PVR Limited Vs. Commissioner of Service Tax, New Delhi - (Customs, Excise and Service Tax Appellate Tribunal) (05 Jul 2021)

Unless the fees is for provision of information/data, the arrangement cannot fall under OIDAR for levy of service tax

MANU/CE/0082/2021

Service Tax

Appeals have been filed to assail the order by which the two show cause notices have been adjudicated upon and service tax amounting to Rs. 2,02,31,146 has been confirmed under section 73(1) of the Finance Act, 1994 with interest and penalty. The Appellant is engaged in the business of exhibition of movies through various cinema halls located all over India.

The issue involved in present appeals relates to taxability of 'convenience fee' charged by PVR Limited on its customers for online booking of movie tickets under the category of 'online information and database access retrieval system' defined under Section 65(75) of the Finance Act and taxable under Section 65 (105)(zh) of the Finance Act.

The Terms and Conditions of online booking facility do not mention that, the essence of the contract is for accessing or retrieving any information or data. Infact, the terms are restricted to the facility of online booking. An arrangement which is predominantly for OIDAR would have provisions clearly indicative of the nature of data/information that is permitted to be accessed or retrieved. Such an arrangement would also contain a term that on payment of fee, the user shall have limited or unlimited rights to retrieve or access data/information making it abundantly clear as to what the dominant intention of the contract is.

Unless the fees is for provision of information/data, the arrangement cannot fall under OIDAR. In the present case, the dominant intention for charging fees is to grant facility of online booking and not for access/retrieval of any data or information.

The submission of the Department that, since a booking code is provided to a user when online booking facility is availed and the user has go to a movie hall to get a print out of the ticket, would mean that there is access/retrieval of information cannot, therefore, be accepted. The code received in the process is purely incidental and cannot be said to be the main object of the transaction.

There is, therefore, no manner of doubt that the essential characteristic of the arrangement under consideration in these appeals is availing the facility of online booking of ticket and not accessing/retrieving any data/information. Service tax under the category of OIDAR, therefore, cannot be levied upon a user merely because he receives a code for getting a printout of the ticket from the cinema hall.

The convenience fee is not charged by the Appellant for any access/retrieval of information or data base. Service tax under OIDAR cannot, therefore, be levied upon the Appellant for the period prior to 1st July, 2012. The Appellant has stated that, it started discharging service tax on convenience fees under the negative list regime after July 1, 2012 under the category of "other taxable services".

The confirmation of demand of service tax of Rs. 1.27 crores for the period 1st April, 2007 to 31st March, 2011 out of the total demand of Rs. 2,02,31,146 covered under the two show cause notices dated 14th June, 2012 and 15th March, 2014 cannot also be sustained for the reason that, it is for a period beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and the extended period of limitation could not have been invoked.

As the confirmation of demand under the two notices cannot be sustained, the imposition of penalty and interest under Sections 78 and 75 of the Finance Act cannot also be sustained. Thus, the impugned order confirming the demand of service tax under the two show cause notices is set aside. Appeals allowed.

Tags : DEMAND CONFIRMATION LEGALITY