Mobile Value-Added Services To Telephone Service Providers Classified As OIDAR; Service Tax Applicable: CESTAT

Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) were addressing the issue of whether the Mobile Value-Added Services rendered by the assessee can be classified as 'Online Information Database Access and Retrieval Services' (OIDAR) as claimed by the Revenue or are they classifiable as 'Information Technology Software Services' (ITSS) as claimed by the assessee.

In this case, the assessee/appellant is engaged in the business of providing certain 'Mobile Value-Added Services' (MVAS) to telephone service providers located in India and outside India and are registered for providing online information and database access services and retrieval services, business auxiliary services, GTA services, etc.

It was alleged that the assessee had not paid service tax on Online Information and Database Access or Retrieval (OIDAR) services provided by them from their Bangalore office to their customers located outside India.

Accordingly, show-cause notice was issued to the assessee. The demand was confirmed along with interest and penalty.

The assessee referring to the definition of OIDAR services and the Instruction F.No. B.11/1/2001-TRU dated 09.07.2001 contended that inter-connectivity services provided by the one ISP to another ISP and the charged recovered from such services would not be subject to service tax and qualify as OIDAR services.

The bench after looking into Sections 65(75) and 65(105)(zh) of the Finance Act, 1994 observed that an activity can be classified under the category of OIDAR service providing data or information which is provided to any person and such data or information should be accessible or retrievable or both and such data or information has to be provided in electronic form through computer network in any manner.

The Tribunal opined that “……the services rendered by the assessee clearly fall under the category of OIDAR services since the Mobile Value-Added Services (MVAS) are owned by the assessee and allowed to be retrieved by the subscribers on payment through the telecom operators. This kind of online retrieval information of ringtones, horoscope, jokes, games etc., being the property of the appellant which are allowed to be retrieved through online by Global Network Operation Centre (GNOC) at Bangalore under no circumstances can be considered as Information Technology Software Services (ITSS)……..”

As per the definition of OIDAR, data is to be owned and allowed to be retrieved through electronic form or computer networks which is exactly the services rendered by the assessee, therefore, the services rendered by the assessee is rightly classifiable as OIDAR services, stated the bench.

In view of the above, the bench held that the services rendered by the assessee fall under OIDAR services and hence, the tax stands confirmed for the normal period.

Case Title: M/s. Onmobile Global Ltd. v. The Commissioner of Central Excise and Central Tax

Case Number: Service Tax Appeal No. 20430 of 2021

Counsel for Appellant/ Assessee: G. Shivadass

Counsel for Respondent/ Department: P.R.V. Ramanan

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