TMI Blog2014 (6) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be said to be an agreement between the service provider and the service recipient. - demand is not sustainable. As regards web hosing services - classification - information technology service covered by Section 65 (105) (zzzze) or business support service taxable w.e.f. 01/05/06 under Section 65 (105) (zzzq) - Held that:- On perusal of Section 65 (105) (zzzze), we are prima facie view that the service of Web hosting being received by the appellant from foreign service providers is not covered by clause 65 (105) (zzzze), as this clause covers various services in relation to information technology software including development of information technology software, study, analysis, design and programming of information technology software, acquiring the right to use the information technology software supplied electronically etc. - On the other hand the Web hosting services received by the appellant involved providing of space by a service provider in his server to another person to enable that person to upload information about his business or his company which can be accessed by his customers, friends and other individuals through internet. The Web hosting service is a ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds for MTC s network in its territory. Out of total revenue generated from the use of the application from the subscribers of M/s MTC, M/s MTC retains 45% of the gross revenue and pays the remaining 55% to ACL (the appellant) who, in turn, as per the agreement between them (the appellant) and TASK, share this revenue earned by the joint venture in the ratio of 54.45%: 45.55%. The revenue share of the TASK is remitted by the appellant (ACL) to TASK. The Department has alleged that the appellant have received Business Auxiliary Service of marketing of their services from TASK and accordingly has sought to levy service tax on the TASKs revenue share, as the same had been shown in the books of accounts of the appellant company (ACL) as commission, while according to the appellant, it is only the share of revenue earned from joint venture which is payable to TASK. The service tax demand of Rs. 50,53,645/- for the period from 01/10/03 to 31/03/07 is on this basis. 1.4 The appellant company has entered into an agreement with some parties abroad for providing virtual space to them on their servers to enable the appellant to upload documents or personal or business information about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of maintenance of Versant software being used by the appellant and for which payment in foreign currency had been made to M/s Versant Corporation, Germany and similarly the Management Consultancy Service had been received from foreign service providers during period from 01/10/03 to 31/03/07 in respect of which service tax demand of Rs. 74,894/- has been made, that the service of maintenance of software and Management Consultancy Service had been received during period prior to 18/04/06, while Section 66A providing for recovery of service tax from the recipient of the service in India in case of service provided by an offshore service provider had been introduced w.e.f. 18/04/06 and, hence, during period prior to 18/04/06, in respect of taxable services received from offshore service provider, the service tax cannot be demanded from the service recipient in India and in this regard he relies upon the judgment of Hon ble Bombay High Court in the case of Indian National Shipowners Association vs. Union of India reported in 2009 (13) S.T.R. 235 (Bom.) and thus the service tax demand of Rs. 36,949/- in respect of repair and maintenance service and service tax demand of Rs. 67,922/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Commissioner in the impugned order. He pleaded that the supply of content including user generated contents like SMS through software to the Telecom Service Providers to enable the mobile telephone subscribers to receive advertisements, ring tones, general information etc. is Business support Service taxable w.e.f. 01/05/06 under Section 65 (105) (zzzq) readwith Section 65 (104c) of the Finance Act, 1994, that it is well known that telecom operators besides providing telephone service through mobile network, also provide other services like SMS, internet, Email, internet banking and informative service etc. to their clients and the appellant provide software to enable the telecom service providers to provide these auxiliary services and, hence, the services provided by the appellant have to be treated as business support service, that just because w.e.f. 01/6/07 a new clause (zzzzb) was inserted in Section 65 (105) to cover the services in relation to development or supply of content for use in telecom services, it does not mean that during period prior to 01/6/07, this activity could not be taxed as business support service under Section 65 (105) (zzzq), that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing taxation of a service is introduced in the Act from a particular date, it has to be presumed that during the period prior to introduction of the new entry, that service was not taxable. 8. As regards the service tax demand of Rs. 50,53,645/- in respect of the amount paid by the appellant company to their joint venture partners M/s TASK, Kuwait, it is not disputed that the appellant company had entered into a joint venture agreement with M/s TASK, Kuwait to work together for smooth implementation of wireless instant messenger application on the network of M/s Mobile Telephone Company, Kuwait (M/s MTC) and in terms of this joint venture agreement, the earnings of the joint venture from this activity were to be shared by the appellant and the TASK in the ratio of 54.45% to 45.55% i.e. 54.45% of the revenue of the joint venture from the activity of wireless instant messenger application on MTC s network was to be retained by the appellant company and the remaining 45.55% of the revenue was to be given to TASK. Prima facie, we are of the view that there is nothing in the joint venture from which it can be inferred that TASK, Kuwait were providing the service of marketing or promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to use software components for the creation of and inclusion in other information technology software products, (vi) [providing] the right to use information technology software supplied electronically.] 9.2 Section 65 (105) (zzzq) covers service provided to any person by any other person in relation to support services of business or commerce in any manner. Section 65 (104c) defines the expression support service of business or commerce as under:- [(104c) support services of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purposes of this clause, the expression infrastructural support services includes providing office along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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