By TIOL News Service

MUMBAI, SEPT 08, 2017: THIS is a Revenue appeal.

The appellants are engaged in the business of conducting Online E-Sell auctions for various commodities such as MS/SS Steel etc. for a commercial consideration.

The jurisdictional authorities were of the view that these services are taxable under the category of "Online information and database access or retrieval services" w.e.f. 16.7.2001 and since the respondent had neither registered themselves nor paid the tax, SCN dated 24.04.2007 was issued demanding service tax under OIDAR[Period October 2001 to March 2006] & BAS [Period 14.5.2003 to 31.3.2005] of Rs.34,45,770/-.

The original authority confirmed the demand but the Commissioner (Appeals) allowed the assessee appeal.

The AR submitted that the Commissioner (Appeals) had erred in setting aside the service tax demand by categorizing service provided by the assessee under e-commerce; that as per Board Circular No. B-11/1/01-TRU dt. 09.07.2001, it covers only those e-commerce transactions where no charge is paid by the surfers for information on sale of goods and services offered;that in the present case, the respondents are charging fees from those who wish to access such Online Information and Database; therefore, the service provided to the buyers of the steel products is rightly classifiable under OIDAR Services. As regards the demand under BAS which was dropped by the lower appellate authority by allowing the exemption under Notification No. 13/2003-ST dt. 20.06.2003, the said benefit is available only for the period prior to 9.7.2004and, therefore, Service Tax demanded for the period from 9.7.2004 onwards is sustainable.

The respondent relied upon the impugned order and also submitted that they were only engaged in providing a platform for facilitating e-commerce trading facility and subscription/membership fee was being recovered only for purpose of providing access to the trading floor through a login ID/password and not for the purpose of providing access to any online information or database; that Revenue has not been able to produce any evidence, either in the Show Cause Notice or in its appeal, to show that the Respondent were maintaining a database for providing any service regarding retrieval of such database . Further, as regards BAS they have been paying tax thereunder from March 2004 which fact has been recorded by Commissioner(A).

After considering the submissions, the Bench observed –

OIDAR:

++ Respondent is running website through which the interested steel manufacturer/trader are making trade. The respondent is buying and selling the steel product of various steel manufacturer/trader. We do not find that the buyer of the goods is accessing any information online or data online on the respondent's site but they are only interested for sale and purchase of the steel products. The respondent with regard to such trading are getting margin from sale and purchase. Hence the service of the respondent is clearly of e-commerce in respect of steel products. Therefore it merits classification as e-commerce service and not online information or database access or retrieval services.

BAS:

++ In the Revenue's appeal, the benefit (of Notification No. 13/2003-ST) was not denied, however, the only prayer is that demand under Business Auxiliary Service is sustainable for the period from 9.7.2004 onwards. The respondent in their submission has clearly stated that the respondent is discharging the service tax on Business Auxiliary Services w.e.f. March 2004 onwards, therefore the appeal of the Revenue on this point is incorrect.

Noting that there is no infirmity in the impugned order passed by the Commissioner(A), the same was upheld and the Revenue appeal was dismissed.

(See 2017-TIOL-3262-CESTAT-MUM)