Providing Access To Government Data Through Its Portal Not OIDAR Service: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has set aside service tax demands against MP Online Ltd., holding that the company did not provide Online Information and Database Access or Retrieval (OIDAR) services merely by operating a portal through which Madhya Pradesh Government data could be accessed.

The Bench of Officiating President Dr. Rachna Gupta and Technical Member P.V. Subba Rao held that MP Online only provided a network through which government data could be accessed by government officers and citizens.

The tribunal observed, “The well settled legal principle is that OIDAR services can be alleged to have been provided only if the data belongs to the service provider. The service provider cannot provide access to data which itself do not possess. In this case, the appellant had provided only a network through which the data of the government of Madhya Pradesh could be accessed by the officers of the government of Madhya Pradesh and by the citizens. Therefore, it cannot be said that the appellant had provided any OIDAR services.”

MP Online was formed as a joint venture of the Madhya Pradesh State Electronic Department Corporation and Tata Consultancy Services to develop, maintain and manage the state government's e-governance portal. The portal provided services including registration of births and marriages, issuance of certificates and licences, utility bill collection and grievance redressal.

The three appeals concerned service tax demands of ₹19.77 crore, ₹12.73 crore and ₹9.06 crore for periods between October 2009 and June 2017. The first appeal covered both the pre-negative-list period and the period after July 1, 2012, while the other two concerned the post-negative-list period.

For the pre-negative-list period, the tribunal held that services provided to government departments and universities or educational institutions were not taxable as business auxiliary or business support services because they were not provided to business entities.

After July 1, 2012, services provided to universities were covered by Exemption Notification No. 25/2012-ST. Services provided to corporations such as BSNL, Airtel, LIC and SBI Life were taxable, with the appellant submitting that it had already paid service tax on the commissions received.

The tribunal also considered interest earned on fixed deposits. MP Online had placed surplus funds in fixed deposits before transferring amounts collected for government departments, educational institutions and utility companies.

It observed, “It must be remembered that the interset is the time value for money. It is the consideration received for the money deposited with the bank and it is not consideration received for any service. Therefore, it is not exigible to service tax either during the pre negative list or post negative list regime.”

The tribunal allowed all three appeals and set aside the impugned orders confirming the service tax demands.  

For  Appellant: Chirag Shetty, Advocate

For Respondent: Mehboob Ur Rehman, Authorised Representative