Pranav B Prem

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) comprising Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member), has held that mobile value-added services (MVAS) provided by telecom content aggregators such as OnMobile Global Ltd. fall squarely under the category of Online Information and Database Access or Retrieval (OIDAR) services, thereby attracting service tax under the Finance Act, 1994. The assessee's attempt to classify the services as Information Technology Software Services (ITSS) was rejected.

Also Read: CESTAT Rules, Transfer Of Approvals/Allotments Acquired From Government Involves Business Support Services, Attracts Service Tax

The appellant, OnMobile Global Ltd., was engaged in offering various MVAS content such as ringtones, games, horoscopes, and other infotainment content to subscribers of telecom operators located in India and abroad. These services were managed through the company’s Global Network Operations Centre (GNOC) in Bangalore. The services were delivered to end-users through electronic networks and made accessible on a subscription basis via telecom providers.

According to the department, the content offered by the assessee constituted proprietary information and data owned and managed by the assessee, and was retrieved electronically by users. Therefore, the department alleged that these services were taxable under OIDAR, defined under Section 65(75) and Section 65(105)(zh) of the Finance Act, 1994. As per the department, OnMobile had failed to pay the service tax on these services for the period from April 2011 to March 2016.

A show cause notice was issued to the assessee on 20.04.2017 alleging non-payment of service tax on taxable services, especially under the OIDAR category, for services rendered from their Bangalore unit to foreign telecom operators.

The assessee defended its position by arguing that their services did not involve the direct provision of online information or data but rather constituted software-driven support infrastructure, and thus qualified as ITSS. They also contended that they had provided MVAS to foreign telecom service providers and hence the services amounted to exports and were not liable to service tax.

However, the Tribunal found that the services offered involved proprietary content owned by the assessee (ringtones, games, jokes, horoscopes), which was made available online through telecom networks for access by end-users. The content was made accessible only after payment through the telecom operators. This retrieval of data/content through electronic means satisfied all three elements of the definition of OIDAR services. Quoting the definition under Section 65(75), the Tribunal observed: “Online Information and Database Access or Retrieval Services means providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network.”

The bench emphasized that the content was owned by the assessee, retrievable online, and accessed on-demand by subscribers. Hence, these services could not fall under the ITSS category. The Tribunal clarified that the key determinant under OIDAR is the electronic accessibility and retrieval of content, which was fulfilled in this case.

The Tribunal further held that the extended period of limitation invoked by the department was not sustainable. It noted that the department was well aware of the assessee’s business and registration under OIDAR services and that the classification dispute was a matter of interpretation. Hence, the extended limitation could not be invoked in absence of suppression of facts or willful misstatement.

Also Read: CESTAT Rules, Packing/Re-Packing Of Parts Of Device Is Not Manufacture U/S 2(f)(iii) Of Central Excise Act; No Excise Duty

Ultimately, the Tribunal:

• Confirmed the service tax demand for the normal period, classifying the services under OIDAR.

• Set aside the demand for the extended period.

• Remanded the case back to the original adjudicating authority for re-quantification of demand and interest limited to the normal period.

Appearance

Counsel for Appellant/ Assessee: G. Shivadass

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

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

Case No: Service Tax Appeal No. 20430 of 2021

Coram: Dr. D.M. Misra (Judicial Member), R. Bhagya Devi (Technical Member)