TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 560
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....y had received Online Information Database Access or Retrieval service (OIDAR service) during the period 19.04.2006 to 16.05.2008 from their holding company TIUSA, they have not discharged service tax on the same. On completion of investigation, a show-cause notice was issued to them on 19.10.2011 proposing to recover service tax of Rs.39,88,39,200/- for the period 19.04.2006 to 16.05.2008 along with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 3.1. At the outset, the learned advocate for the appellant has submitted that the appellant is a company incorporated under the Companies Act, 1956 and was one of the 25 wholly owned subsidiaries of M/s. Texas Instruments Incorporated, USA (TIUSA, for short). The appellant was primarily engaged in the business of design and development of software for the purpose of new and improved semiconductor related software and products. In the present case, they were undertaking design and development of software for its holding company i.e. TIUSA and for the purpose, the appellant required Electronic Data Automation (EDA) software tools. Due to high cost of said software tools,....
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....65(75) read with Section 65(105)(zh) of the Finance Act, 1994, he has submitted that the license for the EDA software tools had been procured by TIUSA from a 3rd party vendor and the same was shared with all the subsidiaries of TIUSA; the appellant received the software tools for using the same for development of software relating to semiconductors. A portion of the expenditure incurred by TIUSA for procurement of EDA software tools was allocated to the appellant based on the time which the appellant logged into EDA software tools was not related to any access of data but for the usage of EDA tools per se by the appellant. He has further submitted that mere access or retrieval of data cannot fall under the scope of OIDAR service. In support, they have referred to the judgment in the case of Intimate Fashions Pvt. Ltd. Vs. CGST & CE, Chennai [2023-VIL-729-CESTAT-CHE-ST) and Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE,C&ST, Bangalore LTU [Final Order No.21535/2024 dated 13.12.2024]. 3.3. Referring to the judgment of Givaudan (India) Pvt. Ltd. Vs. Commissioner, LTU, Bangalore [2024(12) TMI 600 - CESTAT BANGALORE], he has submitted that in the said judgment, it was held that the agr....
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....2019(6) TMI 127 - CESTAT NEW DELHI] 3.5. Further, they have submitted that in any case, no service tax can be levied prior to 18.04.2006 who are receiving taxable service outside India as the recipient becomes liable to pay service tax only after the insertion of Section 66A in the Finance Act, 1994 on 18.04.2006. In support, they have referred to the Circular No.276/8/2009-CX 8A dated 26.09.2011 issued by Board. Further, the learned advocate for the appellant has submitted that extended period of limitation is not invokable in the present case as they have not suppressed nor mis-declared any facts. He has submitted that the Cost Allocation Agreement and Agreement with international vendors, have been furnished to the Deputy Commissioner of Service Tax, Bangalore on being called for necessary details about the EDA software tools procured from the holding company. Also, the appellant has submitted that the Cost Allocation Agreement along with application for the refund claim under Rule 5 of the CENVAT Credit Rules, 2004 for the period July 2008 to September 2008. It is a settled principle of law that if the Department is well aware of the activities of the appellant, then allegatio....
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.... in relation to on-line information and database access or retrieval or both in electronic form through computer network, in any manner; 8. The said OIDAR service has been inserted in the Finance Act, 1994 in the year 2001. After the introduction of the same, a Circular was issued by TRU explaining the implication of the new service brought into the Service Tax not including the OIDAR service vide Instruction F.No.B.11/1/2001-TRU dated 09.07.2001. The relevant portion is extracted below:- ANNEXURE IV On-line information and database access and/or retrieval: 1. As per section 65(19), 1994, the term "On-line information and data base access or retrieval" means providing data or information, retrievable or otherwise, to a customer in electronic form through a computer network. The words "Data", "information", "electronic form" and "computer network" have the same meanings assigned to them in the Information Technology Act, 2000. As per section 65(72)(zh), taxable service means any service provided to a customer, by a commercial concern, in relation to on-line information and database access or retrieval or both in electronic form. 2. The definitions given in the Information T....
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....rmation and database access or retrieval. They are an integral part of the internet operations and without their service, the data or information can neither be accessed nor retrieved. They are, therefore, liable to pay service tax on the amount charged from the customers whether on usage time basis or on lease line basis. 5. As regards paid websites, a few examples of Indian dot companies are, Indiainformer.com, CIIonline.com, who charge the customer for certain specific information contained in their website either in advance or credit basis. They shall be also liable to pay service tax on the paid services provided by them. It is obvious that where the information is supplied free of charge, no service tax is payable. 6. Point for clarification: A question has been raised as to whether e-commerce transactions (other than providing on-line information and data) are covered in the ambit of service tax. It is clarified that in e-commerce transactions, no service of on-line information and database access/retrieval is involved. Therefore, e-commerce transactions will not ordinarily be covered under the service tax net. Normally, the websites do not charge the surfers for infor....
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.... Allocation of expenses 2.1. Electronic Design Automation (EDA) expenditures will be allocated to TI India based on the number of seconds TI India personnel are logged onto any of the EDA software packages provided by TI to TI India. Following the end of each yearly accounting period. TI will make a final determination of coss actually incurred and will adjust the amount charged to TI India in the price period by issuing a final invoice or a credit. Any cost incurred by TI not covered by per second of use it any will be allocated to TI India on a mutually agreed basis. 2.2. It is agreed that TI Inc will raise an invoice to TI India on a quarterly basis respect of the amounts allocated to TI India in accordance with the terms this agreement. 2.3. Subject to complying with Indian withholding tax and exchange central regulations, TI India agrees to pay the amounts allocated to it in accordance with the terms of this agreement within a period of 60 days from the date on which it receives the invoice/debit note raised by TI Inc. 10. The aforesaid agreement is the bone of contention between the Revenue and the appellant. It is the allegation of the Revenue that the appellant had r....
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....s magnetic or optical storage media, punched cards, punched tapes) or stored internally in the memory of the computer; (r) "electronic form" with reference to information means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device; (v) "information" includes data, text, images, sound, voice, coder, computer programmes, software and databases or micro film or computer generated micro fiche: (j) "computer network" means the interconnection of one or more computers through- '(i) the use of satellite, microwave, terrestrial line or other communication media, and (ii) terminals or a complex consisting of two or more interconnected computers whether or not the interconnection is continuously maintained;" 33. On comparison of the requirements of the definition under Section 65(105)(zh) of the Finance Act, 1994 with that of the IT Act, 2000, it is seen that; 33(i). TI Inc procure various software from vendors and store the same in the server of M/s TIPL. As per the requisites of Online Information and Database Access or Retrieval Service, service must relate to pro....
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....uated with data or information only on the ground that information as per IT Act, 2000 includes software, and data includes information which implies that 'software' is included within the definition of 'data' is not acceptable in the light of the above observation and The software and database, the access to which is provided by TI Inc to TI India is nothing but information which is defined under the IT Act, 2000. Therefore, the software provided by TI Inc clearly falls under the ambit of the said service. Access to these softwares is provided to various group companies including TI India to the said server. As per the requisites of Online Information and Database Access or Retrieval Service, the said data or information can he retrievable or otherwise. Since, the term "access" or retrieval is not defined in the Finance Act, definition of terms under IT Act, 2000, is resorted to. Definition of terms under IT Act, 2000, (a) "access" with its grammatical variations and cognate expressions means gaining entry into, instructing or communicating with the logical, arithmetical, or memory function resources of a computer, computer system or computer network; 33(iii). ....
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...., I observe that the software provided through the computer network is in electronic form. The Finance Act, 1994, defines 'electronic form' as- (39) "electronic form" has the meaning assigned to it in clause (r) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);" 33(v). As per the requisites of Online Information and Database Access or Retrieval Service must be provided in electronic form. "electronic form" with reference to information as defined in the IT Act, 2000, means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device; M/s. TIPL relying upon Circular F.No.B11/1/2001 TRU dated 9.7.2001 submitted that as per the above Circular the levy was intended to cover content access to which is offered directly through web sites or through internet service provider. I do not agree with the argument of M/s. TIPL and hold that the data/information provided through the computer network is in electronic form and fully satisfies the requirements of the definition in the Finance Act, 1994. 33(vi). I observe that the access to the software is ....
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....ebsite supply, web-hosting, distance maintenance of programmes and equipment; (a) Website hosting and webpage hosting; (b) Automated, online and distance maintenance of programmes; (c) Remote systems administration; (d) online data warehousing where specific date is stored and retrieved electronically; (e) online supply of on-demand disc space. (2) Supply of software and updating thereof; (a) Accessing or downloading software (including procurement/accountancy programmes and anti-virus software) plus updates; (b) software to block banner adverts showing, otherwise known as Banner blockers; (c) download driver, such as software that interfaces computers with peripheral equipment (such as printers); (d) online automated installation of filters on websites; (e) online automated installation of firewalls. 12. From the above, it is clear that the services received by the appellant by way of access of software tools installed in their server discharging the value of service on cost sharing basis definitely falls under the OIDAR service. More or less on similar facts and circumstances, this Tribunal has held in the case of Vishay Components India Pvt. Ltd., as u....
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....val, etc. Internet service provider provides access to the website through computer networks and the websites. They also provide dedicated lease licence, they are integral part of the internet operation and without their service data or information can neither access nor retrieved, therefore service of internet service provider is liable to service tax. In the present case appellant have booked communication and technical fees under the head of expenditure in foreign currency, further this expenses related to payment towards IT cost charged by the BC Components International BV, Netherland. Merely because the total cost charged by the BC Components International BV, Netherland is allocated to the various companies based on the logical basis like number of users, system usages etc. it cannot be said that appellant have not received service and paid consideration thereof. The appellant emphasized that activity is not taxable only because appellant are making payment only for cost sharing does not have any force. Taking into consideration overall facts, it is clear that appellant have received the service and paid consideration to BC Components International BV, Netherland therefore t....