Show Cause Notice
Draft Show Cause Notice
Sub: SERVICE TAX- M/s. Express Network Private Ltd., No.29, Second
Main Road, Ambattur Industrial Estate, Chennai- 600058.
Recovery of service Tax N ot paid - Reg.
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M/s. Express Network Private Ltd., No.29, Second Main Road, Ambattur Industrial Estate, Chennai- 600058(Here after referred as Service Provider or ENP for short)are registered with Service tax department and their STC No. AAACE6586AST001 Dated 10.07.2008 They are registered for provision of Advertising Agency, Online Information and database access or retrieval services and sale of Space or Time for advertisement service.
2. The ENP is also having their own website Indiavarta.com which is used for e-commerce business. Various products are displayed on this website for sale. After sale of these products the Service Provider gets commission from the vendors for which service tax is paid. The Service Provider is also selling / providing space in their websites to advertisement agencies or direct clients for which they are paying service tax on the income earned through sale of space or time for advertisement service.
3.0 During the course of Audit of accounts of the ENP it was noticed that for the website viz., Indiavarta.com the assessee paid overseas vendors for the Web Hosting service provided from abroad. It was noticed that they have not discharged the service tax liability on the above activity of Online Information and database access or retrieval services imported from abroad on payment of Rs.1,41,97,718/- under Section 66A of the Finance Act 1994 reverse charge mechanism. The tax liability works out to Rs.14,10,816/- for the period 2007-08 to 2011-12 as per the Annexure enclosed.
3.1. The service provider from abroad is providing dedicated servers along with necessary software for security and hosting of the Service Provider’s websites, web applications and database which are taxable service for which the service receiver
Sub: SERVICE TAX- M/s. Express Network Private Ltd., No.29, Second
Main Road, Ambattur Industrial Estate, Chennai- 600058.
Recovery of service Tax N ot paid - Reg.
<><><>
M/s. Express Network Private Ltd., No.29, Second Main Road, Ambattur Industrial Estate, Chennai- 600058(Here after referred as Service Provider or ENP for short)are registered with Service tax department and their STC No. AAACE6586AST001 Dated 10.07.2008 They are registered for provision of Advertising Agency, Online Information and database access or retrieval services and sale of Space or Time for advertisement service.
2. The ENP is also having their own website Indiavarta.com which is used for e-commerce business. Various products are displayed on this website for sale. After sale of these products the Service Provider gets commission from the vendors for which service tax is paid. The Service Provider is also selling / providing space in their websites to advertisement agencies or direct clients for which they are paying service tax on the income earned through sale of space or time for advertisement service.
3.0 During the course of Audit of accounts of the ENP it was noticed that for the website viz., Indiavarta.com the assessee paid overseas vendors for the Web Hosting service provided from abroad. It was noticed that they have not discharged the service tax liability on the above activity of Online Information and database access or retrieval services imported from abroad on payment of Rs.1,41,97,718/- under Section 66A of the Finance Act 1994 reverse charge mechanism. The tax liability works out to Rs.14,10,816/- for the period 2007-08 to 2011-12 as per the Annexure enclosed.
3.1. The service provider from abroad is providing dedicated servers along with necessary software for security and hosting of the Service Provider’s websites, web applications and database which are taxable service for which the service receiver
Cited: Antrix Corporation Ltd. v. Assistant Commissioner of Commercial Taxes — (2010) TIOL 515 HC KAR — Relied on [Para 19] Bharat Sanchar Nigam Ltd State of Alabama v. Central Computer Services, Inc. — 349 So. 2d. 1156 — Referred [Para 13] State of Madras v State of Uttar Pradesh v. Union of India — (2004) 137 SRC 620 (S.C.) — Noted [Para 19] Tamil Nadu Kalyana Mandapam Assn Tata Consultancy Services v. State of Andhra Pradesh — 2004 (178) E.L.T. 22 (S.C.) — Relied on [Paras 7, 13] 20th Century Finance Corporation — (2000) 6 SCC 12 — Noted [Para 19]