movies and other like information. No fees is charged by the appellant for accessing this website and any individual can access the website for the aforesaid information. However, customers who actually book tickets online through the website or through mobile phones electronically are required to pay a certain amount per ticket over and above the value of ticket towards 'convenience fees'. In such a situation, when the tickets are booked online, the hard copy of the tickets can either be collected over the counter of the cinema hall or can be retrieved by way of the print out from a machine kept outside the counter in the cinema hall. 15. The issue that arises for consideration in these two appeals is regarding the taxability of 'convenience fee' charged by the appellant on its customers for online booking of movie tickets under OIDAR category under section 65(105)(zh) of the Finance Act. 16. Learned counsel for the appellant has broadly raised two submissions. According to the learned counsel for the appellant, the Commissioner was not justified in confirming the demand of service tax on convenience ....
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....Finance Act. 20. The contention of the learned counsel for the appellant is that the necessary ingredients for invoking the larger period of limitation contemplated under the proviso to section 73 (1) of the Finance Act, namely wilful suppression of facts with an intent to evade payment of service tax do not exist and, therefore, the extended period of limitation could not have been invoked. 21. In order to appreciate this contention it would appropriate to reproduce section 73 of the Finance Act as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows; "73.(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED that whe....
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.... suppressed any material facts, much less suppressed them wilfully, from the Department in regard to the collection of convenience fee from the customers for online booking of movie tickets, nor was there any intent to evade payment of service tax and, therefore, the extended period of limitation could not have been invoked in the facts and circumstances. For this purpose, learned counsel for the appellant placed the following factual position. 26. Pursuant to the audit conducted by the Audit Team of Service Tax Commissionerate, Delhi from 25.11.2008 to 28.11.08 for the period 2004-2005 to 2007-08, a communication dated 27.02.2009 was sent to the appellant by the Superintendent Service Tax (Audit) raising only two specific objections about service tax on the amount charged from advertising agencies and utilization of CENVAT Credit in excess of 20%. The appellant submitted a letter dated 18.05.2009 in response to both the audit objections. The appellant also submitted various documents, including financial records, agreements, details of revenue earned, credit availed etc., before the authorities. Subsequently summons dated 08.07.2009 was issued to the appellant by the office of ....
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.... 3. Copies of invoices. 32. The Annual Report from 2005-06 to 2009-10 also consisted of the Balance Sheet. Schedule 17 of the Balance Sheet provides for "operating income" which also makes mention of the "convenience fees". The amount of convenience fees as mentioned in the Balance Sheet is Rs. 14,926,478/-, which is the same amount on which service tax has been demanded by the Department for the year 2007-08 in the show cause notice dated 14.06.2012. 33. A CERA Audit was also conducted and a Local Audit report dated 27.06.2011 was issued for the period 2007-10 raising for the first time an issue about non-payment of service tax on convenience fees. The Department believed that service tax was required to be paid on the amount collected as convenience fees under "business auxiliary service" [BAS]. The appellant submitted a reply dated on 27.07.2011 stating therein that service tax would not be payable on convenience fees under BAS. 34. The Commissioner, while confirming the demand under the extended period of limitation, observed that the Department was never made aware about the convenience fees received by the appellant and, therefore, the appellant had suppressed fac....
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....Supreme Court explained "suppression of facts" in Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay [1995 (78) E.L.T. 401 (SC)]. It is as follows: "11A: Where any duty of excise has not been levied or paid or has been short-levied or short-pain or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice." 39. In Pushpam Pharmaceuticals Company, the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The....
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..... It does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held :- "In taxation, it ("suppression of facts") can have only one meaning that the correct information was not disclosed deliberately to escape payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention ....
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....ment or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty. xxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention." xxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief." (emphasis supplied) 44. It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil & Gas Exploration Services Ltd., wherein the Tribunal after making reference to the decision of the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay [1995 (75) E.L.T. 721 (SC)], observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoke....
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....mation from the Department relating to collection of convenience fees and then holding that mere suppression of facts was enough for invoking the extended period of limitation. As noticed above, even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade the payment of service tax. There is no finding by the Commissioner as to whether suppression of facts was wilful and in the context of intent, the Commissioner held that there is no necessity that suppression of facts has to be with an intent to evade the payment of service tax. 47. For all these reasons, the confirmation of demand of service tax of Rs. 1.27 crores on convenience fees for the period commencing 01.04.2007 to 31.03.2011 is beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and, therefore, this demand deserves to be set aside. Merits 48. It has now to be seen whether the convenience fees that is charged by the appellant from each user over and above the prescribed value of the movie ticket can be subjected to service tax under OIDAR. 49. For this purpose, it would be necessary to refer the Terms & Conditions for p....
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....d will not issue a refund to the user for selecting the wrong tickets or if the user does not meet the minimum age requirements for that particular film. The online booking is non transferable and cannot be further sold. To collect the tickets the user must present the credit/debit card that was used to book the tickets in that particular cinema. The user has to carry the print out of the confirmation mail. The user may procure the ticket from the automatic ticket collection points or they can present the print out to the PVR representative at the ticket counter of the concerned Cineplex. The user shall also carry proof of age for movies certified 'A'. (emphasis supplied) 50. The explicit terms of the contract are always the final word with regard to the intention of the parties. This is what was observed by the Supreme Court in Nabha Power Limited. The terms of contract have also to be treated on their face value and should be presumed to mean what they say and must be acted upon unless proved to be sham or farce, as was observed by the Allahabad High Court in Reliance Industries Limited. In CMS (l) Operations & Maintenance Co. P. Ltd. vs. C.C.E., Pondicherry [2007 ....
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.... line at the window to procure the ticket. This online booking facility, therefore, offers a convenient way of procuring a ticket as against the conventional method of having to stand outside the ticket counter in a long queue. It is clear that the pith and substance and the dominant intention of the arrangement is not to access/retrieve data/information but it is an arrangement by which the facility of online booking is made available to users. 54. It needs to be remembered that any person who visits the website of the appellant to seek information about the show timings or like information does not have to make any payment and it is only when a ticket is booked online that convenience fee is required to be paid by the user. The substance of the transaction is, therefore, to book a ticket online and thereby engage in e-commerce. It cannot, therefore, be said that convenience fee is charged for any access/retrieval of information or database as contemplated under OIDAR service. 55. In this connection reference needs to be made to the decision of the Tribunal in Click for Steel Services, wherein the assesse was engaged in the business of conducting online auctions for various ....
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....val: 1. xxxxxxxxx 2. xxxxxxxxx 3. xxxxxxxxx 4. xxxxxxxxx 5. xxxxxxxxx 6. Point for clarification: A question has been raised as to whether e-commerce transactions (other than providing online information and data) are covered in the ambit of service tax. It is clarified that in e-commerce transactions, no service of online information and database access/retrieval is involve. Therefore, e-commerce transactions will not ordinarily be covered under the service tax net. Normally, the web sites do not charge the surfers for information of sale of goods or services offered by them. If at all they do, service tax will be payable on the amount charged for providing the information. Another point raised related to applicability of service tax on inter-connectivity services provided by one ISP to another and the charges recovered for such services. It is understood that this is done to inter connect various networks so as to reach the server where the information is stored. It is informed that interconnection of one ISP to another is a commercial and technical arrangement under which service providers connect their equi....
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.... purely incidental and cannot be said to be the main object of the transaction. 60. In this connection it would be pertinent to refer to the Circulars dated 29.02.2008 and 06.08.2008 issued by the Board clarifying that if a transaction contains major and ancillary elements, classification has to be determined based on the essential features or the dominant element and that the guiding principle is to identify the essential features of the transaction. The said Circulars are reproduced below: Circular Dated 29.02.2008 "3.2 For the purpose of classification of a service covering number of separate services, a view has to be taken as to whether an individual service is merely a component of the overall supply or is itself a distinct and independent supply i.e., whether the component is merely ancillary to the principal supply or the component can be considered as separate taxable service in its own right. A service, which does not constitute for a customer an aim in itself but a means of better enjoying the principal supply, is considered as a supply ancillary to the principal supply. 3.3 Section 65A states the principles for classification of taxable services.....