Dewsoft Overseas Private Limited v. Commissioner of Service Tax, New Delhi
2008 IndLaw CESTAT 1661
In the Customs Excise And Service Tax Appellate Tribunal
Case Number: Final Order No. St/218/2008-(Pb), In Appeal No. St/235/2006
Before Rakesh Kumar (Technical Member) and S.S. Kang (Vice President)
Decided on August 25, 2008
Relevancy: Whether providing online computer course is “commercial training or coaching?”
Statutes & Provisions Involved
• The Information Technology Act, 2000 (Section 2, 69, 79)
• The Code of Civil Procedure, 1908 (Section 151)
• The appellants provide computer education via “online” and “real-time centres.” The main point of dispute is as to whether the activity of providing “online computer training” can be categorised as “commercial training or coaching” under Section 65(27) of the Finance Act, 1994 and on this basis, be exempted from service tax under Notification No. 9/2003-S.T. dated 20-6-03, as claimed by the Appellant or this activity is classifiable under “online information and database access and/or retrieved service” defined under Section 65(75) of the Finance Act and chargeable under service tax accordingly.
• The other point of dispute is with regards to the real-time training/coaching centres managed through franchisees and the same is whether the franchise fee being received by the Appellants from their franchisees is liable to service tax under “Franchise Service” as defined under Section 65(47) of the Finance Act.
Prominent Arguments by the Advocates
• Sh. P.K. Sahu, Advocate, the learned counsel for the appellants submitted that the services of online computer training being provided by the appellants are much more than the service of mere online access. Providing online education has become feasible because of internet connectivity. Importing knowledge or education is different from merely disseminating information, which alone is taxable under entry -‘online information and database access and/or retrieved service.’ Education is the result produced by instruction, training and study. The appellants are using the internet as the medium for instruction and other related activities. Therefore, the basket of services provided by the appellants cannot fall under the taxable category of ‘online information and database retrieval service.’
• Sh. Amit Jain, the learned Departmental Representative, submitted that what is taxable under Section 65(105)(zh) is the service provided to a customer, by any person, in relation to online information and database access, in electronic form through a computer network, in any manner. The scope of the words – ‘in relation to’, holds true as explained by Hon’ble Supreme Court in para 46 of its judgment in the case of Tamilnadu Kalyana Mandapam v. CCE, Chennai (2006).
Opinion of the Bench
• Online coaching or teaching is an interactive process and the same cannot be compared with mere online information and database access and/or retrieval. Online information and data access/or retrieval service, which is taxable, is defined under Section 65(75) of the Act as “providing data or information, retrieval or otherwise, to a customer in electronic form through a computer network” and the taxable service with regards to “online information and database access or retrieval” has been defined as “service provided to a customer by any person in relation to online information or database access or retrieval or both, in an electronic form, through a computer network in any manner.” The word “data” has been defined under Section 65(36) of the Finance Act, 1994 read with Section 2(1)(o) of the Information Technology Act, 2000, as “representation of information, knowledge, facts, concepts or instructions and may be in any form.”
• In view of the above findings, the impugned order is not sustainable and the same is set aside. The appeal is allowed.