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TMI Blog2017 (5) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... ith telecom service providing companies. In terms of agreement entered into by the appellant with Mobile Telecom Companies such as Reliance Communication, Aircel etc., the appellants developed various short messaging services (SMS) under two categories - regular and premium. The said services could be delivered to the mobile phones of the subscriber through short codes 8888. The subscribers of Mobile Telecommunication Services pays charges for such services to the telecom service provider. The appellants shared such income. Thus, the appellants were engaged in developing and supplying contents like news, cricket scores, jokes, etc. to various telecom companies on revenue sharing basis. To access these services, the subscribers have to dial short codes like 8888/58888, etc. These short codes are advertised in various media by the appellant. The Revenue entertained a view that these types of value added services with reference to news, cricket score, astrology, jokes, etc. are to be considered under the taxable category of "Business Auxiliary Service" (BAS). Referring to various sub-clauses in the tax entry, the Revenue held that these services provided by the appellant through telec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice itself is not clear as to under what category of tax entry, the appellant should be taxed for the services of developing and supplying contents to the telecom service provider. Referring to para 2.5, 2.6 and 2.8 of the show cause notice, the ld. Consultant submitted that there is no clarity about the category under which the appellant should be made liable to pay service tax. (b) The value added service provided by the appellant to the telecom companies in terms of the contract and dealings are on principal to principal basis. The appellants are earning the revenue on account of supplying such contents to telecom operators. No consideration is received on account of any customer care service on behalf of client or procurement of inputs for telecom companies. None of the clauses mentioned under BAS is applicable to the transactions entered into by the appellant. (c) Referring to the contents of the agreement entered into by the appellant with various telecom operators, the ld. Consultant emphasized that the appellants are engaged in development and supplying contents to telecom companies on revenue sharing basis. The said consideration can never be equated to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65(19) of the Finance Act, 1994 is as below:- "Business Auxiliary Service" means any service in relation to - (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) Promotion or marketing of service provided by the client; or (iii) Any customer care service provided on behalf of the client; or (iv) Procurement of goods or services, which are inputs for the client; or explanation -- for the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client; (v) Production or processing of goods for, or on behalf of the client; or (vi) Provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to "manufacture" within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sheet under the head "Income from SMS", is covered under category of "Business Auxiliary Service" as defined in clause (iii) and (iv) of Section 65 (19) of the Act, as amended by the Finance Act, 2004 w.e.f. 10.09.2004.". 11. We note that the findings of the Original Authority that the appellant is promoting the service provided by the mobile operator is without any factual basis. Admittedly, the arrangement is on principal to principal basis, wherein the appellants develops and provides certain contents to be transmitted by the mobile telecom operators to their various subscribers, as a value added service. The consideration for providing such contents were fixed as percentage of income obtained by the telecom service providers. The arrangement generates revenue both for telecom service providers as well as the appellant. We note the Original Authority held that the consideration received by the appellant is attributable to service rendered under clause (iii) and (iv) of BAS. Clause (iii) talks about "any customer care service provided on behalf of the client and clause (iv) states procurement of goods or services, which are inputs for the clients". We are not able to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted under Section 65(64) with effect from 1.6.2007: "Explanation.- For the removal of doubts, it is hereby declared that for the purposes of this clause, 'goods' includes computer software". 13. The Original Authority held that the appellants were involved in management, maintenance & repair of software covered under the above taxable entry. Reliance was also placed on the circular dated 7.10.2005 of the Board. 14. We have examined the agreement entered into by the appellant with M/s. M/s. BCCL. As already noted, BCCL is a flagship company of the Times of India Group and are engaged in the business of printing and publishing newspapers. The agreement with the appellant is to provide the information technology services to BCCL in relation to online publications and online sites for BCCL. In other words, the offline publication of BCCL are to be put online in designed websites for access through internet by the public. The appellants were to provide information technology services for such online publications and online websites. The agreement states that the appellant shall decide on the design, look, feel and content of the online publication and online sites. The websites ..... X X X X Extracts X X X X X X X X Extracts X X X X
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