TaxTMI 
TaxTMI 
2026 (1) TMI 1350
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....s. Shri Nipul Chandrakant Pael stated that they are engaged in web solutions services in which they are providing various services to their customers that included: (i) Corporate Website Designing - We design the website for our clients. (ii) Application Development or Content Management Systems - As per requirement of the clients, we customize the application especially for data base usage at the end of clients. (iii) Online Marketing or, Search Engine Marketing - We develop the content for on-line information, data base access or retrieval services for marketing purpose. (iv) Flash Development On-line animation for up gradation service related to IT software. (v) Web Hosting -To access website through computer network (vi) Web server Domain sale packages - To provide space vide internet 1.1 After completing the investigation, department issued Show Cause Notice dated 18.10.2013 proposing demand of service tax of Rs. 34,93,328/- (inclusive Cess) under Section 73(1) read with Section 73A of the Finance Act, 1994 alongwith interest under Section 75 read with Section 73B of Finance Act, 1994 and proposal to impose penalty under....
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....retail shop of cloths or other items where seller purchases the products and keep employees to sell the product. (d) The Revenue has assumed and presumed that activities provided by the appellant to their customers as domain registration/ renewal, hosting space renewal, hosting space, hosting back-up space, hosting space registration is a service with effect from 01.07.2012 and for the period prior to this date. The Adjudicating Authority has erred in excluding the value of expenditure cost referred above in the Show Cause Notice in the gross taxable value of website development activity as ascertained under Section 67 of Finance Act, 1994. The department has erred in concluding that sale is a temporary transfer of right to possession whereas it is actually a permanent transfer of rights for the website concerned. Hence, the ISP will not be liable to any tax or state levy and not the agent or franchisee as he has acted only a pure agent. (e) For the valuation, they relied on the decision of the Principal Bench New Delhi in Bhayana Builders Pvt. Limited vs. Commissioner of Service Tax, Delhi - 2013(13) STR 0049 (Tri. LB), in the case of Karamjeet Singh & Company Li....
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....agreement. The agreement is of a nature of principal-to-principal basis and resellers cannot be considered as franchisee or associate franchisor of ICANN. No Service Tax is leviable under the franchise service and hence demand and penalties are not sustainable. Appeal allowed." (h) The department has invoked extended period of limitation in this case which is not available to the department as there is no fraud or collusion. There is also no intention to evade payment of duty in this case and therefore, extended period in disputed areas of interpretation is not invokable. In view above, they prayed to set-aside the Order-in-Appeal and drop the demand confirmed by the appellate Commissioner. 3. During hearing, learned advocate explained the grounds taken by him in their appeal. He also explained various case laws relied upon to substantiate that the issue was rightly decided by the learned Adjudicating Authority, whose decision should be upheld and decision taken by the Commissioner (Appeals) may be set-aside being bad in law. 4. Learned AR mentioned that out of total demand of Rs. 34.93 Lakh raised against the appellant, the Adjudicating Authority had confirmed de....
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....the appellant under Information Technology service and therefore, both the cases relied upon by the appellant are not applicable in this case. 5.2 We find that CESTAT Mumbai in the case of Dimakh Consultants Pvt. Limited vs. CCE, Pune (supra) while dealing with similar issue of demand of service tax on web hosting, server co-location, domain name registration etc. held that services rendered by the appellant are under the taxable category of Information Technology brought into statute with effect from 16.05.2008 and accordingly, confirmed the demand of service tax for the said period alongwith interest and penalty. The relevant para of the said decision is as under:- "5. We have carefully considered the submissions advanced by both sides. We find that the appellant during the relevant period October 2007 to March 2010 failed to discharge service tax amounting to Rs. 31,14,678/- in providing taxable service under the category of advertising agency services. It is not in dispute also that during the period they have failed to furnish any returns with the department informing the collection of service tax along with service charges from the customers. In these circumstance....
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....and of Rs. 15,81,805/- for the period 2008-09 to 2012-13, which has not been challenged by the appellant. If extended period has been accepted by the appellant for a part of the demand, their argument now for the remaining portion of the demand has no merit and hence, does not survive. 5.4 We rely on the following decisions:- (a) Dharampal Satyapal vs. CCE, New Delhi - 2005 (183) 241 (SC) - Wherein, the Hon'ble Supreme Court has held that Clandestine manufacture of compound (kimam) without payment of duty - Assessee in business of manufacturing Tulsi Zafrani Zarda for couple of years - Similar kimam brought from various traders who operated from licensed units - Units where compound (kimam) was manufactured not registered or licensed - No Central Excise records maintained - Plea of bona fide belief not acceptable - Demand not barred by time - Section 11A of Central Excise Act, 1944. (b) Annai Angammal Akakkattalai (Pre Mahal vs. Jt. Commissioner of GST (Appeals), Coimbatore - 2025 (96) GSTL 446 (Mad.) - In para 15, the Hon'ble Madras High Court has held that - "The entire claim against the petitioner had arisen of its own failure to register itself unde....