2024-VIL-1626-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax – Classification of Service - OIDAR Services - Appellant entered into an agreement with its foreign holding company to avail various IT services, including remote access to information systems, business support systems, electronic mail systems, etc. – Revenue of the view that the services received by the appellant are classifiable as 'Online Information and Database Access or Retrieval Services' (OIDAR) and the appellant, being the recipient, is liable to pay service tax under the Reverse Charge Mechanism - Whether the services received by the appellant are classifiable as OIDAR services – HELD – the appellant is not only using the hardware and software facilities of their holding company but it is allowed to use the applications and databases of the holding company, including supply chain, manufacturing and finance systems, quality and laboratory information systems, fragrance business support systems, data warehouse, etc. - based on the services received by the appellant, it is clear that it is not mere Information Technology Services but the services received include whole lot of access to the data worldwide with regard to technology, production and various other services essential for day-to-day manufacturing activities. Therefore, in agreement with the Commissioner that the services received by the appellant fall under OIDAR services - with effect from 18.04.2006 though the service provider is outside India, recipient of services is liable to pay service tax as per Section 66A and Section 68 of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Tax Rules 1994 - Since the services were provided by a non-resident entity, the appellant, being the recipient, is liable to pay service tax under the reverse charge mechanism as per Section 66A and Section 68 of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 - the demand of service tax with interest is confirmed but the penalties imposed on the appellant under Sections 76 and 77 of the Finance Act, 1994 are set aside as the there was no suppression of facts and the demand arose due to the interpretation of legal provisions - Appeals are partially allowed only to the extent of setting aside the penalty
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