TaxTMI 
TaxTMI 
2025 (7) TMI 560
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....ed against the appellant that even though they 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 ....
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....nder the OIDAR services as defined under Section 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 ....
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.... KOLKATA] iv. Malviya National Institute of Technology Vs. CST, Jaipur [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....
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.... Section 65(105)(zh) "taxable service" means any service provided or to be provided to any person, 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; 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,....
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.... Dishnet. They normally charge the customers on the basis of usage of time (hours). They also provide dedicated lease lines on lump-sum payment basis. Clearly ISPs provide service in relation to on-line information 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, ....
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....opsys Cadence, Mathwork, Magma, Rational etc. In recognition of this and in recognition of the benefit derived by TI Indis from usage of the above for its business, it is hereby agreed that Ti India will pay an amount allocated by Ti inc as per the terms of this agreement. 2. 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 alloc....
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....n Technology Act. 2000 (21 of 2000); 32. As per Section 2 of the Information Technology Act, 2000; "(o) "data" means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalised manner, and is intended to be processed, is being processed or has been processed in a computer system or computer network, and may be in any form (including computer printouts 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 com....
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....oftware. Whereas data/ information cannot be called software, codes, instructions, basic units of programs can be called or termed as data when further put to use for compiling larger programs/ software. The aforementioned is included in definition of data of IT Act as well. 33(ii). M/s. TIPL contention that they have received only the right to use the software for which the license has been obtained by their holding company from the software vendors; that the service provided in relation to 'software' cannot be equated 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 ....
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.... the expression to a person by the Finance Act, 2008 with effect from 16.5.2008 and that for the entire period covered in the present notice only services provided to a customer was subject to levy. In this regard, I observe that TI, USA and M/s. TIPL are two different legal entities and hence both are to be treated separately. Moreover M/s. TIPL is making payments to TI, USA for the services rendered by them and hence I do not find any merit in the noticee's argument that they cannot be construed as a customer to TI, USA. In the instant case, 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....
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....are tools on cost sharing basis to their holding company TIUSA. There is no downloading or retrieval of data placed on the server; therefore, the use of software tools cannot be considered as an OIDAR service. We do not find substance in the arguments of the appellant. In Givaudan (India) Pvt. Ltd.'s case, this Tribunal referred to the Board's Circular No.202/12/2016-ST dated 09.11.2016, though issued subsequently, indicated broadly what services would fall under the scope of OIDAR service. The relevant portion of the said circular is as below:- Indicative List of OIDAR services 16. (1) Website 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....
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....on of service, we find that as per Section 65(75) of the Finance Act, online information and database access for retrieval means providing data or information retrieval or otherwise to the consumer in electric form or through computer network. As per 65(105)(zh) taxable service means any service provided or to be provided to any person by any person in relation to online information and database access or retrieval or both in electronic form through computer work in any manner. In the context of the present case as per the nature of the service it is internet service and online information service that includes database service, provision of information on website, data retrieval, 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 ....