TaxTMI 
TaxTMI 
2025 (6) TMI 1812
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....f this appeal, noticed that there were two contrary sets of decisions of the Tribunal. In United Telecom Limited vs. Commissioner of Service Tax, Bangalore [2008 (8) TMI 191- CESTAT-Bangalore], the issue that arose for consideration was whether United Telecom was liable to pay service tax under OIDAR service. The Division Bench held that the ownership of data was relevant and since the data was generated by Andhra Pradesh Government and the same was used by different wings of the Government, United Telecom had not provided any data and so the demand of service tax was not justified. 3. However, in British Airways vs. Commissioner of Central Excise (Adjudication), Delhi [2013 (36) STR 598 (Tri.-Del.)], where the issue was whether OIDAR service was received by British Airways from foreign based CRS Companies and British Airways was liable to pay service tax under reverse charge mechanism, the Division Bench held that the services were covered by the definition of OIDAR. The same view was expressed by another Division Bench of the Tribunal in Jet Airways (I) Ltd. vs. Commissioner of Service Tax, Mumbai [2016 (44) STR 465 (Tri.-Mumbai)], wherein again the issue was relating to OIDAR....
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....a single platform and assisted them in seamless booking of tickets. It was understood that this revolutionized method of online ticketing provided airlines with greater outreach and visibility to travel agents across the globe, thereby increasing the bookings of airlines and consequently, their business. It was for this reason that airlines, including the appellant, entered into arrangements with CRS Companies to use the infrastructure of the CRS Companies so that the travel agents across the world could book tickets with the appellant airlines. 6. The appellant has explained the working of the CRS Companies in the following manner: (i) CRS Companies are provided access by the appellant to the public domain information/data of the appellant available on its online reservation system, namely, flight schedule, seat availability and fare schedule; (ii) The CRS Companies convert this data in CRS format; (iii) CRS Companies provide hardware connectivity infrastructure and software access to air travel agents; (iv) CRS Companies provide access to information to the air travel agents; (v) The air travel agents book the tickets through CRS; ....
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....el agents or by itself through its computer system since Oct 03 onwards in the instant case. It is clarified that service tax is liable to be paid on consideration paid for using CRS service by the assessee. It is seen that the airline specific CRS software and the data processing centre maintained by CRS companies, is accessed and used by the assessee and the travel agents. Under this process, the assessee appears the ultimate beneficiary. Therefore any payment made and services received in the hands of the assessee, in this regard, are taxable amount under the above said taxable service. I also observe in view of the provisions of section 65(75) (zh) of the Act that it is not necessary that the data or information should be provided to a customer personally or that the computer network should be owned by the service provider/assessee/TAs as claimed by them. It is also not important as who is under the possession of related data or information. The important thing involved in the instant case is the arrangements, the systems available for delivery of message, data and information. In the instant case, I find that the element of intangible service is visible in the form of access o....
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.... rendered by CRS Companies are, therefore, not covered under OIDAR services. In support of this contention, learned counsel placed reliance upon a decision of the Tribunal in United Telecom, wherein it was held that the ownership of the data is very much relevant for deciding the taxability of OIDAR. Learned counsel also placed reliance on the decisions of the Tribunal in State Bank of India vs. Commissioner of Service Tax-Mumbai-II [2015 (37) STR 340 (Tri.-Mumbai)]; Commissioner of Service Tax-Mumbai-II vs. BASF India Ltd. [2018 (5) TMI 916 (CESTAT-Mumbai)]; and Nestle India Ltd. vs. CCE & ST, LTU, Delhi [2018 (11) TMI 461 - CESTAT Chandigarh]; (ii) Though, in British Airways and Jet Airways, the taxability of services provided by CRS Companies under the category of OIDAR services was upheld, but these decisions did not consider the ratio of the decisions of the Tribunal in United Telecom and State Bank of India. In British Airways, though the decision in United Telecom has been referred to but it was summarily distinguished without even considering the ratio of the law laid down in United Telecom. Jet Airways did not even consider United Telecom and State Bank of In....
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....Companies; (vi) Even if the understanding of the department is considered, and it is assumed that there is provision of some data from the CRS Companies to the appellant, then too such provision of data is only incidental to the primary purpose of the arrangement between the two parties, which is utility of the CRS infrastructure for achieving larger outreach to the travel agents. Once the ticket of the appellant is booked, the records of the appellant are updated on real time basis. This is because at the time of booking of a ticket, the seat in the flight of the appellant is assigned and this information is internally updated in the data base of the appellant. There is an automatic and direct decrement in the remaining seats in the flight of the appellant. Hence, what is perceived by the department as provision of data, pre-exists with the appellant. The appellant is not dependent on the CRS to be informed of the tickets which are booked with the airlines of the appellant; (vii) If data/information belongs to the service recipient itself, the service provider cannot render OIDAR services in relation to such data/information; (viii) The expression 'provi....
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....ease the number of bookings. 15. It would, therefore, be appropriate to refer to the relevant provisions governing the levy of service tax and the contractual arrangement between the parties. 16. Section 65(75) of the Finance Act defines OIDAR service. With effect from 18.04.2006 upto 15.05.2008, the definition provided: "65(75) - "on-line information and database access or retrieval" means providing data or information, retrievable or otherwise, to a customer, in electronic form through a computer network" 17. With effect from 16.05.2008 upto 30.06.2012, section 65(75) of the Finance Act stood as follows: "65(75) - "on-line information and database access or retrieval" means providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network" 18. Section 65(105)(zh) of the Finance Act makes OIDAR service taxable. From 18.04.2006 upto 15.05.2008, it stood as follows: "65(105)(zh) - Any service provided or to be provided to a customer, by any person, in relation to on-line information and database access or retrieval or both in electronic form through computer network, in any manner" 19. With....
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....fter referred to as "Abacus") and (II) INDIAN AIRLINES a company incorporated in INDIA and whose registered office is at AIRLINES HOUSE, 113 GURUDWARA RAKAB GUNJ ROAD, NEW DELHI- 110001, INDIA (hereinafter referred to as "PARTICIPANT") WHEREAS: (1) Abacus is developing a fully computerized reservation system, to provide comprehensive information, reservations, ticketing, communications, distribution and other travel-related functions on behalf of its airline shareholders and participating carriers. (2) The Participant wishes to participate in the Abacus System and Abacus is willing to allow it to become a Participating Airline on the terms and conditions mentioned hereinafter NOW THEREFORE, in consideration of the premises and the mutual obligations hereinafter set forth, Abacus and PARTICIPANT agree as follows: DEFINITIONS As used in this Agreement, the terms listed below shall be defined as follows: ... Abacus System means the CRS operated by Abacus ... Booking means a sale of a PARTICIPANT's product of services. Booking on the PARTICIPANT means a confirmed Passenger Segment cr....
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....or all services of Abacus Affiliates on a level equal to the level it provides to any other vendor of travel related products and services, subject to technical feasibility. ... P. Subject to Clause 2 at the PARTICIPANT's option. Abacus will take all reasonable steps necessary to provide to Subscribers such Abacus services as per the option selected by the PARTICIPANT and so reflected in Schedule I. ... U. Prior to the location of the Abacus Core in Singapore, the PARTICIPANT agrees to work with Abacus to establish the necessary communication like between the Participant System and the Abacus System such that interruption to the delivery or transmission of the Abacus product and services to the Subscribers will be minimized. Abacus will endeavor at a date no later than six (6) months prior to the commencement of activities to establish the link, provide detailed plans for the installation, testing and commissioning of the links. 4. RESPONSIBILITIES OF ABACUS A. Subject to Clause 2, Abacus will provide the Abacus Service(s) selected by PARTICIPANT indicated in Schedule 1 hereof. B. Abacus will indentify all transactions ....
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....panies was intended to be limited to the provision of data. The intention of the agreement was to achieve greater outreach and thereby increase the number of bookings of the appellant. In fact, the consideration clause of the agreement is dependent on the successful bookings made through the CRS. If the intention of the parties was the provision and receipt of data, then service itself would have ended once data/information were shared by the CRS Companies and it would not be material whether the travel agents were successful in booking tickets. 26. Learned counsel for the appellant contended that it is only the terms and conditions of the contract from which the intention of the parties can be gathered and they alone are relevant for determining levy of tax. To support this contention, learned counsel placed reliance upon the following decisions: (a) State of Gujarat (Commissioner of Sales Tax, Ahmedabad) vs. M/s. Variety Body Builders [(1976) 3 SCC 500]; (b) Rashtriya Ispat Nigam Ltd. vs. M/s. Dewan Chand Ram Saran [2012 (26) S.T.R. 289 (S.C.)]; (c) Commissioner of Sales Tax, Maharashtra State, Bombay vs. Walchandnagar Industries [1984 (11) TMI 304 -....
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....not be treated as provision of OIDAR service by the CRS Companies to the appellant. 31. Once the ticket of the appellant is booked, the records of the appellant are also updated. There is an automatic and direct decrement in the remaining seats of the flights of the appellant. Thus, what is perceived by the department as provision of some data to the appellant, is a data which is already existing with the appellant. The appellant, in fact, is not dependent on the CRS Companies to be informed of the tickets which are booked with the airlines of the appellant. There is, therefore, no provision of any data to the appellant. The appellant had not associated with the CRS Companies for receiving such data/information, for the purpose of the agreement was to promote and increase the number of bookings by providing seamless interface by the travel agents and the consideration is dependent on the number of bookings. Consideration is not payable for the provision of data. It also needs to be noted that data pertaining to other airlines is not provided to the appellant. 32. In any view of the matter, even if it is assumed that there is provision of some data from the CRS Companies to th....
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.... not available with the person who is receiving". 36. The meaning of the term "providing" in dictionaries is as follows: Cambridge Dictionary Providing: present participle of provide Provide: (verb): to give something to a person, company, or organization, or to make it available for them to use: to give someone something that they need. Collins Dictionary Provide Word forms: provides, providing, provided (3) Verb : If you provide something that someone needs or wants, or if you provide them with it, you give it to them or make it available to them. Merriam-Webster Dictionary provided; providing transitive verb a : to supply or make available (something wanted or needed) Britannica Dictionary provide verb provides; provided; providing a : to make (something) available : to supply (something that is wanted or needed) 37. Thus, "providing" necessarily means supplying or giving something to someone, which is needed or sought for. The phrase "to supply" has been defined in Strouds Judicial Dictionary, to mean, "pass anything from one who has it to those who want it". 38. It, therefore, follows that the expression "providing data/....
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....)], the dispute was regarding the levy of service tax under the category of OIDAR services on the convenience fee charged by PVR on booking of movie tickets through their website. The Department sought to levy such tax by alleging that PVR had permitted the customers access to information on its website pertaining to movie timings and charges. The Tribunal observed that an OIDAR service arrangement would require permission to access or retrieve certain data/information. The arrangement between the OIDAR service provider and recipient should also be indicative of the legal obligations pertaining to such data/information such as copyright violations and replications. However, the online booking of movie tickets did not result in any such arrangement, it could not be said that PVR had rendered OIDAR services against collection of convenience charges and so the demand was set aside. 44. However, in British Airways where the issue was whether OIDAR service was received by British Airways from foreign based CRS Companies and British Airways was liable to pay service tax under reverse charge mechanism, the Division Bench held that the services were covered by the definition of OID....