ST - as data being retrieved or accessed by applicant is their own prima facie it cannot be said that applicant have received service of 'Online information and database access or retrieval' – Pre-deposit waived and stay granted: CESTAT
By TIOL News Service
MUMBAI, MAY 22, 2013: THE bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian sub-continent. Bank of Madras merged into the other two presidency banks-Bank of Calcutta and Bank of Bombay-to form the Imperial Bank of India, which in turn became the State Bank of India. The government of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI was ranked 285th in the Fortune Global 500 rankings of the world's biggest corporations for the year 2012.
Any Indian would be proud of an institution that has such an impressive lineage. After all, as the tag line says, "The Nation banks on us… ”
Be that as it may, the Commissioner of Service Tax, Mumbai issued a Service Tax demand of Rs.2.61 Crores to the State Bank of India and like always, confirmed the demand along with interest and impressive amounts of penalty.
The short issue on which the service tax demand is raised is - that the applicants are availing Online information and data base access or retrieval service through computer network service and as the ‘service provider' is located abroad, the bank is required to discharge the Service Tax.
The bank is before the CESTAT with a Stay application. And the Revenue got itself represented through a Special Consultant for defending its case.
The appellant referred to the terms and conditions of the agreement entered into with M/s Equant Pte. Ltd., Singapore and submitted thus –
+ State Bank of India has entered into a contract with M/s Equant Pte Ltd. , Singapore for providing Virtual Private Network (VPN) which enables the SBI and the SBI branches to retrieve data from data centre maintained by the applicants in India, USA and UK.
+ M/s Equant Pte Ltd. are not providing any service as the applicants were retrieving data from their own data maintained in India, USA & UK.
+ Reliance is placed on the decision in United Telecom Ltd. vs. CCE (2009-TIOL-595-CESTAT-BANG) to submit that in a similar situation, the Tribunal set aside the demand which was confirmed on the same service.
+ The applicants also relied upon the Board's circular dated 19 th Dec. 2011 to submit that the service received by the applicants is a telecommunication service which requires a licence under the Indian Telegraph Act, 1985.
The Consultant for the Revenue relied upon the statement of Shri K.K.Shrivastava, Asstt. General Manager of SBI whereby it is admitted that the applicants had received online connectivity to their data base in the data centres and this connectivity is provided by the Singapore company. The findings of the adjudicating authority were also reiterated to justify the Rs.2.61 crore demand.
The Bench extracted the provisions of sec. 65(75) of the FA, 1994 defining the term “online information and database access ore retrieval” and observed –
“6. We find that as per the provision of the above section, the service is to be provided to any person in electronic form through a computer network. In the present case, as per the argument of the Revenue, M/s Equant Pte Ltd. are the provider of Virtual Private Network facility. As per the argument of the Revenue, the applicants are the beneficiary through this network facility inasmuch as the same enables the foreign offices of SBI to access to this besides updating the same on regular basis. As the data is being retrieved or access by the applicants to their own database which were in US, UK and India, therefore, it cannot be prima facie said that the applicants have received the services. In these circumstances, the applicants have made out a case in their favour. Therefore, pre-deposit of the dues is waived and recovery thereof is stayed during the pendency of the appeal.”
In fine, the Stay petition was allowed and considering the revenue involved the appeal was listed for hearing on 25 th July, 2013.
Virtual access : By the way, retrieving this news does not cost, but the judgment will, now and later.
(See 2013-TIOL-767-CESTAT-MUM)
