TaxTMI 
TaxTMI 
2024 (11) TMI 526
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....alties under sections 78 and 77 of the Finance Act. 2. The appellant claims to be engaged in the provision of 'online information and database access or retrieval' [OIDAR] service defined under section 65(75) of the Finance Act and made taxable under section 65(105)(zh) of the Finance Act. 3. During the relevant period in dispute, the appellant entered into an agreement with Verio USA for providing NTTA platform hosting. Under the agreement, Verio USA was to provide various dedicated servers and an operating software Red Hat Enterprise Linux. The scope of the agreement includes providing data storage and access services wherein Verio USA will make available various servers such as intel-based high end data base server, back linked server, high end application server for storage of data on server space. Verio USA would also provide operating software and equipment used for internet connectivity. The agreement also provides that Verio USA would exercise no control over the content, accuracy or quality of information passing through or on the equipment. 4. An audit of the records of the appellant was conducted for the period 2004-08. A letter dated 12.02.2008 was sent to the appell....
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...., however, paid amount was of Rs. 78,54,405/- Total Differential demand of Rs. 1,41,88,504/- (total demand was of Rs. 2,29,96,388/-) Rs. 88,07,884/- 6. In continuation to the aforesaid show cause notice another show cause notice dated 23.10.2009 was issued to the appellant for the period 2008-09 demanding service tax of Rs. 32,29,837/- under section 73(1) of the Finance Act with interest and penalties. 7. A third show cause notice dated 21.12.2012 was also issued to the appellant under section 73(1) of the Finance Act for the period 2011-2012 on the ground that the OIDAR service provided by the appellant to the SEZ Units are not exempted services as the appellant had not fulfilled the conditions of the Notification 17/2011 - ST dated 01.03.2011 [the Notification dated 01.03.2011]. 8. All the three show cause notices were adjudicated by the Commissioner by an order dated 28.01.2014. The entire demand of service tax under reverse charge mechanism for the period prior to 18.04.2006 in the first show cause notice was dropped, following the decision of the Bombay High Court in Indian National Shipowners Association vs. Union of India [2009 (13) STR 235 (Bom.)] in which it....
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.... appellant without imposition of any penalty. However, the demand of Education Cess and SHE Cess of Rs. 19,289/- has been confirmed against the appellant. 14. The confirmed demand and penalties imposed are contained in the following chart: Sl. No. Issue involved Period for confirmed demand service tax demand confirmed in Rs. Amount appropriated in Rs. Penalty under section 78 in Rs. Penalty under section 77 on confirmed demand in Rs. 1. Service received from Verio USA 18.04.2006 to 01.03.2008 (first show cause notice) 92,82,446/- -- 1,07,31,820/- 1,00,000/- 01.04.2008 to 16.05.2008 (second show cause notice) 14,49,374/- -- 2. Services received from Minik Enterprises, USA 18.04.2006 to 01.03.2008 (first show cause notice) 1,27,004/- 1,27,004/- NIL 3. Advertising services from foreign entity 18.04.2006 to 01.03.2008 (first show cause notice) 1,25,799 for Ed. Cess & SHE Cess -- 1,68,440/- equivalent to Ed. And SHE Cess remaining unpaid 18.04.2006 to 01.03.2008 (first show cause notice) 53,25,505/- 53,25,505/- Total 1,63,10,128/- 54,52,509/- 1,09,00,260/- 1,00,00....
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....ed authorized representative appearing for the department have been considered. Issue No. 1 of the Chart 18. The first show cause notice proposed to demand service tax on the services received from Verio USA under OIDAR service. The order accepts the contentions of the appellant and holds that to be covered under OIDAR service, data or information belonging to the service provider should be provided to the service receiver but the appellant did not provide any data or information owned by Verio USA as Verio USA only provided infrastructure facilities in the form of server space and other facilities which are necessary for the appellant to store the data. Accordingly, the order holds that services provided by Verio USA to the appellant are not taxable under OIDAR service. However, the order proceeds to hold that such services are in the nature of infrastructure support and are taxable under BSS. 19. Thus, the order has confirmed the demand under BSS though the demand made in the show cause notice is for OIDAR service. 20. A show cause notice is the foundation and since, the taxability under BSS was not proposed in the first show cause notice, the demand could not have been confi....
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....ragraph 67.01 of the impugned order, service tax on advertising service after 18.04.2006 has been determined for an amount of Rs. 53,25,505/- with Education Cess of Rs. 1,06,510/- and SHE Cess of Rs. 19,289/-. However, while confirming the demand of Education Cess and SHE Cess, the amount of Education Cess has been taken as 1,49,151/-. The contention, therefore, of the learned counsel for the appellant is that an amount of Rs. 42,641/- has been wrongly confirmed. 28. It has also been submitted by learned counsel for the appellant that the amount that has been appropriated is Rs. 54,09,868/- but the amount paid towards service tax on advertising service is Rs. 43,25,505/- and Rs. 1,27,004/- on the service received from Minik Enterprises. Thus, the total amount of service tax that was paid is Rs. 54,52,509/- but only an amount of Rs. 54,09,868/- has been appropriated. According to the learned counsel for the appellant, there is a short fall of Rs. 42,641/- in appropriation, 29. Learned counsel for the appellant also submitted that an amount of Rs. 20,17,511/- has been paid in excess on advertising service and, therefore, it may also be adjusted towards or refunded to the appellant.....