9911796707
TMI Blog2024 (1) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... VP (Facilities) of the Appellant company by the aforesaid order dated 11.11.2019. 2. Briefly stated, the facts of the case are that the Appellant, M/s Innodata India Private Limited (formerly M/s Innodata Isogen Private Limited) ('IIPL' in short), are providing Content Support Services to its ultimate holding Company, Innodata Inc., USA, which mainly include data conversion, knowledge process outsourcing (KPO) and IT enabled services. 3. It was noticed by the Revenue that the Appellant had taken centralized registration from the Service Tax Commissionerate, Noida vide Registration No. AAACI2425GSD002 initially at A-14-15, Sector-16, Noida and had subsequently changed their address for providing various taxable services. On perusal of the ST-3 returns filed by the Appellant, it was noticed that the taxable services being provided/exported by them had been described as 'OIDAR services' in their ST-3 returns filed upto June 2012, and from July 2012 to March 2013, the services exported were described as 'Development and supply of contents for use in Telecom services', 'Advertising agency' etc., and from April 2013 onwards the services exported were described as 'Business support ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2012 entered between Innodata USA and American Psychogical Association ('American PSY' for short) which provides the scope of work as below: a) Innodata USA would provide i) capture of bibliographic information। and abstracting and indexing of articles from serial publications, journals, books and book chapters, and conference papers/abstracts; ii) indexing of dissertation records (long piece of writing) associated with its PsycINFO indexing and abstracting workflow project; b) Innodata USA shall utilise American PSY's Hermes/Apollo system in processing the source materials, which shall be accessed through VPN connection; c) The deliverables shall be saved in American PSY's Hermes/Apollo system. The said work has to be undertaken by the Appellant for Innodata USA as per service agreement dated 10.12.2008. 'IT Enabled Services' The Ld.Chartered Accountant referred to SOW dated 14.03.2014 entered between Innodata USA and British Standards, ('BSI' for short), which provides the scope of work as below: BSI would like Innodata USA to perform corrections in order to fix the issues in Metadata Manager (the administration of data that de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternet (Hotstar, Amazon Prime Video) * Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network * Online gaming (Steam). It was therefore, alleged that services provided by the Appellant fall under the category of OIDAR services as both the required conditions are fulfilled in all the three segments viz., data conversion services; KPO services; and IT enabled services. The claim of the Appellant that the service provided by them are covered within the definition and scope of 'Business Support Service' from 2013-14 was found to be erroneous in view of the meaning assigned to it under Section 65(104c) of the Act as it existed before 01.07.2012, thus 'Business Support Services, means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, data analytics and related services to its customers located outside India; the appellant works as a content production facility for rendering IT relating services and allied activities, and all services are exported out of India to Innodata USA. 12. Ld. CA further demonstrates that raw data/content is supplied by clients of Innodata USA to the Appellant and after execution of the work, the processed/converted data is delivered through file transfer protocol (FTP) or secured file transfer protocol (SFTP). The ownership, intellectual property and copy rights of raw data/content before or after processing of data/content rest with the data/content providers. When the Appellant has no right to put up the data on internet or use it in any way except working upon the same to make it more useful as a job worker/processor, there is no reason to hold that Appellant is providing the data online for access or retrieval to the customers/public and charging any fees/consideration. Accordingly, it was submitted that the activity of the Appellant is not covered under the category of OIDAR services but is properly covered under the category of business support service. The Ld. CA relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igence of any nature, by wire, radio, visual or other electro-magnetic means but shall not include broadcasting services. 14. The Appellant admitted that they inadvertently classified the services of the above nature of services under the category of OIDAR services defined under Section 65(75) of the Act, as it existed prior to introduction of negative list effective from 01.07.2012, as under: "65(75) "on-line information and data base access or retrieval" means providing data or information, retrievable or otherwise to any person, in electronic form through a computer network". Due to misunderstanding of the above definition as if all services provided in electronic form through internet would be covered in this category, the appellant classified above IT enabled support services provided through computer network as OIDAR services. c) It was only after introduction of Negative list from 01.07.2012 that the scope of OIDAR services as defined in the Place of Provision of Services Rules, 2012 was clarified by the CBEC in Guidance Note 5.9.5 of the Education Guide dated 20.06.2012 on Taxation of services as under: "5.9.5 What are "Online information and database access or retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, KPO/BPO or IT enabled services and fall outside the purview of OIDAR services. The same will be broadly covered within the scope of 'Support Services of business or commerce' or 'Business support services' (BSS) or telecommunication services. 15. The Appellant corrected the nomenclature of their services from OIDAR to services other than OIDAR being covered under Section 65B (44) of the Act in their service tax registration. The Appellant was in his legal right to correct the classification or broad nomenclature of services based on proper understanding as per the clarification issued by the CBEC. The allegation levelled in this regard that it cannot be changed is wholly untenable and without any reasonable and legal ground. The place of provision of service in respect of services provided by the Appellant is location of recipient of service which is outside India as per default Rule 3 and is not taxable under Section 66B of the Act, and all the condition for export of services under Rule 6A (including Rule 6A (d)) of Service Tax Rules, 1994 are fully satisfied. The Appellant does not provide OIDAR service for which place of provision was location of service p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not be covered under the category of OIDAR services. 19. We find that the instant case is wholly covered by the decision of this Tribunal in the case of State Bank of India Vs. Commissioner of Service Tax, Mumbai-II (supra) wherein SBI had entered into a contract for providing Virtual Private Network (VPN) which enabled SBI and its branches to retrieve data from the data centre maintained by the applicants in different countries abroad and demand was made under OIDAR service. This Tribunal held as under: "The ownership of data is quite clearly with the SBI foreign offices. Equant have not provided any data for access/retrieval. They have simply enabled the connectivity. They have provided connectivity which enables the FOs to access/ retrieve data online. The responsibility of Equant is to ensure that network VPN functions properly. The commissioner has totally misread the meaning of " services provided in relation to online information and database access or retrieval". Clearly, the service provided has to relate to information access/retrieval. And Equant has to relate to information access/retrieval. And Equant has not provided information and database. The ownership of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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